EXHIBIT 10.31.1
LICENSE AND
EXCHANGE AGREEMENT
by and among
EUROTECH, LTD.
HOMECOM COMMUNICATIONS, INC.
and, solely with respect to ARTICLE V and ARTICLE XI hereof
POLYMATE, LTD.
and
GREENFIELD CAPITAL PARTNERS LLC
March 27, 2003
LICENSE AND EXCHANGE AGREEMENT
This LICENSE AND EXCHANGE AGREEMENT, dated as of March 27, 2003 (this
"AGREEMENT"), is made by and between EUROTECH LTD., a District of Columbia
corporation (the "COMPANY"), HOMECOM COMMUNICATIONS, INC., a Delaware
corporation ("HOMECOM"), and solely with respect to ARTICLE V and ARTICLE XI
hereof, POLYMATE, LTD., an Israeli corporation ("Polymate"), and GREENFIELD
CAPITAL PARTNERS LLC, a Delaware limited liability company ("GREENFIELD").
R E C I T A L S
WHEREAS, the Company desires to acquire from HomeCom, and HomeCom
agrees to issue (i) 11,250 shares of Series F Convertible Preferred Stock of
HomeCom, $.01 par value per share (the "HOMECOM SERIES F STOCK"),which will
represent, upon conversion, 75% of the issued and outstanding shares of HomeCom
common stock, par value $.001 per share (the "COMMON STOCK") (other than the
shares of Common Stock issuable upon conversion of HomeCom's outstanding Series
B-E Convertible Preferred Stock and warrants or options, and the Series G
Convertible Preferred Stock of HomeCom convertible into Common Stock) (such
shares the "EXCHANGE SHARES"), such shares of HomeCom Series F Stock having the
rights, powers and designations set forth in the Certificate of Designations of
such HomeCom Series F Stock, a copy of which is annexed hereto as Exhibit B (the
"CERTIFICATE OF DESIGNATIONS") and (ii) 1,069 shares of Series G Preferred
Stock, $ .01 par value per share, of HomeCom with a face value of $1,069,000
(the "ADDITIONAL PREFERRED SHARES"); and
WHEREAS, the Company desires to license to HomeCom all right, title and
interest held by the Company in the intellectual property and other associated
assets described in Exhibit A attached hereto (collectively the "LICENSED
PROPERTY") as consideration for the Exchange Shares, and upon the terms and
subject to the conditions set forth in this Agreement and the form of License
Agreement to be mutually agreed upon by Eurotech and HomeCom and deliverd at the
Closing (the "LICENSE AGREEMENT"); and
WHEREAS, HomeCom agrees to issue to Polymate, in consideration of the
relinquishment of certain rights associated with the Licensed Property, 1,500
shares of HomeCom Series F Stock, representing, upon conversion, 10% of the
issued and outstanding shares of Common Stock (other than the shares of Common
Stock issuable upon conversion of HomeCom's outstanding Series B-E Convertible
Preferred Stock and warrants or options of HomeCom convertible into Common
Stock) (such shares the "POLYMATE SHARES"), upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, HomeCom agrees to issue for its services as a finder in
connection herewith to Greenfield 750 shares of HomeCom Series F Stock,
representing, upon conversion, 5% of the issued and outstanding shares of Common
Stock (other than the shares of Common Stock issuable upon conversion of
HomeCom's outstanding Series B-E Convertible Preferred Stock and warrants or
options of HomeCom convertible into Common Stock) (such shares the "GREENFIELD
SHARES"), upon the terms and subject to the conditions set forth in this
Agreement; and WHEREAS, simultaneously with the execution of this Agreement, the
holders of shares of Series B-E Convertible Preferred Stock are executing
certain consent and forbearance agreements relating to such shares (the "B-E
CONSENTS");
WHEREAS, the respective Boards of Directors of all of the parties
hereto have approved the form, terms and conditions of this Agreement upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt
and
sufficiency of which is acknowledged by the parties hereto, the parties agree
as follows:
ARTICLE I.
CLOSING; THE EXCHANGE; THE EXCHANGE PROCEDURES
1.1 Closing. The closing of the Exchange and the other transactions
contemplated hereby (the "CLOSING") shall be made at such time and place as the
parties may mutually agree, on or before April 15, 2003 (the "CLOSING DATE").
1.2 Company/HomeCom Proceedings. At the Closing, HomeCom shall
issue to the Company 11,250 shares of HomeCom Series F Stock, representing the
Exchange Shares and the Additional Preferred Shares (each denominated by
separate certificates), and simultaneously therewith, and conditioned thereon,
the Company shall execute and deliver the License Agreement to HomeCom as a part
of and in connection with the issuance of the Exchange Shares. The Company will
enter into the License Agreement only upon the obtaining by the Company of any
applicable third party consents or similar documentation and the satisfaction of
the other conditions contained herein. The issuance of the Exchange Shares and
execution and delivery of the Licensed Property, in each case as contemplated
herein, are referred to herein as the "EXCHANGE".
1.3 At the Closing, HomeCom shall issue to Polymate 1,500
shares of HomeCom Series F Stock, representing the Polymate Shares.
1.4 Greenfield/HomeCom Proceedings. Greenfield is receiving
the Greenfield Shares in consideration of services provided to HomeCom as a
finder in connection with the transactions contemplated by the Exchange. At the
Closing, HomeCom shall issue to Greenfield 750 shares of HomeCom Series F Stock,
representing the Greenfield Shares.
ARTICLE II.
[INTENTIONALLY OMITTED]
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represent and warrants to HomeCom that:
3.1 Organization, Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the District
of Columbia, and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing is not, when taken together
with all other such failures, reasonably likely to have a Material Adverse
Effect (as defined below) on it.
As used in this Agreement, the term "MATERIAL ADVERSE EFFECT" means,
with respect to any Person, a material adverse effect on the financial
condition, assets or liabilities or business of such Person; provided, however,
that Material Adverse Effect shall exclude any effect resulting from or related
to changes or developments involving (1) a prospective change arising out of any
proposed or adopted legislation, or any other proposal or enactment by any
governmental, regulatory or administrative authority, (2) general conditions
applicable to the economy of the United States, including changes in interest
rates and (3) conditions or effects resulting from the announcement of the
existence or terms of this Agreement.
3.2 Corporate Authority and Approval. The Company has all requisite
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly executed and delivered by the Company and is a valid and
binding agreement enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "BANKRUPTCY AND EQUITY EXCEPTION"). The
Board of Directors of the Company has unanimously approved this Agreement and
the other transactions contemplated by this Agreement.
3.3 Government Filings; No Violations.
(a) Except for filings required pursuant to the Securities
Exchange Act of 1934, as amended, or the rules and regulations promulgated
thereunder (collectively, the "EXCHANGE ACT") or any other federal or state
securities laws or any stock exchange or other self regulatory organization, no
notices, reports or other filings are required to be made by the Company with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any governmental or regulatory
authority, court, agency, commission, body or other governmental entity
("GOVERNMENTAL ENTITY"), in connection with the execution and delivery of this
Agreement by the Company and the consummation of the transactions contemplated
by this Agreement, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on the Company or the Licensed Property, nor prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
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(b) The execution, delivery and performance of this Agreement
by the Company does not, and the consummation of the other transactions
contemplated by this Agreement will not, constitute or result in (A) a breach or
violation of, or a default under, the certificate of incorporation or bylaws of
the Company, (B) a breach or violation of, or a default under, the acceleration
of any obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of each of the Company (with or without notice, lapse
of time or both) pursuant to, any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation ("CONTRACTS") binding upon it or any
law, statute, ordinance, regulation, judgment, order, decree, injunction,
arbitration award, license, authorization, opinion, agency requirement or permit
of any Governmental Entity or common law (each, a "LAW" and collectively,
"LAWS") to which it is subject or (C) any change in the rights or obligations of
any party under any Contracts to which the Company is a party, except, in the
case of clauses (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably 1ikely to have a Material Adverse Effect on the Company or prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement. Schedule 3.3(b) ("PRIOR
CONTRACTS") sets forth a correct and complete list of Contracts of the Company
pursuant to which consents or waivers are or may be required prior to
consummation of the transactions contemplated by this Agreement other than those
where the failure to obtain such consents or waivers is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect on the
Company or prevent or materially impair their ability to consummate the
transactions contemplated by this Agreement.
3.4 Reports; Financial Statements. The Company is a reporting company
under the Exchange Act and the shares of the Company's common stock are
registered under Section 12(g) of the Exchange Act. The Company has made
available to HomeCom, through electronic filings on ▇▇▇▇▇, each registration
statement, report, proxy statement or information statement prepared by it since
December 31, 2000, including its Annual Report on Form 10-KSB for the year ended
December 31, 2001 and its Quarterly Reports on Form 10-QSB for the quarters
ended since December 31, 2000, in the form (including exhibits, annexes and any
amendments thereto) filed with the Securities and Exchange Commission (the
"SEC") (collectively, including any such registration statements, reports, proxy
statements or information statements filed subsequent to the Agreement Date, its
"REPORTS"). Since June 30, 2000, the Company has made all filings required to be
made by the Securities Act of 1933, or any successor law, and the rules and
regulations issued pursuant thereto (the "SECURITIES ACT"), and the Exchange
Act. The financial statements and any supporting schedules of the Company
included or incorporated by reference in the Company's Reports present fairly
the consolidated financial position of the Company as of the dates indicated and
the consolidated results of their operations for the periods specified (subject,
in the case of unaudited statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
accordance with generally accepted accounting principles of the United States
consistently applied ("GAAP") during the periods involved, except as may be
noted therein.
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3.5 Litigation and Liabilities. Except as disclosed in the Company's
Reports filed prior to the Closing Date or on Schedule 3.5, there are no (i)
civil, criminal or administrative suits, claims or hearings pending or, to the
actual knowledge of its executive officers, threatened against the Company or
any of its Affiliates with respect to the Licensed Property or (ii) obligations
or liabilities, whether or not accrued, contingent or otherwise and whether or
not required to be disclosed with respect to the Licensed Property, or any other
facts or circumstances, in either such case, of which its executive officers
have actual knowledge and that are reasonably likely to result in any claims
against or obligations or liabilities of the Company or any of its Affiliates,
except for those that are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on the Company, or prevent, materially
delay or materially impair its ability to consummate the transactions
contemplated by this Agreement.
For purposes of this Agreement, the term "AFFILIATE" means, with
respect to any person or entity, any person or entity that, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "CONTROL" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
3.6 Compliance with Laws. Except as disclosed in the Company's Reports
filed prior to the Closing Date or on Schedule 3.6, the businesses of the
Company with respect to the Licensed Property have not been, and are not being,
conducted in violation of Law, except for violations or possible violations that
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on the Licensed Property or prevent, materially delay or
materially impair its ability to consummate the transactions contemplated by
this Agreement. To the actual knowledge of its executive officers, no material
change is required in the Company's processes, properties or procedures in
connection with any such Laws, and it has not received any notice or
communication of any material noncompliance with any such Laws that has not been
cured as of the Closing Date, except for such changes and noncompliance that are
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on them or prevent, materially delay or materially impair their
ability to consummate the transactions contemplated by this Agreement.
3.7 Brokers and Finders. Except for Greenfield, neither the Company nor
any of its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the Exchange or the other transactions contemplated in this
Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF HOMECOM
HomeCom hereby represent and warrant to the Company that:
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4.1 Organization, Good Standing and Qualification. HomeCom is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate or similar power and authority and
is qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing is not, when taken together with all other such
failures, reasonably likely to have a Material Adverse Effect on it. HomeCom has
made available to the Company a complete and correct copy of its certificate of
incorporation and bylaws, each as amended to date. Such certificates of
incorporation and bylaws are in full force and effect.
4.2 Capital Structure. The authorized capital stock of HomeCom consists
of (i) 15,000,000 shares of Common Stock, of which 14,999,156 shares shall be
issued and outstanding as of the Closing Date, and (ii) 125 shares of HomeCom
Series B Preferred Stock, of which 17.8 shares shall be issued and outstanding
as of the Closing Date; (iii) 175 shares of HomeCom Series C Preferred Stock, of
which 90.5 shares shall be issued and outstanding as of the Closing Date; (iv)
75 shares of HomeCom Series D Preferred Stock, of 1.3 shares shall be issued and
outstanding as of the Closing Date; (v) 106.4 shares of HomeCom Series E
Preferred Stock, of which 106.4 shares shall be issued and outstanding as of the
Closing Date (collectively, the "SERIES B-E PREFERRED STOCK"). All of the
outstanding shares of Common Stock, and Series B-E Preferred Stock, and the
HomeCom Series F Stock, including the Exchange Shares, the Additional Preferred
Shares, and the Polymate Shares and Greenfield Shares when issued at the Closing
pursuant to this Agreement, have been or will (at the Closing) be duly
authorized, validly issued, fully paid and nonassessable. Except as disclosed in
this Section 4.2 or on Schedule 4.2, as of the Closing Date, there are no
additional issued and outstanding shares of Common Stock, Series B-E Preferred
Stock or HomeCom Series F Stock, and there are no rights, options, warrants or
similar instruments outstanding pursuant to which any shares of capital stock of
any class or series of HomeCom are issueable to any person or entity, except for
1,069 shares of Series G Convertible Preferred Stock.
4.3 Corporate Authority and Approval. HomeCom has all requisite
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly executed and delivered by HomeCom and is a valid and
binding agreement of HomeCom, enforceable against HomeCom in accordance with its
terms, subject to the Bankruptcy and Equity Exception. The Board of Directors of
HomeCom has duly approved this Agreement.
4.4 Government Filings; No Violations.
(a) Except for filings required pursuant to the Exchange Act,
no notices, reports or other filings are required to be made by HomeCom with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by HomeCom from, any Governmental Entity, in connection
with the execution and delivery of this Agreement by it and the other
transactions contemplated by this Agreement, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on HomeCom or prevent, materially delay or
materially impair its ability to consummate the transactions contemplated by
this Agreement.
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(b) The execution, delivery and performance of this Agreement
by HomeCom does not, and the consummation by it of the Exchange and the other
transactions contemplated by this Agreement will not, constitute or result in
(A) a breach or violation of, or a default under, its certificate of
incorporation, certificates of designations or bylaws, (B) a breach or violation
of, or a default under, the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance on its assets or the assets
of any of its Subsidiaries (with or without notice, lapse of time or both)
pursuant to, any Contract binding upon it or any of its Subsidiaries or any Law
to which it or any of its Subsidiaries is subject or (C) any change in the
rights or obligations of any party under any Contracts to which it or its
Subsidiaries are a party, except, in the case of clauses (B) or (C) above, for
any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on it or prevent, materially delay or materially impair its
ability to consummate the transactions contemplated by this Agreement.
4.5 Reports; Financial Statements. HomeCom is a reporting company under
the Exchange Act and the shares of HomeCom Common Stock are registered under
Section 12(g) of the Exchange Act. HomeCom has made available to the Company,
through electronic filings on ▇▇▇▇▇, each registration statement, report, proxy
statement or information statement prepared by it since December 31, 2002,
including its Annual Report on Form 10-KSB for the year ended December 31, 2001,
and its Quarterly Reports on Form 10-QSB for the quarters ended since December
31, 2001, in the form (including exhibits, annexes and any amendments thereto)
filed with the SEC (collectively, including any such registration statements,
reports, proxy statements or information statements filed subsequent to the
Agreement Date, its "REPORTS"). Since June 30, 2000, HomeCom has made all
filings required to be made by the Securities Act and the Exchange Act. As of
their respective dates, the HomeCom Reports complied as to form with all
applicable requirements and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances in which they
were made, not misleading. The financial statements and any supporting schedules
of HomeCom and its Subsidiaries included or incorporated by reference in the
HomeCom Reports present fairly the consolidated financial position of HomeCom
and its Subsidiaries as of the dates indicated and the consolidated results of
their operations for the periods specified (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that will not be
material in amount or effect), in each case in accordance with GAAP consistently
applied during the periods involved, except as may be noted therein. To the
knowledge of the directors, officers, employees and legal and accounting
representatives of HomeCom, except as disclosed on Schedule 4.5, as of the
Closing Date, no Person or group beneficially owns 10% or more of the
outstanding voting securities of the Company. As used in this Section 4.5, the
terms "beneficially owns" and "group" shall have the meanings ascribed to such
terms under Rule 13d-3 and Rule 13d-5 under the Exchange Act.
4.6 Litigation and Liabilities. Except as disclosed in HomeCom's
Reports filed prior to the Closing Date, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the actual knowledge of its executive officers, threatened
against HomeCom or any of its Affiliates or (ii) obligations or liabilities,
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whether or not accrued, contingent or otherwise and whether or not required to
be disclosed, including those relating to matters involving any Environmental
Law, or any other facts or circumstances, in either such case, of which its
executive officers have actual knowledge and that are reasonably likely to
result in any claims against or obligations or liabilities of HomeCom or any of
its Affiliates, except for those that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on HomeCom or prevent,
materially delay or materially impair its ability to consummate the transactions
contemplated by this Agreement.
4.7 Compliance with Laws. Except as disclosed in HomeCom's Reports
filed prior to the Closing Date, the businesses of HomeCom and its Subsidiaries
have not been conducted in violation of any Laws. Except as disclosed in the
HomeCom's Reports filed prior to the Closing Date, no investigation or review by
any Governmental Entity with respect to the HomeCom or any of its Subsidiaries
is pending or, to the actual knowledge of its executive officers, threatened,
nor has any Governmental Entity indicated an intention to conduct the same,
except for those the outcome of which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it or prevent, materially
delay or materially impair its ability to consummate the transactions
contemplated by this Agreement.
4.8 Insurance. Schedule 4.8 to this Agreement is a complete list
accurately describing all insurance policies held by HomeCom concerning its
businesses and properties and any officer or director of HomeCom. All such
policies are in the respective principal amounts set forth in Schedule 4.8 and
are in full force and effect as of the Closing Date. HomeCom has not received
written notice of any pending or threatened termination or retroactive premium
increase with respect such policies, and HomeCom is in compliance in all
material respects with all conditions contained therein. There are no pending
claims against such insurance by HomeCom or any individual or entity covered
under such policies as to which insurers have denied liability and no defenses
provided by insurers under reservations of rights. HomeCom does not self insure
any risk under any such policies other than applicable deductibles. None of the
policies listed on Schedule 4.8 shall terminate or be terminable pursuant to
their terms as a result of the consummation of the transactions contemplated
hereby.
4.9 Brokers and Finders. Except for Greenfield, neither HomeCom nor any
of its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the Exchange or the other transactions contemplated in this
Agreement.
4.10 Indebtedness. As of the date hereof, HomeCom has incurred the
indebtedness and obligations listed on Schedule 4.10, which schedule lists that
certain accrued dividend liability owed to a preferred stockholder of HomeCom
(the "ACCRUED DIVIDEND LIABILITY"). As of the Closing Date the Accrued Dividend
Liability will have been paid or otherwise satisfied.
4.11 Contracts. Except as set forth on Schedule 4.11 hereto, neither
HomeCom nor its Subsidiaries are a party to any material contracts, leases,
arrangements or commitments (whether oral or written) or is a party to or bound
by or affected by any contract, lease, arrangement or commitment (whether oral
or written) relating to: (a) the employment of any person; (b) collective
bargaining with, or any representation of any employees by, any labor union or
association; (c) the acquisition of services, supplies, equipment or other
personal property; (d) the purchase or sale of real property; (e) distribution,
agency or construction; (f) lease of real or personal property as lessor or
lessee or sublessor or sublessee; (g) lending or advancing of funds; (h)
borrowing of funds or receipt of credit; (i) incurring any obligation or
liability; or (j) the sale of personal property.
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4.12 As of the Closing, all of the holders of the Company's Series B
Convertible Preferred Stock, Series C Convertible Stock, Series D Convertible
Preferred Stock, and Series E Convertible Preferred Stock have executed
forebearance as to certain default and given their consents to the transactions
contemplated by the Agreement pursuant to the B-E Consents.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY, POLYMATE AND GREENFIELD
Each of the Company, Polymate and Greenfield (for these purposes, each,
a "STOCKHOLDER") severally (and not jointly) represents and warrants to HomeCom,
solely with respect to each as a Stockholder, that:
5.1 Accredited Investor. The Stockholder is an "accredited investor"
(as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act), and has such knowledge and experience in financial business
matters that the Stockholder is capable of evaluating the merits and risks of
the Exchange. The Stockholder's residence or, if other than a natural person,
its principal office, is located in the jurisdiction indicated in the address of
such Stockholder opposite its name on the signature page hereof.
5.2 Review of SEC Filings. The Stockholder has had the opportunity to
review the HomeCom's Reports.
5.3 Opportunity for Investigation. HomeCom has given the Stockholder
the opportunity to meet with HomeCom's directors and executive officers for the
purpose of asking questions and receiving answers concerning the terms and
conditions of the Exchange, and to obtain any additional information that
HomeCom may possess or can acquire without unreasonable effort or expense that
is necessary to verify the accuracy of any information that HomeCom has
furnished the Stockholder in connection with the Exchange.
5.4 Restricted Securities. The Stockholder understands and acknowledges
that the Exchange Shares, the Polymate Shares and Greenfield Shares being issued
to the respective Stockholders in the Exchange are "restricted securities," (as
such terms is defined in Rule 144(a)(3) under the Securities Act) that the
certificate or certificates evidencing those shares will bear a legend,
substantially in the form set forth below, indicating that those shares are
restricted securities, and that those shares may not be Licensed except pursuant
to an effective registration statement under the Securities Act or an available
exemption from such registration.
The legend referred to above will be substantially as follows:
"These securities have been issued pursuant to an exemption under the
Securities Act of 1933 and are restricted securities, and neither such
securities nor any interest therein may be offered, sold, pledged,
hypothecated, made the subject of a gift or otherwise Licensed, for
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value or otherwise, without the written approval of counsel for the
issuer making specific reference to this certificate. The transfer
agents of the issuer have been instructed to register transfers of the
shares evidenced by this certificate only in accordance with the
foregoing instructions."
5.5 Stockholder's Intent. The Stockholders are acquiring the Exchange
Shares, the Polymate Shares and Greenfield Shares, respectively, and such
acquisition is for the Stockholders' own account, for investment purposes, and
not with a view towards their distribution, except such distribution is
permitted under applicable law or with the knowledge of HomeCom.
5.6 Enforceability. This Agreement is the Stockholders' valid and
binding obligation, enforceable against the Stockholder in accordance with it
terms.
ARTICLE VI.
POST-CLOSING COVENANTS
6.1 Financial Statements. The parties shall cooperate in preparing
and/or causing to be prepared the information and financial statements required
by Form 8-K under the Exchange Act. As soon as practicable after the Closing
Date, but in no event later than forty-five (45) days after the Closing Date,
HomeCom shall deliver its audited financial statements as of and for the year
ended December 31, 2002, and such audit shall have been conducted by such
accounting firm mutually acceptable to the parties.
6.2 Access; Consultation.
(a) Upon reasonable notice, and except as may be prohibited by
applicable Law, HomeCom and Company each shall (and shall cause their
Subsidiaries to) afford to the other and the employees, agents and
representatives (including any attorney or accountant retained by either party)
of either party, as the case may be, reasonable access, during normal business
hours throughout the period prior to the Closing Date, to its properties, books,
Contracts and records and, during such period, each shall (and shall cause their
Subsidiaries to) furnish promptly to the other all information concerning its
business, properties and personnel as may reasonably be requested, provided that
no investigation pursuant to this Section 6.2 shall affect or be deemed to
modify any representation or warranty under this Agreement, and provided,
further, that the foregoing shall not require HomeCom or the Company to permit
any inspection, or to disclose any information, that in the reasonable judgment
of HomeCom or the Company, as the case may be, would result in the disclosure of
any trade secrets of third parties or violate any of its obligations with
respect to confidentiality if HomeCom or the Company, as the case may be, shall
have used all reasonable efforts to obtain the consent of such third party to
such inspection or disclosure. All requests for information made pursuant to
this Section 6.2 shall be directed to an executive officer of HomeCom or the
Company, as the case may be, or such Person as may be designated by any such
executive officer, as the case may be.
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(b) Subject to applicable Laws relating to the exchange of
information, from the Agreement Date to the Closing Date, the Company and
HomeCom agree to consult with each other on a regular basis on a schedule to be
agreed with regard to their respective operations.
6.3 Other Actions; Notification.
(a) The Company and HomeCom shall cooperate with each other
and use (and shall cause their respective Subsidiaries to use) their respective
reasonable best efforts (i) to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable on its part under
this Agreement and the applicable Laws to consummate and make effective the
Exchange and the other transactions contemplated by this Agreement as soon as
practicable, including (A) obtaining opinions of their respective accountants,
if required, (B) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions, filings
and other documents, and (C) instituting court actions or other proceedings
necessary to obtain the approvals required to consummate the Exchange or the
other transactions contemplated by this Agreement or defending or otherwise
opposing all court actions or other proceedings instituted by a Governmental
Entity or other Person for purposes of preventing the consummation of the
Exchange and the other transactions contemplated by this Agreement and (ii) to
obtain as promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Exchange or any
of the other transactions contemplated by this Agreement; provided, however,
that nothing in this Section 6.3(a) shall require either party to agree to any
divestitures or hold separate or similar arrangements in order to obtain
approval of the transactions contemplated by this Agreement if such divestitures
or arrangements would reasonably be expected to have a Material Adverse Effect
on the Company or HomeCom, or a Material Adverse Effect on the expected benefits
of the Exchange to the Company or HomeCom. Subject to applicable Laws relating
to the exchange of information, the Company and HomeCom shall have the right to
review in advance, and to the extent practicable each will consult the other on,
all the information relating to the Company or HomeCom, as the case may be, that
appear in any filing made with, or written materials submitted to, any third
party and/or any Governmental Entity in connection with the Exchange and the
other transactions contemplated by this Agreement. In exercising the foregoing
right, each of the Company and HomeCom shall act reasonably and as promptly as
practicable.
(b) The Company and HomeCom each shall, upon request by the
other, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with any Registration
Statement or filing with the SEC made by HomeCom or the Company in connection
with the Exchange and the transactions contemplated by this Agreement.
(c) The Company and HomeCom each shall keep the other apprised
of the status of matters relating to completion of the transactions contemplated
by this Agreement, including promptly furnishing the other with copies of notice
or other communications received by the Company or HomeCom, as the case may be,
or any of its Subsidiaries or, from any third party and/or any Governmental
Entity with respect to the Exchange and the other transactions contemplated by
this Agreement. Each of the Company and HomeCom shall give prompt notice to the
other of any change that is reasonably likely to result in a Material Adverse
Effect on it or of any failure of any conditions to the other party's
obligations to affect the Exchange.
11
6.4 Publicity. The initial press release with respect to the Exchange
shall be a joint, mutually agreed press release. Thereafter, HomeCom and the
Company shall consult with each other prior to issuing any press releases or
otherwise making public announcements with respect to the Exchange and the other
transactions contemplated by this Agreement and prior to making any filings with
any third party and/or any Governmental Entity (including any securities
exchange) with respect thereto, except as may be required by Law or by
obligations pursuant to any listing agreement with or rules of any securities
exchange.
6.5 Indemnification of Officers and Directors. The Company agrees that
all rights to indemnification existing in favor of any of the present or former
officers or directors of HomeCom (the "MANAGERS") as provided in HomeCom's
Certificate of Incorporation or Bylaws as in effect as of the Closing Date, and
in any agreement between HomeCom and any Manager with respect to matters
occurring prior to the Closing Date, shall survive the Exchange in accordance
with the terms of the applicable agreements or instruments. The Company further
covenants not to amend or repeal any provisions of the Certificate of
Incorporation or Bylaws of HomeCom in any manner which would adversely affect
the indemnification or exculpatory provisions contained therein as they pertain
to acts occurring prior to the Closing. The provisions of this Section 6.5 are
intended to be for the benefit of, and shall be enforceable by, each indemnified
party and his or her heirs and representatives.
6.6 Post-Exchange Indemnification. If the Company or any of its
successors or assigns (i) shall consolidate with or merge into any other
corporation or entity and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to such Person, then and in each
such case, proper provisions shall be made so that the successors and assigns of
the Company shall assume all of the obligations set forth in Section 6.5.
6.7 Stockholder Meeting. On or prior to December 31, 2003, HomeCom
shall have held a special meeting of stockholders in respect of the transactions
contemplated by that certain Preliminary Proxy Statement filed on or about
November 30, 2001, as amended in April, 2002 with the Securities and Exchange
Commission by HomeCom, and shall have received all necessary shareholder and
regulatory approval to consummate the transactions therein contemplated, or as
otherwise agreed by the Company, and such transactions shall have been
consummated and closed.
6.8 Increase in Authorized Shares and Reverse Split. On or prior to
December 31, 2003, HomeCom shall have held a special meeting of stockholders,
and as a result thereof, HomeCom shall have amended its Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
15,000,000 to 150,000,000, and implement a reverse split of issued and
outstanding Common Stock of not less than 1 for 10 as contemplated by the Proxy
Statement referred to in Section 6.7.
6.9 Registration Rights. The Exchange Shares, the Polymate Shares and
Greenfield Shares shall have piggy-back and demand rights with respect to
registration on a registration statement filed by HomeCom subsequent to the
Closing, either on Form S-l or other applicable form, for the resale of the
Common Stock of the HomeCom. Subsequent to the Closing, HomeCom and,
respectively, the Company, Polymate and Greenfield shall enter into separate
piggy-back and demand registration rights agreements for the registration, in a
commercially reasonable manner and time frame, of the Exchange Shares, the
Polymate Shares and Greenfield Shares. HomeCom shall pay all expenses of such
registration, other than broker commissions and discounts. A registration
statement covering such registration rights shall be filed by HomeCom within a
commercially reasonable time following request for registration.
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Exchange. The
respective obligation of each party to effect the Exchange is subject to the
satisfaction or waiver, if applicable, at or prior to the Closing Date, of each
of the following conditions:
(a) Exhibits and Schedules. The Exhibits and Schedules shall
have been delivered and accepted by the Company and HomeCom (such acceptance to
be in each party's sole and absolute discretion);
(b) Each of the Company and HomeCom shall have completed its
respective continuing business, legal and accounting due diligence review, shall
be satisfied with the results of such review in each's sole and absolute
discretion, and shall have notified the other that it has completed such review;
and
(c) Laws and Orders. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Exchange or the
other transactions contemplated by this Agreement and the License Agreement
(collectively, an "ORDER"), and no Governmental Entity shall have instituted any
proceeding or threatened to institute any proceeding seeking any such Order.
7.2 Condition to Obligations of the Company. The obligations of the
Company to effect the Exchange are also subject to the satisfaction or waiver by
the Company at or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of HomeCom set forth in this Agreement (i) to the extent qualified by
Material Adverse Effect shall be true and correct and (ii) to the extent not
qualified by Material Adverse Effect shall be true and correct (except that this
clause (ii) shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct, taken together, would not
reasonably be expected to have a Material Adverse Effect on HomeCom and would
not reasonably be expected to have a material adverse effect on the expected
benefits of the Exchange to the Company), in the case of each of (i) and (ii),
as of the Agreement Date and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date;
13
(b) Performance of Obligations of Homecom. Homecom shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, including the filing of
a Certificate of Designation, in the form annexed hereto as Exhibit B with the
Secretary of State of Delaware and issuance of the Exchange Shares to the
Company and the filing of a Certificate of Designation, in the form annexed
hereto as Exhibit C with the Secretary of State of Delaware and issuance of the
Additional Preferred Shares to the Company;
(c) Consents Under Agreements. HomeCom shall have obtained the
executed B-E Consents and the consent or approval of each Person whose consent
or approval shall be required in order to consummate the transactions
contemplated by this Agreement under any Contract to which HomeCom is a party,
except those for which the failure to obtain such consent or approval,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on HomeCom or a material adverse effect on the expected benefits
of the Exchange to Company (it being understood that the failure to meet the
conditions set forth in Sections 7.2 (d), (e), (f) and (g) below would
constitute a Material Adverse Effect on HomeCom);
(d) HomeCom shall deliver to the Company evidence satisfactory
to the Company that HomeCom's accounts payable have been reduced from $1.9
million to no more than $600,000 by the waiver or satisfaction of the Accrued
Dividend Liability;
(e) HomeCom shall deliver to Eurotech such executed corporate
governance documents of HomeCom (including written consents to action and
director resignations) as may be reasonably requested by Eurotech in order to
effect the changes to the board of directors and officers of HomeCom set forth
in Schedule 7.2(e), it being acknowledged and agreed that the parties intend to
effect such changes at or following the Closing, as the case may be pursuant to
such schedule;
(f) HomeCom shall deliver to the Company evidence satisfactory
to the Company that HomeCom has settled that certain dispute between HomeCom and
the landlord of HomeCom's leased real property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇, and the terms of such settlement shall be
satisfactory to the Company;
(g) HomeCom shall deliver to the Company evidence satisfactory
to the Company that the holders of Series B-E Preferred Stock have waived the
mandatory redemption and conversion provisions of the instruments of such
securities and extended the date of such mandatory redemption and conversion to
March 31, 2004, in each case pursuant to the B-E Consents; and
(f) HomeCom shall have filed with the Securities and Exchange
Commission and shall provide the Company with a certified copy of, its Annual
Report on Form 10-KSB for its fiscal year 2002.
14
7.3 Conditions to Obligation of HomeCom. The obligation of HomeCom to
effect the Exchange is also subject to the satisfaction or waiver by HomeCom at
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company, Polymate and Greenfield set forth in this Agreement
and the License Agreement (i) to the extent qualified by Material Adverse Effect
shall be true and correct, and (ii) to the extent not qualified by Material
Adverse Effect shall be true and correct (except that this clause (ii) shall be
deemed satisfied so long as any failures of such representations and warranties
to be true and correct, taken together, would not reasonably be expected to have
a Material Adverse Effect on the Company and would not reasonably be expected to
have a material adverse effect on the expected benefits of the Exchange to
HomeCom), in the case of each of (i) and (ii), as of the Agreement Date and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
(b) Performance of Obligations of Polymate. Polymate shall
have executed, or shall cause to be executed, such further undertakings as may
be satisfactory to Eurotech in respect of the Licensed Property; and
(c) Consents Under Agreements. The Company shall have obtained
the consent or approval of each Person whose consent or approval shall be
required in order to consummate the transactions contemplated by this Agreement
under any Contract to which the Company is a party, except those for which the
failure to obtain such consent or approval, individually or in the aggregate, is
not reasonably likely to have a Material Adverse Effect on the Company, or a
material adverse effect on the expected benefits of the Exchange to HomeCom.
ARTICLE VIII
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be terminated and
the Exchange may be abandoned at any time prior to the Closing Date by mutual
written consent of HomeCom and the Company, through action of their respective
Boards of Directors.
8.2 Termination by Either Company or HomeCom. This Agreement may be
terminated and the Exchange may be abandoned at any time prior to the Closing
Date by action of the Board of Directors of either Company or HomeCom if (i) the
Exchange shall not have been consummated by April 15, 2003 (the "TERMINATION
DATE"), or (ii) any order permanently restraining, enjoining or otherwise
prohibiting consummation of the Exchange shall become final and non-appealable;
provided, that the right to terminate this Agreement pursuant to clause (i)
above shall not be available to any party that has breached in any material
respect its obligations under this Agreement in any manner that shall have
approximately contributed to the failure of the Exchange to be consummated.
15
8.3 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Exchange in accordance with the
provisions of this Article, this Agreement shall become void and of no effect
with no liability on the part of any party to this Agreement or of any of its
directors, officers, employees, agents, legal or financial advisors or other
representatives; provided, however, no such termination shall relieve any party
to this Agreement from any liability for damages resulting from any breach of
this Agreement.
ARTICLE IX.
INDEMNIFICATION AND SURVIVAL
9.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants and obligations in this Agreement, and
any certificate or document delivered pursuant to this Agreement, shall survive
the closing until the second anniversary of the Closing Date. The right to
indemnification and payment of damages for third party claims based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
damages for third party claims based on such representations, warranties,
covenants and obligations.
9.2 Indemnification and Payment of Damages by HomeCom. HomeCom will
indemnify and hold harmless the Company and will pay to the Company the amount
of any damages arising, directly or indirectly, from or in connection with third
party claims with respect to (a) any material breach of any representation or
warranty made by HomeCom in this Agreement or any other certificate or document
delivered by HomeCom pursuant to this Agreement, or (b) any material breach by
HomeCom of any agreement, covenant or obligation of HomeCom in this Agreement.
Any indemnity pursuant to this Section 9.2 shall only be available to the extent
that such damages pursuant to (a) or (b) above exceed $25,000 in aggregate.
9.3 Indemnification and Payment of Damages by the Company. The Company
will indemnify and hold harmless HomeCom, and will pay to HomeCom the amount of
any damages arising, directly or indirectly, from or in connection with third
party claims with respect to (a) any material breach of any representation or
warranty made by the Company in this Agreement or in any certificate delivered
by the Company pursuant to this Agreement or (b) any material breach by the
Company of any agreement, covenant or obligation of the Company in this
Agreement. Any indemnity pursuant to this Section 9.3 shall only be available to
the extent that such damages pursuant to (a) or (b) above exceed $25,000 in
aggregate.
9.4 Procedure for Indemnification - Third Party Claims.
(a) Promptly after receipt by an indemnified party under
Section 9.2 or 9.3 of notice of the commencement of any proceeding against it (a
"PROCEEDING"), such indemnified party will, if a claim is to be made against an
16
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 9.4(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves Taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this ARTICLE IX for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of a Law or any violation of the rights of any Person
and no effect on any other claims that may be made against the indemnified
party, and (B) the sole relief provided is monetary damages that are paid in
full by the indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims effected
without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
business days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
17
(d) Notwithstanding Section 11.4 hereof, each of the Company
and HomeCom hereby consents to the non-exclusive jurisdiction of any court in
which a Proceeding is brought against any indemnified party for purposes of any
claim that an indemnified party may have under this Agreement with respect to
such Proceeding or the matters alleged therein.
ARTICLE X.
[INTENTIONALLY OMITTED]
ARTICLE XI.
MISCELLANEOUS AND GENERAL
11.1 Modification or Amendment. Subject to the provisions of the
applicable law, the parties to this Agreement may modify or amend this Agreement
by written agreement executed and delivered by a duly authorized officer of the
respective parties.
11.2 Waiver.
(a) Any provision of this Agreement may be waived prior to the
Closing Date if, and only if, such waiver is in writing and executed and
delivered by a duly authorized officer of the respective parties.
(b) No failure or delay by any party in exercising any right,
power or privilege under this Agreement shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. Except
as otherwise provided in this Agreement, the rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by Law.
11.3 Counterparts. This Agreement may be executed in any number of
counterparts, and by facsimile, each such counterpart being deemed to be an
original instrument, and all such counterparts shall together constitute the
same agreement.
11.4 Governing Law and Venue; Waiver of Jury Trial.
(a) This Agreement shall be deemed to be made in and in all
respects shall be interpreted, construed and governed by and in accordance with
New York law without regard to the conflict of law principles thereof, except
that matters relating to the corporate governance of HomeCom shall be governed
by Delaware law. The parties hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of New York and
of the United States of America located in the Borough of Manhattan (the "NEW
YORK COURTS") for any litigation arising out of or relating to this Agreement
and the transactions contemplated by this Agreement (and agree not to commence
any litigation relating thereto except in such New York Courts), waive any
objection to the laying of venue of any such litigation in the New York Courts
and agree not to plead or claim in any New York Court that such litigation
brought therein has been brought in an inconvenient forum.
18
(b) Each party acknowledges and agrees that any controversy
which may arise under this Agreement is likely to involve complicated and
difficult issues, and therefore each party hereby irrevocably and
unconditionally waives any right such party may have to a trial by jury in
respect of any litigation directly or indirectly arising out of or relating to
this Agreement, or the transactions contemplated by this Agreement. Each party
certifies and acknowledges that (i) no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each
such party understands and has considered the implications of this waiver, (iii)
each party makes this waiver voluntarily, and (iv) each party has been induced
to enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 11.4.
11.5 Notices. Notices, requests, instructions or other documents to be
given under this Agreement shall be in writing and shall be deemed given, (i)
three business days following sending by registered or certified mail, postage
prepaid, (ii) when sent if sent by facsimile, provided that written or other
confirmation of receipt is obtained by the sending party, (iii) when delivered,
if delivered personally to the intended recipient, and (iv) one business day
later, if sent by overnight delivery via a national courier service, and in each
case, addressed to a party at the following address for such party:
If to the Company:
Eurotech, Ltd.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇, President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Ellenoff ▇▇▇▇▇▇▇▇ Schole & Cyruli, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Polymate:
Polymate Ltd.
B'nai ▇▇▇▇▇ ▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇-▇▇▇▇
If to HomeCom:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
19
with a copy to:
▇▇▇▇▇▇▇ & Prager, LLP
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Greenfield:
Greenfield Capital Partners LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATT: ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
11.6 Entire Agreement. This Agreement (including any schedules or
exhibits to this Agreement, whether deliver as of the date hereof or at the
Closing) constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties, both written and
oral, among the parties, with respect to the subject matter of this Agreement.
Each party to this Agreement agrees that, except for the representations and
warranties contained in this Agreement, neither the Company nor HomeCom makes
any other representations or warranties, and each hereby disclaims any other
representations or warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement or the transactions
contemplated by this Agreement, notwithstanding the delivery or disclosure to
the other or the other's representatives of any documentation or other
information with respect to any one or more of the foregoing.
11.7 No Third Party Beneficiaries. This Agreement is not intended to
confer upon any Person other than the parties to this Agreement any rights or
remedies under this Agreement.
11.8 Obligations of the Parent. Whenever this Agreement requires a
Subsidiary of either the Company or HomeCom to take any action, such requirement
shall be deemed to include an undertaking on the part of the Company, or
HomeCom, respectively, to cause such Subsidiary to take such action. For
purposes of this Agreement, the term "SUBSIDIARY" shall mean, when used with
reference to any party hereto, any corporation or other entity of which such
party or any other subsidiary of such party directly or indirectly (i) is a
general or managing partner or managing member, (ii) owns (A) a majority of the
outstanding voting securities or interests of which, having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other entity or
(B) securities in such corporation or entity which grant such party or its
subsidiary the right to perform or approve management functions of such
corporation or entity or (iii) owns more than fifty percent (50%) of the value
of the outstanding equity securities or interests (including membership
interests) of which are owned directly or indirectly by such party.
20
11.9 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions of this Agreement.
If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefore in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
11.10 Interpretation. The table of contents and headings in this
Agreement are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions of this Agreement. Where a reference in this Agreement is made to a
schedule, such reference shall be to a schedule to this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
11.11 Assignment. This Agreement shall not be assignable by operation
of law or otherwise. Any assignment in contravention of the preceding sentence
shall be null and void.
11.12 Further Assurances. Each party shall do and perform or cause to
be done and performed, all such further acts and things, and shall execute and
delivery all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement, including the schedules and exhibits
thereto, and the consummation of the transactions contemplated hereby.
11.13 Confidentiality. Except to the extent expressly authorized by
this Agreement or otherwise required by law or agreed to in writing by the
applicable party, the parties agree that all parties hereto shall keep
completely confidential and shall not publish or otherwise disclose and shall
not use for any purpose other than proper performance hereunder any information
furnished to it by the other parties pursuant to this Agreement (including the
schedules and exhibits hereto).
21
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
HOMECOM COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
EUROTECH, LTD.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and CEO
Solely with respect to ARTICLE V
and ARTICLE XI hereof:
POLYMATE, LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: General Manager
GREENFIELD CAPITAL PARTNERS LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Managing Director
SCHEDULES
Schedule 3.3(b) - Prior Contracts
Schedule 3.5 - Litigation and Liabilities
Schedule 3.6 - Violations
Schedule 4.2 - HomeCom Authorized Capital
Schedule 4.5 - 10% Holders
Schedule 4.8 - HomeCom Insurance
Schedule 4.11 - HomeCom Contracts
Schedule 7.2(e) - Corporate Governance Matters
EXHIBITS
EXHIBIT A Licensed Property
EXHIBIT B Certificate of Designation of HomeCom Series
F Convertible Preferred Stock
EXHIBIT C Certificate of Designations of HomeCome Series
G Convertible Preferred Stock
EXHIBIT A
LICENSED PROPERTY
1. EKOR(TM)
EKOR(TM) is a family of non-toxic advanced composite polymer materials
that provides for effective and unique means of containment of nuclear and
hazardous materials and prevents radioactive contaminants from spreading.
EKOR(TM) is available as a coating or sealing agent with varying viscosity and
as flexible or rigid foam.
2. EMR/AC
Electromagnetic Radiography(TM) ("EMR") and Acoustic Core(TM) ("AC")
provide integrated remote sensing capabilities that produce 3D images of
subsurface contaminants with a high degree of discrimination and precision. They
offer large area coverage at high resolution and are significantly more cost
effective than monitoring methods currently used for environmental assessments.
3. Hybrid Nonisocyanate Polyurethane ("HNIPU")
HNIPU is a technology intended to improve upon conventional monolithic
polyurethanes, which have good mechanical properties, but are porous, with poor
hydrolytic stability and moderate permeability. HNIPU is modified polyurethane
with lower permeability, increased chemical resistance properties and material
synthesis that has superior environmental characteristics to conventional
polyurethanes. HNIPUs form into a material with practically no pores and
therefore, do not absorb moisture on the surface or in fillers during formation.
# # #
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION OF
HOMECOM SERIES F CONVERTIBLE PREFERRED STOCK
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF
SERIES F CONVERTIBLE PREFERRED STOCK
OF
HOMECOM COMMUNICATIONS, INC.
HomeCom Communications, Inc. (the "Company"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the Board of Directors
of the Company by the Certificate of Incorporation of the Company, and pursuant
to Section 151 of the General Corporation Law of the State of Delaware, the
Board of Directors of the Company at a meeting duly held, adopted resolutions
(i) authorizing a series of the Company's authorized preferred stock, $.01 par
value per share, and (ii) providing for the designations, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of 13,500 shares of Series F Convertible
Preferred Stock of the Company, as follows:
RESOLVED, that the Company is authorized to issue 13,500 shares of
Series F Convertible Preferred Stock (the "Series F Preferred Shares"), $.01 par
value per share, which shall have the following powers, designations,
preferences and other special rights:
(1) DIVIDENDS. The Series F Preferred Shares shall not bear any
dividends except as provided herein.
(2) HOLDER'S CONVERSION OF SERIES F PREFERRED SHARES. A holder of
Series F Preferred Shares shall have the right, at such holder's option, to
convert the Series F Preferred Shares into shares of the Company's common stock,
$.0001 par value per share (the "Common Stock"), on the following terms and
conditions:
(a) CONVERSION RIGHT. At any time or times on or after the
earlier of (i) December 31, 2003 or (ii) the first date on which the Company's
Certificate of Incorporation is validly amended such that the number of
authorized shares of Common Stock (the "Authorized Common") equals or exceeds
the sum (the "Common Equivalents") of (i) the number of issued and outstanding
shares of Common Stock plus (ii) the aggregate of the number of shares of Common
Stock into which all other issued and outstanding shares of any class of Company
stock are at any time convertible (the period of time beginning on the later of
the dates referred to in (i) and (ii) above and continuing for so long as the
Authorized Common equals or exceeds the Common Equivalents shall be referred to
herein as the "Conversion Period"), any holder of Series F Preferred Shares
shall be entitled to convert each Series F Preferred Share, in whole or in part,
into fully paid and nonassessable shares (rounded to the nearest whole share in
accordance with Section 2(e) below) of Common Stock at a rate, subject to
adjustment as provided herein, of 10,000 Shares of Common Stock for each Series
F Preferred Share (the "Conversion Rate") as and when the creation of such
Common Stock is duly authorized by all necessary corporate action, at the
Conversion Rate;
(b) ADJUSTMENT TO CONVERSION RATE - DILUTION AND OTHER EVENTS.
In order to prevent dilution of the rights granted under this Certificate of
Designations, the Conversion Rate will be subject to adjustment from time to
time as provided in this Section 2(b).
(i) ADJUSTMENT OF FIXED CONVERSION RATE UPON SUBDIVISION
OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of
its outstanding shares of Common Stock into a greater
number of shares, the Conversion Rate in effect
immediately prior to such subdivision will be
proportionately increased. If the Company at any time
combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding
shares of Common Stock into a smaller number of
shares, the Conversion Rate in effect immediately
prior to such combination will be proportionately
reduced.
(ii) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION,
MERGER, OR SALE. Any recapitalization,
reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the
Company's assets to another Person (as defined below)
or other similar transaction which is effected in
such a way that holders of Common Stock are entitled
to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect
to or in exchange for Common Stock is referred to
herein as in "Organic Change." Prior to the
consummation of any Organic Change, the Company will
make appropriate provision to insure that each of the
holders of the Series F Preferred Shares will
thereafter have the right to acquire and receive in
lieu of or in addition to (as the case may be) the
shares of Common Stock immediately theretofore
acquirable and receivable upon the conversion of such
holder's Series F Preferred Shares, such shares of
stock, securities or assets as may be issued or
payable with respect to or in exchange for the number
of shares of Common Stock immediately theretofore
acquirable and receivable upon the conversion of such
holder's Series F Preferred Shares had such Organic
Change not taken place. In any such case, the Company
will make appropriate provision (in form and
substance satisfactory to the holders of a majority
of the Series F Preferred Shares then outstanding)
with respect to such holders' rights and interests to
insure that the provisions of this Section 2(b) will
thereafter be applicable to the Series F Preferred
Shares. The Company will not effect any such
consolidation, merger or sale, unless prior to the
consummation thereof the successor entity (if other
than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes,
by written instrument (in form and substance
satisfactory to the holders of a majority of the
Series F Preferred Shares then outstanding), the
obligation to deliver to each holder of Series F
Preferred Shares such shares of stock, securities or
assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
For purposes of this Agreement, "PERSON" shall mean
an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or
any department or agency thereof.
(iii) SPIN OFF. If, at any time prior to a Conversion Date,
the Company consummates a spin off or otherwise
divests itself of a part of its business or
operations or disposes of all or of a part of its
assets in a transaction (the "Spin Off") in which the
Company does not receive just compensation for such
business, operations or assets, but causes securities
of another entity (the "Spin Off Securities") to be
issued to security holders of the Company, then the
Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which would
have been issued to the Holder had all of the
holder's Series F Preferred Shares outstanding on the
record date (the "Record Date") for determining the
amount and number of Spin Off Securities to be issued
to security holders of the Company been converted as
of the close of business on the trading day
immediately before the Record Date (the "Reserved
Spin Off Shares"), and (ii) to be issued to the
Holder on the conversion of all or any of the
outstanding Series F Preferred Shares, such amount of
the Reserved Spin Off Shares equal to (x) the
Reserved Spin Off Shares multiplied by (y) a
fraction, of which (a) the numerator is the principal
amount of the outstanding Series F Preferred Shares
then being converted, and (b) the denominator is the
principal amount of all the outstanding Series F
Preferred Shares.
(iv) NOTICES.
(A) Immediately upon any adjustment of the Conversion
Rate, the Company will give written notice thereof to
each holder of Series F Preferred Shares, setting
forth in reasonable detail and certifying the
calculation of such adjustment.
(B) The Company will give written notice to each holder
of Series F Preferred Shares at least twenty (20)
days prior to the date on which the Company closes
its books or takes a record (I) with respect to any
dividend or distribution upon the Common Stock, (II)
with respect to any pro rata subscription offer to
holders of Common Stock or (III) for determining
rights to vote with respect to any Organic Change,
dissolution or liquidation.
(C) The Company will also give written notice to each
holder of Series F Preferred Shares at least twenty
(20) days prior to the date on which any Organic
Change (as defined below), dissolution or liquidation
will take place.
(c) MECHANICS OF CONVERSION. Subject to the Company's ability
to fully satisfy its obligations under a Conversion Notice (as defined below) as
provided for in Section 5 below:
(i) HOLDER'S DELIVERY REQUIREMENTS. To convert Series F
Preferred Shares into full shares of Common Stock on
any date (the "Conversion Date"), the holder thereof
shall (A) deliver or transmit by facsimile, for
receipt on or prior to 11:59 p.m., Eastern Standard
Time, on such date, a copy of a fully executed notice
of conversion in the form attached hereto as Exhibit
I (the "Conversion Notice") to the Company or its
designated transfer agent (the "Transfer Agent"), and
(B) surrender to a common carrier for delivery to the
Company or the Transfer Agent as soon as practicable
following such date, the original certificates
representing the Series F Preferred Shares being
converted (or an indemnification undertaking with
respect to such shares in the case of their loss,
theft or destruction) (the "Preferred Stock
Certificates") and the originally executed Conversion
Notice.
(ii) COMPANY'S RESPONSE. Upon receipt by the Company of a
facsimile copy of a Conversion Notice, the Company
shall immediately send, via facsimile, a confirmation
of receipt of such Conversion Notice to such holder.
Upon receipt by the Company or the Transfer Agent of
the Preferred Stock Certificates to be converted
pursuant to a Conversion Notice, together with the
originally executed Conversion Notice, the Company or
the Transfer Agent (as applicable) shall, within five
(5) business days following the date of receipt, (A)
issue and surrender to a common carrier for overnight
delivery to the address as specified in the
Conversion Notice, a certificate, registered in the
name of the holder or its designee, for the number of
shares of Common Stock to which the holder shall be
entitled or (B) credit the aggregate number of shares
of Common Stock to which the holder shall be entitled
to the holder's or its designee's balance account at
The Depository Trust Company.
(iii) RECORD HOLDER. The person or persons entitled to
receive the shares of Common Stock issuable upon a
conversion of Series F Preferred Shares shall be
treated for all purposes as the record holder or
holders of such shares of Common Stock on the
Conversion Date.
(d) NASDAQ LISTING. So long as the Common Stock is listed for
trading on NASDAQ or an exchange or quotation system with a rule substantially
similar to NASDAQ Rule 4460(i) then, notwithstanding anything to the contrary
contained herein if, at any time, the aggregate number of shares of Common Stock
then issued upon conversion of the Series F Preferred Shares (including any
shares of capital stock or rights to acquire shares of capital stock issued by
the Corporation which are aggregated or integrated with the Common Stock issued
or issuable upon conversion of the Series F Preferred Shares for purposes of
such rule) equals 19.99% o the "Outstanding Common Amount" (as hereinafter
defined), the Series F Preferred Shares shall, from that time forward, cease to
be convertible into Common Stock in accordance with the terms hereof, unless the
Corporation (i) has obtained approval of the issuance of the Common Stock upon
conversion of the Series F Preferred Shares by a majority of the total votes
cast on such proposal, in person or by proxy, by the holders of the
then-outstanding Common Stock (not including any shares of Common Stock held by
present or former holders of Series F Preferred Shares that were issued upon
conversion of Series F Preferred Shares (the "Stockholder Approval"), or (ii)
shall have otherwise obtained permission to allow such issuances from NASDAQ in
accordance with NASDAQ Rule 4460(i). If the Corporation's Common Stock is not
then listed on NASDAQ or an exchange or quotation system that has a rule
substantially similar to Rule 4460(i) then the limitations set forth herein
shall be inapplicable and of no force and effect. For purposes of this
paragraph, "Outstanding Common Amount" means (i) the number of shares of the
Common Stock outstanding on the date of issuance of the Series F Preferred
Shares pursuant to the Purchase Agreement plus (ii) any additional shares of
Common Stock issued thereafter in respect of such shares pursuant to a stock
dividend, stock split or similar event. The maximum number of shares of Common
Stock issuable as a result of the 19.99% limitation set forth herein is
hereinafter referred to as the "Maximum Share Amount." With respect to each
holder of Series F Preferred Shares, the Maximum Share Amount shall refer to
such holder's pro rata share thereof. In the event that Corporation obtains
Stockholder Approval or the approval of NASDAQ, or by reason of the
inapplicability of the rules of NASDAQ or otherwise, the Corporation concludes
that it is able to increase the number of shares to be issued above the Maximum
Share Amount (such increased number being the "New Maximum Share Amount"), the
references to Maximum Share Amount, above, shall be deemed to be, instead,
references to the greater New Maximum Share Amount. In the event that
Stockholder Approval is obtained and there are insufficient reserved or
authorized shares, or a registration statement covering the additional shares of
Common Stock which constitute the New Maximum Share Amount is not effective
prior to the Maximum Share Amount being issued (if such registration statement
is necessary to allow for the public resale of such securities), the Maximum
Share Amount shall remain unchanged; provided, however, that the holders of
Series F Preferred Shares may grant an extension to obtain a sufficient reserved
or authorized amount of shares or of the effective date of such registration
statement. In the event that (a) the aggregate number of shares of Common Stock
actually issued upon conversion of the outstanding Series F Preferred Shares
represents at least twenty percent (20%) of the Maximum Share Amount and (b) the
sum of (x) the aggregate number of shares of Common Stock issued upon conversion
of Series F Preferred Shares plus (y) the aggregate number of shares of Common
Stock that remain issuable upon conversion of Series F Preferred Shares and
based on the Conversion Price then in effect), represents at least one hundred
percent (100%) of the Maximum Share Amount, the Corporation will use its best
reasonable efforts to seek and obtain Stockholder Approval (or obtain such other
relief as will allow conversions hereunder in excess of the Maximum Share
Amount) as soon as practicable following the Triggering Event and before the
Mandatory Redemption Date.
(e) FRACTIONAL SHARES. The Company shall not issue any
fraction of a share of Common Stock upon any conversion. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of the Series F Preferred Shares by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of a fraction of a share of Common Stock. lf, after the aforementioned
aggregation, the issuance would result in the issuance of a fraction of a share
of Common Stock, the Company shall round such fraction of a share of Common
Stock up or down to the nearest whole share.
(f) TAXES. The Company shall pay any and all taxes which may
be imposed upon it with respect to the issuance and delivery of Common Stock
upon the conversion of the Series F Preferred Shares.
(3) REISSUANCE OF CERTIFICATES. In the event of a conversion or
redemption pursuant to this Certificate of Designations of less than all of the
Series F Preferred Shares represented by a particular Preferred Stock
Certificate, the Company shall promptly cause to be issued and delivered to the
holder of such Series F Preferred Shares a Preferred Stock Certificate
representing the remaining Series F Preferred Shares which have not been so
converted or redeemed.
(4) RESERVATION OF SHARES. During the Conversion Period, the Company
shall, so long as any of the Series F Preferred Shares are outstanding, reserve
and keep available out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Series F Preferred Shares, such
number of shares of Common Stock as shall from time to time be sufficient to
affect the conversion of all of the Series F Preferred Shares then outstanding;
provided that the number of shares of Common Stock so reserved shall at no time
be less than 100% of the number of shares of Common Stock for which the Series F
Preferred Shares are at any time convertible.
(5) VOTING RIGHTS. On all matters submitted to a vote of shareholders,
the holders of the Series F Preferred Shares shall be entitled to vote on a
matter with holders of Common Stock, voting together as one class, with each
share of Series F Preferred Shares entitled to a number of votes equal to the
number of shares of Common Stock into which it is then convertible, using the
record date for the taking of such vote of shareholders. The Series F Shares
shall have no voting rights except as provided in the preceding sentence or in
the General Corporation Law of the State of Delaware.
(6) LIQUIDATION, DISSOLUTION, WINDING-UP. In the event of any voluntary
or involuntary liquidation, dissolution, or winding up of the Company, the
holders of the Series F Preferred Shares shall be entitled to receive in cash
out of the assets of the Company, whether from capital or from earnings
available for distribution to its stockholders (the "Preferred Funds"), before
any amount shall be paid to the holders of any of the capital stock of the
Company of any class junior in rank to the Series F Preferred Shares (other than
the Series G Preferred Shares which shall be equal in rank) in respect of the
preferences as to the distributions and payments on the liquidation, dissolution
and winding up of the Company, an amount per Series F Preferred Share equal to
$1,000 (such sum being referred to as the "Liquidation Value"); provided that,
if the Preferred Funds are insufficient to pay the full amount due to the
holders of Series F Preferred Shares and holders of shares of other classes or
series of preferred stock of the Company that are of equal rank with the Series
F Preferred Shares as to payments of Preferred Funds (the "Pari Passu Shares"),
then each holder of Series F Preferred Shares and Pari Passu Shares shall
receive a percentage of the Preferred Funds equal to the full amount of
Preferred Funds payable to such holder as a liquidation preference, in
accordance with their respective Certificate of Designations, Preferences and
Rights, as a percentage of the full amount of Preferred Funds payable to all
holders of Series F Preferred Shares and Pari Passu Shares. The purchase or
redemption by the Company of stock of any class in any manner permitted by law,
shall not for the purposes hereof, be regarded as a liquidation, dissolution or
winding up of the Company. Neither the consolidation or merger of the Company
with or into any other Person, nor the sale or transfer by the Company of less
than substantially all of its assets, shall, for the purposes hereof, be deemed
to be a liquidation, dissolution or winding up of the Company. No holder of
Series F Preferred Shares shall be entitled to receive any amounts with respect
thereto upon any liquidation, dissolution or winding up of the Company other
than the amounts provided for herein.
(7) PREFERRED RATE. All shares of Common Stock shall be of junior rank
to all Series F Preferred Shares in respect to the preferences as to
distributions and payments upon the liquidation, dissolution, and winding up of
the Company. The rights of the Series F Preferred Shares shall be subject to the
Preferences and relative rights of the Series B Convertible Preferred Stock,
Series C Convertible Preferred Stock, Series D Convertible Preferred Stock, and
Series E Convertible Preferred Stock. Without the prior express written consent
of the holders of not less than a majority of the then outstanding Series F
Preferred Shares, the Company shall not hereafter authorize or issue additional
or other capital stock (other than the Series G Preferred Shares which shall be
equal in rank) that is of senior or equal rank to the Series F Preferred Shares
in respect of the preferences as to distributions and payments upon the
liquidation, dissolution and winding up of the Company. Without the prior
express written consent of the holders of not less than a majority of the then
outstanding Series F Preferred Shares, the Company shall not hereafter authorize
or make any amendment to the Company's Certificate of Incorporation or bylaws,
or make any resolution of the board of directors with the Delaware Secretary of
State containing any provisions, which would materially and adversely affect or
otherwise impair the rights or relative priority of the holders of the Series F
Preferred Shares relative to the holders of the Common Stock or the holders of
any other class of capital stock. In the event of the merger or consolidation of
the Company with or into another corporation, the Series F Preferred Shares
shall maintain their relative powers, designations, and preferences provided for
herein and no merger shall result inconsistent therewith.
(8) RESTRICTION ON DIVIDENDS. If any Series F Preferred Shares are
outstanding, without the prior express written consent of the holders of not
less than a majority of the then outstanding Series F Preferred Shares, the
Company shall not directly or indirectly declare, pay or make any dividends or
other distributions upon any of the Common Stock so long as written notice
thereof has not been given to holders of the Series F Preferred Shares at least
30 days prior to the earlier of (a) the record date taken for or (b) the payment
of any such dividend or other distribution. Notwithstanding the foregoing, this
Section 8 shall not prohibit the Company from declaring and paying a dividend in
cash with respect to the Common Stock so long as the Company: (i) pays
simultaneously to each holder of Series F Preferred Shares an amount in cash
equal to the amount such holder would have received had all of such holder's
Series F Preferred Shares been converted to Common Stock pursuant to Section 2
hereof one business day prior to the record date for any such dividend, and (ii)
after giving effect to the payment of any dividend and any other payments
required in connection therewith including to the holders of the Series F
Preferred Shares, the Company has in cash or cash equivalents an amount equal to
the aggregate of: (A) all of its liabilities reflected on its most recently
available balance sheet, (B) the amount of any indebtedness incurred by the
Company or any of its subsidiaries since its most recent balance sheet and (C)
120% of the amount payable to all holders of any shares of any class of
preferred stock of the Company assuming a liquidation of the Company as the date
of its most recently available balance sheet.
(9) VOTE TO CHANGE THE TERMS OF SERIES F PREFERRED SHARES. The
affirmative vote at a meeting duly called for such purpose, or the written
consent without a meeting of the holders of not less than 66-2/3% of the then
outstanding Series F Preferred Shares, shall be required for any change to this
Certificate of Designations or the Company's Certificate of Incorporation which
would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Series F Preferred Shares.
(10) LOST OR STOLEN CERTIFICATES. Upon receipt by the Company of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing the Series F
Preferred Shares, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the holder to the Company and, in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date; provided, however, the Company shall not
be obligated to re-issue preferred stock certificates if the holder
contemporaneously requests the Company to convert such Series F Preferred Shares
into Common Stock.
(11) WITHHOLDING TAX OBLIGATIONS. Notwithstanding anything herein to
the contrary, to the extent that the Company receives advice in writing from its
counsel that there is a reasonable basis to believe that the Company is required
by applicable federal laws or regulations and delivers a copy of such written
advice to the holders of the Series F Preferred Shares so effected, the Company
may reasonably condition the making of any distribution (as such term is defined
under applicable federal tax law and regulations) in respect of any Series F
Preferred Share on the holder of such Series F Preferred Shares depositing with
the Company an amount of cash sufficient to enable the Company to satisfy its
withholding tax obligations (the "Withholding Tax") with respect to such
distribution. Notwithstanding the foregoing or anything to the contrary, if any
holder of the Series F Preferred Shares so effected receives advice in writing
from its counsel that there is a reasonable basis to believe that the Company is
not so required by applicable federal laws or regulations and delivers a copy of
such written advice to the Company, the Company shall not be permitted to
condition the making of any such distribution in respect of any Series F
Preferred Share on the holder of such Series F Preferred Shares depositing with
the Company any Withholding Tax with respect to such distribution, PROVIDED,
HOWEVER, the Company may reasonably condition the making of any such
distribution in respect of any Series F Preferred Share on the holder of such
Series F Preferred Shares executing and delivering to the Company, at the
election of the holder, either: (i) if applicable, a properly completed Internal
Revenue Service Form 4224, or (a) an indemnification agreement in reasonably
acceptable form, with respect to any federal tax liability, penalties and
interest that may be imposed upon the Company by the Internal Revenue Service as
a result of the Company's failure to withhold in connection with such
distribution to such holder.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by ___________________, its ____________________, as
of the ______ day of _____________, 2003.
HOMECOM COMMUNICATIONS, INC.
By:
--------------------------------------
EXHIBIT I
HOMECOM COMMUNICATIONS, INC.
CONVERSION NOTICE
Reference is made to the Certificate of Designations, Preferences and Rights of
HomeCom Communications, Inc. (the "CERTIFICATE OF DESIGNATIONS"). In accordance
with and pursuant to the Certificate of Designations, the undersigned hereby
elects to convert the number of shares of Series F Convertible Preferred Stock,
$.01 par value per share (the "Series F PREFERRED SHARES"), of HomeCom
Communications, Inc., a Delaware corporation (the "COMPANY"), indicated below
into shares of Common Stock, $.0001 par value per share (the "COMMON STOCK"), of
the Company, by tendering the stock certificate(s) representing the share(s) of
Series F Preferred Shares specified below as of the date specified below.
The undersigned acknowledges that any sales by the undersigned of the securities
issuable to the undersigned upon conversion of the Series F Preferred Shares
shall be made only pursuant to (i) a registration statement effective under the
Securities Act of 1933, as amended (the "ACT"), or (ii) advice of counsel that
such sale is exempt from registration required by Section 5 of the Act.
Date of Conversion:
---------------------------------------------
Number of Series F
Preferred Shares to be converted
---------------------------------------------
Stock certificate no(s). of Series F
Preferred Shares to be converted:
---------------------------------------------
Please confirm the following information:
Number of shares of Common
Stock to be issued:
---------------------------------------------
please issue the Common Stock into which the Series F Preferred Shares are being
converted in the following name and to the following address:
Issue to:(1)
---------------------------------------------
---------------------------------------------
Facsimile Number:
---------------------------------------------
Authorization:
---------------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
Dated:
---------------------------------------------
ACKNOWLEDGED AND AGREED:
HOMECOM COMMUNICATIONS, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
Date: ___________________
--------
(1) If other than to the record holder of the Series F Preferred Shares,
any applicable transfer tax must be paid by the undersigned.
EXHIBIT C
FORM OF CERTIFICATE OF DESIGNATION OF
HOMECOM SERIES G CONVERTIBLE PREFERRED STOCK
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF
SERIES G CONVERTIBLE PREFERRED STOCK
OF
HOMECOM COMMUNICATIONS, INC.
HomeCom Communications, Inc. (the "Company"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the Board of Directors
of the Company by the Certificate of Incorporation of the Company, and pursuant
to Section 151 of the General Corporation Law of the State of Delaware, the
Board of Directors of the Company at a meeting duly held, adopted resolutions
(i) authorizing a series of the Company's authorized preferred stock, $.01 par
value per share, and (ii) providing for the designations, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of 1,069 shares of Series G Convertible
Preferred Stock of the Company, as follows:
RESOLVED, that the Company is authorized to issue 1,069 shares of
Series G Convertible Preferred Stock (the "Series G Preferred Shares"), $.01 par
value per share, which shall have the following powers, designations,
preferences and other special rights:
(1) DIVIDENDS. The Series G Preferred Shares shall not bear any
dividends except as provided herein.
(2) HOLDER'S CONVERSION OF SERIES G PREFERRED SHARES. A holder of
Series G Preferred Shares shall have the right, at such holder's option, to
convert the Series G Preferred Shares into shares of the Company's common stock,
$.0001 par value per share (the "Common Stock"), on the following terms and
conditions:
(a) CONVERSION RIGHT. Subject to the provisions of Section
3(a) below, at any time or times upon the earlier to occur of (i) a date on or
after 120 days after the Issuance Date (as defined herein) or (ii) the date that
the U.S. Securities & Exchange Commission declares the Company's Registration
Statement with respect to the Series G Preferred Shares (the "Effective Date"),
any holder of Series G Preferred Shares shall be entitled to convert any Series
G Preferred Shares into fully paid and nonassessable shares (rounded to the
nearest whole share in accordance with Section 2(h) below) of Common Stock, at
the Conversion Rate (as defined below); PROVIDED, HOWEVER, that in no event
other than upon a Mandatory Conversion pursuant to Section 2(f) hereof, shall
any holder be entitled to convert Series G Preferred Shares in excess of that
number of Series G Preferred Shares which, upon giving effect to such
conversion, would cause the aggregate number of shares of Common Stock
beneficially owned by the holder and its affiliates to exceed 9.9% of the
outstanding shares of the Common Stock following such conversion. For purposes
of the foregoing proviso, the aggregate number of shares of Common Stock
beneficially owned by the holder and its affiliates shall include the number of
shares of Common Stock issuable upon conversion of the Series G Preferred Shares
with respect to which the determination of such proviso is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon
conversion of the remaining, nonconverted Series G Preferred Shares beneficially
owned by the holder and its affiliates. Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended.
(b) CONVERSION RATE. The number of shares of Common Stock issuable upon
conversion of each of the Series G Preferred Shares pursuant to Section (2)(a)
shall be determined according to the following formula (the "Conversion Rate");
LIQUIDATION VALUE
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CONVERSION PRICE
For purposes of this Certificate of Designations, the following terms shall have
the following meanings:
(i) "CONVERSION PRICE" means, as of any Conversion Date
(as defined below), the, the amount obtained by
multiplying the Conversion Percentage by the Average
Market Price for the Common Stock for the five (5)
Trading Days immediately preceding such date;
(ii) "CONVERSION PERCENTAGE" means 82.5%;
(iii) "AVERAGE MARKET PRICE" means, with respect to any
security for any period, that price which shall be
computed as the arithmetic average of the Closing Bid
Prices (as defined below) for such security for each
trading day in such period;
(iv) "CLOSING BID PRICE" means, for any security as of any
date, the last closing bid price on the Nasdaq
SmallCap Market(TM) (the "Nasdaq-SM") as reported by
Bloomberg Financial Markets ("Bloomberg"), or, if the
Nasdaq-SM is not the principal trading market for
such security, the last closing bid price of such
security on the principal securities exchange or
trading market where such security is listed or
traded as reported by Bloomberg (the "Trading
Market"), or if the foregoing do not apply, the last
closing bid price of such security in the
over-the-counter market on the pink sheets or
bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported
for such security by Bloomberg, the last closing
trade price of such security as reported by
Bloomberg. If the Closing Bid Price cannot be
calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such
security on such date shall be the fair market value
as reasonably determined in good faith by the Board
of Directors of the Company (all as appropriately
adjusted for any stock dividend, stock split or other
similar transaction during such period);
(v) "TRADING DAY" means any day on which the Company's
Common Stock is traded on the Principal Trading
Market.
(c) ADJUSTMENT TO CONVERSION PRICE - DILUTION AND OTHER
EVENTS. In order to retain the rights granted under this Certificate of
Designations, the Conversion Price will be subject to adjustment from time to
time as provided in this Section 2(c).
(i) ADJUSTMENT OF FIXED CONVERSION PRICE UPON SUBDIVISION
OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of
its outstanding shares of Common Stock into a greater
number of shares, the Fixed Conversion Price in
effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time
combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding
shares of Common Stock into a smaller number of
shares, the Fixed Conversion Price in effect
immediately prior to such combination will be
proportionately increased.
(ii) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER, OR SALE.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person (as
defined below) or other similar transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as in "Organic Change." Prior to
the consummation of any Organic Change, the Company will make appropriate
provision to insure that each of the holders of the Series G Preferred Shares
will thereafter have the right to acquire and receive in lieu of or in addition
to (as the case may be) the shares of Common Stock immediately theretofore
acquirable and receivable upon the conversion of such holder's Series G
Preferred Shares, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Series G Preferred Shares had such Organic Change not taken place. In
any such case, the Company will make appropriate provision (in form and
substance satisfactory to the holders of a majority of the Series G Preferred
Shares then outstanding) with respect to such holders' rights and interests to
insure that the provisions of this Section 2(b) will thereafter be applicable to
the Series G Preferred Shares. The Company will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and substance satisfactory to the holders of a majority of the Series G
Preferred Shares then outstanding), the obligation to deliver to each holder of
Series G Preferred Shares such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire. For purposes of this Agreement, "PERSON" shall mean an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(iii) SPIN OFF. If, at any time prior to a Conversion Date,
the Company consummates a spin off or otherwise
divests itself of a part of its business or
operations or disposes of all or of a part of its
assets in a transaction (the "Spin Off") in which the
Company does not receive just compensation for such
business, operations or assets, but causes securities
of another entity (the "Spin Off Securities") to be
issued to security holders of the Company, then the
Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which would
have been issued to the Holder had all of the
holder's Series G Preferred Shares outstanding on the
record date (the "Record Date") for determining the
amount and number of Spin Off Securities to be issued
to security holders of the Company been converted as
of the close of business on the trading day
immediately before the Record Date (the "Reserved
Spin Off Shares"), and (ii) to be issued to the
Holder on the conversion of all or any of the
outstanding Series G Preferred Shares, such amount of
the Reserved Spin Off Shares equal to (x) the
Reserved Spin Off Shares multiplied by (y) a
fraction, of which (a) the numerator is the principal
amount of the outstanding Series G Preferred Shares
then being converted, and (b) the denominator is the
principal amount of all the outstanding Series G
Preferred Shares.
(iv) NOTICES.
(A) Immediately upon any adjustment of the
Conversion Rate, the Company will give
written notice thereof to each holder of
Series G Preferred Shares, setting forth in
reasonable detail and certifying the
calculation of such adjustment.
(B) The Company will give written notice to each
holder of Series G Preferred Shares at least
twenty (20) days prior to the date on which
the Company closes its books or takes a
record (I) with respect to any dividend or
distribution upon the Common Stock, (II)
with respect to any pro rata subscription
offer to holders of Common Stock or (III)
for determining rights to vote with respect
to any Organic Change, dissolution or
liquidation.
(C) The Company will also give written notice to
each holder of Series G Preferred Shares at
least twenty (20) days prior to the date on
which any Organic Change (as defined below),
dissolution or liquidation will take place.
(d) MECHANICS OF CONVERSION. Subject to the Company's ability
to fully satisfy its obligations under a Conversion Notice (as defined below) as
provided for in Section 5 below:
1. HOLDER'S DELIVERY REQUIREMENTS. To convert Series G
Preferred Shares into full shares of Common Stock on
any date (the "Conversion Date"), the holder thereof
shall (A) deliver or transmit by facsimile, for
receipt on or prior to 11:59 p.m., Eastern Standard
Time, on such date, a copy of a fully executed notice
of conversion in the form attached hereto as Exhibit
I (the "Conversion Notice") to the Company or its
designated transfer agent (the "Transfer Agent"), and
(B) surrender to a common carrier for delivery to the
Company or the Transfer Agent as soon as practicable
following such date, the original certificates
representing the Series G Preferred Shares being
converted (or an indemnification undertaking with
respect to such shares in the case of their loss,
theft or destruction) (the "Preferred Stock
Certificates") and the originally executed Conversion
Notice.
2. COMPANY'S RESPONSE. Upon receipt by the Company of a
facsimile copy of a Conversion Notice, the Company
shall immediately send, via facsimile, a confirmation
of receipt of such Conversion Notice to such holder.
Upon receipt by the Company or the Transfer Agent of
the Preferred Stock Certificates to be converted
pursuant to a Conversion Notice, together with the
originally executed Conversion Notice, the Company or
the Transfer Agent (as applicable) shall, within five
(5) business days following the date of receipt, (A)
issue and surrender to a common carrier for overnight
delivery to the address as specified in the
Conversion Notice, a certificate, registered in the
name of the holder or its designee, for the number of
shares of Common Stock to which the holder shall be
entitled or (B) credit the aggregate number of shares
of Common Stock to which the holder shall be entitled
to the holder's or its designee's balance account at
The Depository Trust Company.
3. RECORD HOLDER. The person or persons entitled to
receive the shares of Common Stock issuable upon a
conversion of Series G Preferred Shares shall be
treated for all purposes as the record holder or
holders of such shares of Common Stock on the
Conversion Date.
(e) NASDAQ LISTING. So long as the Common Stock is listed for
trading on NASDAQ or an exchange or quotation system with a rule substantially
similar to NASDAQ Rule 4460(i) then, notwithstanding anything to the contrary
contained herein if, at any time, the aggregate number of shares of Common Stock
then issued upon conversion of the Series G Preferred Shares (including any
shares of capital stock or rights to acquire shares of capital stock issued by
the Corporation which are aggregated or integrated with the Common Stock issued
or issuable upon conversion of the Series G Preferred Shares for purposes of
such rule) equals 19.99% o the "Outstanding Common Amount" (as hereinafter
defined), the Series G Preferred Shares shall, from that time forward, cease to
be convertible into Common Stock in accordance with the terms hereof, unless the
Corporation (i) has obtained approval of the issuance of the Common Stock upon
conversion of the Series G Preferred Shares by a majority of the total votes
cast on such proposal, in person or by proxy, by the holders of the then
outstanding Common Stock (not including any shares of Common Stock held by
present or former holders of Series G Preferred Shares that were issued upon
conversion of Series G Preferred Shares (the "Stockholder Approval"), or (ii)
shall have otherwise obtained permission to allow such issuances from NASDAQ in
accordance with NASDAQ Rule 4460(i). If the Corporation's Common Stock is not
then listed on NASDAQ or an exchange or quotation system that has a rule
substantially similar to Rule 4460(i) then the limitations set forth herein
shall be inapplicable and of no force and effect. For purposes of this
paragraph, "Outstanding Common Amount" means (i) the number of shares of the
Common Stock outstanding on the date of issuance of the Series G Preferred
Shares pursuant to the Purchase Agreement plus (ii) any additional shares of
Common Stock issued thereafter in respect of such shares pursuant to a stock
dividend, stock split or similar event. The maximum number of shares of Common
Stock issuable as a result of the 19.99% limitation set forth herein is
hereinafter referred to as the "Maximum Share Amount." With respect to each
holder of Series G Preferred Stock, the Maximum Share Amount shall refer to such
holder's pro rata share thereof. In the event that Corporation obtains
Stockholder Approval or the approval of NASDAQ, or by reason of the
inapplicability of the rules of NASDAQ or otherwise, the Corporation concludes
that it is able to increase the number of shares to be issued above the Maximum
Share Amount (such increased number being the "New Maximum Share Amount"), the
references to Maximum Share Amount, above, shall be deemed to be, instead,
references to the greater New Maximum Share Amount. In the event that
Stockholder Approval is obtained and there are insufficient reserved or
authorized shares, or a registration statement covering the additional shares of
Common Stock which constitute the New Maximum Share Amount is not effective
prior to the Maximum Share Amount being issued (if such registration statement
is necessary to allow for the public resale of such securities), the Maximum
Share Amount shall remain unchanged; provided, however, that the holders of
Series G Preferred Shares may grant an extension to obtain a sufficient reserved
or authorized amount of shares or of the effective date of such registration
statement. In the event that (a) the aggregate number of shares of Common Stock
actually issued upon conversion of the outstanding Series G Preferred Shares
represents at least twenty percent (20%) of the Maximum Share Amount and (b) the
sum of (x) the aggregate number of shares of Common Stock issued upon conversion
of Series G Preferred Shares plus (y) the aggregate number of shares of Common
Stock that remain issuable upon conversion of Series G Preferred Shares and
based on the Conversion Price then in effect), represents at least one hundred
percent (100%) of the Maximum Share Amount, the Corporation will use its best
reasonable efforts to seek and obtain Stockholder Approval (or obtain such other
relief as will allow conversions hereunder in excess of the Maximum Share
Amount) as soon as practicable following the Triggering Event and before the
Mandatory Redemption Date.
(f) FRACTIONAL SHARES. The Company shall not issue any
fraction of a share of Common Stock upon any conversion. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of the Series G Preferred Shares by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of a fraction of a share of Common Stock. lf, after the aforementioned
aggregation, the issuance would result in the issuance of a fraction of a share
of Common Stock, the Company shall round such fraction of a share of Common
Stock up or down to the nearest whole share.
(g) TAXES. The Company shall pay any and all taxes which may
be imposed upon it with respect to the issuance and delivery of Common Stock
upon the conversion of the Series G Preferred Shares.
(3) REISSUANCE OF CERTIFICATES. In the event of a conversion or
redemption pursuant to this Certificate of Designations of less than all of the
Series G Preferred Shares represented by a particular Preferred Stock
Certificate, the Company shall promptly cause to be issued and delivered to the
holder of such Series G Preferred Shares a Preferred Stock Certificate
representing the remaining Series G Preferred Shares which have not been so
converted or redeemed.
(4) RESERVATION OF SHARES. During the Conversion Period, the Company
shall, so long as any of the Series G Preferred Shares are outstanding, reserve
and keep available out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Series G Preferred Shares, such
number of shares of Common Stock as shall from time to time be sufficient to
affect the conversion of all of the Series G Preferred Shares then outstanding;
provided that the number of shares of Common Stock so reserved shall at no time
be less than 100% of the number of shares of Common Stock for which the Series G
Preferred Shares are at any time convertible.
(5) VOTING RIGHTS. Holders of Series G Preferred Shares shall have no
voting rights, except as required by law, including but not limited to the
General Corporation Law of Delaware.
(6) LIQUIDATION, DISSOLUTION, WINDING-UP. In the event of any voluntary
or involuntary liquidation, dissolution, or winding up of the Company, the
holders of the Series G Preferred Shares shall be entitled to receive in cash
out of the assets of the Company, whether from capital or from earnings
available for distribution to its stockholders (the "Preferred Funds"), before
any amount shall be paid to the holders of any of the capital stock of the
Company of any class junior in rank to the Series G Preferred Shares (other than
the Series F Preferred Shares which shall be equal in rank) in respect of the
preferences as to the distributions and payments on the liquidation, dissolution
and winding up of the Company, an amount per Series G Preferred Share equal to
$1,000 (such sum being referred to as the "Liquidation Value"); provided that,
if the Preferred Funds are insufficient to pay the full amount due to the
holders of Series G Preferred Shares and holders of shares of other classes or
series of preferred stock of the Company that are of equal rank with the Series
G Preferred Shares as to payments of Preferred Funds (the "Pari Passu Shares"),
then each holder of Series G Preferred Shares and Pari Passu Shares shall
receive a percentage of the Preferred Funds equal to the full amount of
Preferred Funds payable to such holder as a liquidation preference, in
accordance with their respective Certificate of Designations, Preferences and
Rights, as a percentage of the full amount of Preferred Funds payable to all
holders of Series G Preferred Shares and Pari Passu Shares. The purchase or
redemption by the Company of stock of any class in any manner permitted by law,
shall not for the purposes hereof, be regarded as a liquidation, dissolution or
winding up of the Company. Neither the consolidation or merger of the Company
with or into any other Person, nor the sale or transfer by the Company of less
than substantially all of its assets, shall, for the purposes hereof, be deemed
to be a liquidation, dissolution or winding up of the Company. No holder of
Series G Preferred Shares shall be entitled to receive any amounts with respect
thereto upon any liquidation, dissolution or winding up of the Company other
than the amounts provided for herein.
(7) PREFERRED RATE. All shares of Common Stock shall be of junior rank
to all Series G Preferred Shares in respect to the preferences as to
distributions and payments upon the liquidation, dissolution, and winding up of
the Company. The rights of the Series G Preferred Shares shall be subject to the
Preferences and relative rights of the Series B Convertible Preferred Stock,
Series C Convertible Preferred Stock, Series D Convertible Preferred Stock,
Series E Convertible Preferred Stock, and Series F Convertible Preferred Stock.
Without the prior express written consent of the holders of not less than a
majority of the then outstanding Series G Preferred Shares, the Company shall
not hereafter authorize or issue additional or other capital stock (other than
the Series F Preferred Shares which shall be equal in rank) that is of senior or
equal rank to the Series G Preferred Shares in respect of the preferences as to
distributions and payments upon the liquidation, dissolution and winding up of
the Company. Without the prior express written consent of the holders of not
less than a majority of the then outstanding Series G Preferred Shares, the
Company shall not hereafter authorize or make any amendment to the Company's
Certificate of Incorporation or bylaws, or make any resolution of the board of
directors with the Delaware Secretary of State containing any provisions, which
would materially and adversely affect or otherwise impair the rights or relative
priority of the holders of the Series G Preferred Shares relative to the holders
of the Common Stock or the holders of any other class of capital stock. In the
event of the merger or consolidation of the Company with or into another
corporation, the Series G Preferred Shares shall maintain their relative powers,
designations, and preferences provided for herein and no merger shall result
inconsistent therewith.
(8) RESTRICTION ON DIVIDENDS. If any Series G Preferred Shares are
outstanding, without the prior express written consent of the holders of not
less than a majority of the then outstanding Series G Preferred Shares, the
Company shall not directly or indirectly declare, pay or make any dividends or
other distributions upon any of the Common Stock so long as written notice
thereof has not been given to holders of the Series G Preferred Shares at least
30 days prior to the earlier of (a) the record date taken for or (b) the payment
of any such dividend or other distribution. Notwithstanding the foregoing, this
Section 8 shall not prohibit the Company from declaring and paying a dividend in
cash with respect to the Common Stock so long as the Company: (i) pays
simultaneously to each holder of Series G Preferred Shares an amount in cash
equal to the amount such holder would have received had all of such holder's
Series G Preferred Shares been converted to Common Stock pursuant to Section 2
hereof one business day prior to the record date for any such dividend, and (ii)
after giving effect to the payment of any dividend and any other payments
required in connection therewith including to the holders of the Series G
Preferred Shares, the Company has in cash or cash equivalents an amount equal to
the aggregate of: (A) all of its liabilities reflected on its most recently
available balance sheet, (B) the amount of any indebtedness incurred by the
Company or any of its subsidiaries since its most recent balance sheet and (C)
120% of the amount payable to all holders of any shares of any class of
preferred stock of the Company assuming a liquidation of the Company as the date
of its most recently available balance sheet.
(9) VOTE TO CHANGE THE TERMS OF SERIES G PREFERRED SHARES. The
affirmative vote at a meeting duly called for such purpose, or the written
consent without a meeting of the holders of not less than 66-2/3% of the then
outstanding Series G Preferred Shares, shall be required for any change to this
Certificate of Designations or the Company's Certificate of Incorporation which
would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Series G Preferred Shares.
(10) LOST OR STOLEN CERTIFICATES. Upon receipt by the Company of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing the Series G
Preferred Shares, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the holder to the Company and, in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date; provided, however, the Company shall not
be obligated to re-issue preferred stock certificates if the holder
contemporaneously requests the Company to convert such Series G Preferred Shares
into Common Stock.
(11) WITHHOLDING TAX OBLIGATIONS. Notwithstanding anything herein to
the contrary, to the extent that the Company receives advice in writing from its
counsel that there is a reasonable basis to believe that the Company is required
by applicable federal laws or regulations and delivers a copy of such written
advice to the holders of the Series G Preferred Shares so effected, the Company
may reasonably condition the making of any distribution (as such term is defined
under applicable federal tax law and regulations) in respect of any Series G
Preferred Share on the holder of such Series G Preferred Shares depositing with
the Company an amount of cash sufficient to enable the Company to satisfy its
withholding tax obligations (the "Withholding Tax") with respect to such
distribution. Notwithstanding the foregoing or anything to the contrary, if any
holder of the Series G Preferred Shares so effected receives advice in writing
from its counsel that there is a reasonable basis to believe that the Company is
not so required by applicable federal laws or regulations and delivers a copy of
such written advice to the Company, the Company shall not be permitted to
condition the making of any such distribution in respect of any Series G
Preferred Share on the holder of such Series G Preferred Shares depositing with
the Company any Withholding Tax with respect to such distribution, PROVIDED,
HOWEVER, the Company may reasonably condition the making of any such
distribution in respect of any Series G Preferred Share on the holder of such
Series G Preferred Shares executing and delivering to the Company, at the
election of the holder, either: (i) if applicable, a properly completed Internal
Revenue Service Form 4224, or (a) an indemnification agreement in reasonably
acceptable form, with respect to any federal tax liability, penalties and
interest that may be imposed upon the Company by the Internal Revenue Service as
a result of the Company's failure to withhold in connection with such
distribution to such holder.
IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to
be signed by ___________________, its ____________________, as of the ______ day
of _____________, 2003.
HOMECOM COMMUNICATIONS, INC.
By:
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EXHIBIT I
HOMECOM COMMUNICATIONS, INC.
CONVERSION NOTICE
Reference is made to the Certificate of Designations, Preferences and Rights of
HomeCom Communications, Inc. (the "CERTIFICATE OF DESIGNATIONS"). In accordance
with and pursuant to the Certificate of Designations, the undersigned hereby
elects to convert the number of shares of Series G Convertible Preferred Stock,
$.01 par value per share (the "SERIES G PREFERRED SHARES"), of HomeCom
Communications, Inc., a Delaware corporation (the "COMPANY"), indicated below
into shares of Common Stock, $.0001 par value per share (the "COMMON STOCK"), of
the Company, by tendering the stock certificate(s) representing the share(s) of
Series G Preferred Shares specified below as of the date specified below.
The undersigned acknowledges that any sales by the undersigned of the securities
issuable to the undersigned upon conversion of the Series G Preferred Shares
shall be made only pursuant to (i) a registration statement effective under the
Securities Act of 1933, as amended (the "ACT"), or (ii) advice of counsel that
such sale is exempt from registration required by Section 5 of the Act.
Date of Conversion:
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Number of Series G
Preferred Shares to be converted
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Stock certificate no(s). of Series G
Preferred Shares to be converted:
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Please confirm the following information:
Number of shares of Common
Stock to be issued:
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please issue the Common Stock into which the Series G Preferred Shares are being
converted in the following name and to the following address:
Issue to:(1)
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Facsimile Number:
---------------------------------------------
Authorization:
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By:
------------------------------------------
Title:
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Dated:
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ACKNOWLEDGED AND AGREED:
HOMECOM COMMUNICATIONS, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
Date: ___________________
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(1) If other than to the record holder of the SERIES G Preferred Shares,
any applicable transfer tax must be paid by the undersigned.
SCHEDULE 7.2(e)
CORPORATE GOVERNANCE MATTERS
The parties agree that the following has occurred and/or that they
shall draft and execute all corporate governance documents in order to affect
the following:
1. CURRENT BUSINESS/EUROTECH BUSINESS/FINANCING
Upon shareholder approval, HomeCom to complete sale of current business
to Tulix Systems, Inc.("Tulix"). Until closing of such sale, all
ongoing working capital needs related to operations to be acquired by
Tulix will be funded by revenues from those operations or other
financings.
The board of directors of Homecom shall approve that the operations and
activities of Homecom related license from Eurotech (the "Eurotech
Business") will be segregated in an unincorporated division of HomeCom
and will be funded at the closing of the License and Exchange Agreement
by existing preferred shareholder of HomeCom in an amount equal to
$150,000, subject to acceptable security for financing (such financing,
the "Licensed Technology Financing"). The documentation for the
Licensed Technology Financing shall provide that such funds shall be
used solely and exclusively for the Eurotech Business. Additional
documentation to be delivered at closing (i.e., Board approval by
HomeCom) will provide that such funds shall be under the sole exclusive
control of ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (as
employees of HomeCom) and shall be segregated in a separate operating
bank account under the control of such individuals only.
2. RESIGNATION OF HOMECOM DIRECTORS AND OFFICERS
In anticipation of the closing of the License and Exchange Agreement,
two Eurotech designated directors, ▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, were
elected to the board of directors of Homecom as of March 21, 2003 by
current the directors. The board of directors of HomeCom shall grant
▇▇. ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ sole and exclusive authority
to manage the Eurotech Business through the unincorporated division
discussed above. At the closing of the License and Exchange Agreement,
▇▇. ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ will be hired by Homecom as
employees of Homecom in order to effect the foregoing, the board of
Homecom to approve such hiring.
In anticipation of the closing of the License and Exchange Agreement,
two current directors of Homecom, ▇▇. ▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇, have
resigned as directors and an appropriate Form 8-K will be filed
covering these and all other applicable transactions. This will leave
the board of directors of Homecom with 6 members (including ▇▇.
▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇).
3. HOMECOM PROXY
Following the closing of the License and Exchange Agreement, the parties will
work together in good faith to update and cause the filing with the Securities
and Exchange Commission, and the delivery to Homecom stockholders of, a Homecom
Proxy Statement (the "Proxy Statement"). The Proxy Statement will provide that
if the Tulix sale is approved by Homecom stockholders and the transaction
closes, the remaining existing directors of Homecom, except for ▇▇. ▇▇▇▇▇▇▇▇,
will not stand for re-election at the Special Meeting of Homecom Stockholder
called for by the Proxy Statement and a full slate of Eurotech designated
directors, to be listed in Proxy Statement, will take office at the closing of
the Tulix Sale and existing officers of Homecom will resign and new officers
appointed. The Proxy Statement will also cover the increase in the authorized
common stock of Homecom, a stock split, the election of the new Eurotech
directors and such other matters as the parties may agree on.