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EXHIBIT 7.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CRESCENT INTERNATIONAL LIMITED
AND
INFOCURE CORPORATION
DATED AS OF SEPTEMBER 28, 1998
This STOCK PURCHASE AGREEMENT is entered into as of the 28th day of
September 1998 (this "Agreement"), by and between CRESCENT INTERNATIONAL LIMITED
(the "Investor"), an entity organized and existing under the laws of Bermuda,
and INFOCURE CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase, up to
$10,000,000 of the Common Stock (as defined below); and
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") and Regulation D ("Regulation D") of the United
States Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder (the "Securities Act"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Common Stock to be made
hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 "Additional Warrant" shall mean the Additional Warrant in
the form of Exhibit D hereto issued pursuant to Section 2.1(d) of this
Agreement.
Section 1.2 "Additional Warrant Shares" shall mean all shares of Common
Stock issued or issuable pursuant to exercise of the Additional Warrants.
Section 1.3 "Average Daily Trading Volume" shall mean, with respect to
any Closing Date, the average of the daily trading volumes for the Common Stock
on the Principal Market during the applicable Valuation Period, and with respect
to any other date, such average during the portion of the applicable Valuation
Period that has expired as of such date.
Section 1.4 "Capital Shares" shall mean the Common Stock and any shares
of any other class of common stock whether now or hereafter authorized, having
the right to participate in the distribution of dividends (as and when declared)
and assets (upon liquidation of the Company).
Section 1.5 "Closing" shall mean one of the closings of a purchase and
sale of the Common Stock pursuant to Section 2.1.
Section 1.6 "Closing Date" shall mean, with respect to a Closing, the
first Trading Day following the Put Notice Period related to such Closing,
provided all conditions to such Closing have been satisfied on or before such
Trading Day.
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Section 1.7 "Commitment Period" shall mean the period commencing on the
Subscription Date and expiring on the earlier to occur of (i) the date on which
the Investor shall have purchased Put Shares pursuant to this Agreement for an
aggregate Purchase Price of the Maximum Commitment Amount, (ii) the date this
Agreement is terminated pursuant to Section 2.4, or (iii) the date occurring
eighteen (18) months from the Subscription Date.
Section 1.8 "Common Stock" shall mean the Company's common stock,
$0.001 par value per share.
Section 1.9 "Common Stock Equivalents" shall mean any securities that
are convertible into or exchangeable for Common Stock or any warrants, options
or other rights to subscribe for or purchase Common Stock or any such
convertible or exchangeable securities.
Section 1.10 "Condition Satisfaction Date" shall have the meaning set
forth in Section 7.2 of this Agreement.
Section 1.11 "Damages" shall mean any loss, claim, damage, liability,
costs and expenses (including, without limitation, any and all investigative,
legal and other expenses reasonably incurred in connection with, and any and all
amounts paid in defense or settlement of, any action, suit or proceeding between
any indemnified party and any indemnifying party or between any indemnified
party and any third party, or otherwise, or any claim asserted).
Section 1.12 "Discounted Market Price" shall mean ninety two and a half
percent (92.5%) of the Lowest Average Price.
Section 1.13 "Effective Date" shall mean the earlier to occur of: (i)
the date on which the Company first notifies the Investor that the SEC has
declared effective a Registration Statement registering resale of Registrable
Securities as set forth in Section 7.2(a) and (ii) the date on which such
Registrable Securities first become eligible for resale pursuant to Rule 144 of
the Securities Act.
Section 1.14 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder.
Section 1.15 "Floor Price" shall mean ten dollars ($10.00) per share.
Section 1.16 "Incentive Warrant Shares" shall mean all shares of Common
Stock issued or issuable pursuant to exercise of the Incentive Warrant.
Section 1.17 "Incentive Warrant" shall mean the Incentive Warrant in
the form of Exhibit C hereto issued pursuant to Section 2.5 of this Agreement.
Section 1.18 "Investment Amount" shall mean the dollar amount (within
the range specified in Annex A hereto) to be invested by the Investor to
purchase Put Shares with respect to any Put Date as notified by the Company to
the Investor in accordance with Section 2.2 hereof.
Section 1.19 "Legend" shall have the meaning specified in Section 8.1.
Section 1.20 "Letter Agreement" shall mean the letter agreement in the
form of Exhibit H hereto.
Section 1.21 "Lowest Average Price" shall mean the lowest average Sale
Price for any period of three consecutive Trading Days during the applicable
Valuation Period.
Section 1.22 "Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and such other entities
controlling or controlled by the Company, taken
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as a whole, and/or any condition, circumstance, or situation that would prohibit
or otherwise interfere with the ability of the Company to enter into and perform
its obligations under any of (i) this Agreement, (ii) the Registration Rights
Agreement and (iii) the Warrants.
Section 1.23 "Maximum Commitment Amount" shall mean $10,000,000.
Section 1.24 "Maximum Put Amount" shall mean with respect to any Put
the amount determined in accordance with the table set forth on Annex A hereto.
Section 1.25 "Minimum Put Amount" shall mean $500,000.
Section 1.26 "Minimum Time Interval" shall mean the mandatory thirty
(30) days between any two Put Dates.
Section 1.27 "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.28 "Outstanding" when used with reference to Common Shares or
Capital Shares (collectively the "Shares"), shall mean, at any date as of which
the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not refer to any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.29 "Parent Company" shall mean Dar Al-Maal Al-Islami Trust.
Section 1.30 "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
Section 1.31 "Principal Market" shall mean the Nasdaq National Market,
the Nasdaq SmallCap Market, the American Stock Exchange, the Bulletin Board or
the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock.
Section 1.32 "Purchase Price" shall mean, with respect to a Put, the
Discounted Market Price for the applicable Closing Date (or such other date on
which the Purchase Price is calculated in accordance with the terms and
conditions of this Agreement); provided, however, that in no event shall the
Purchase Price be less than ninety-two and a half percent (92.5%) of the Floor
Price.
Section 1.33 "Put" shall mean each occasion the Company elects to
exercise its right to tender a Put Notice requiring the Investor to purchase a
discretionary amount of the Company's Common Stock, subject to the terms and
conditions of this Agreement.
Section 1.34 "Put Date" shall mean the Trading Day during the
Commitment Period that a Put Notice to sell Common Stock to the Investor is
deemed delivered pursuant to Section 2.2(b) hereof.
Section 1.35 "Put Fees" shall have the meaning specified in Section 2.6
hereof.
Section 1.36 "Put Notice" shall mean a written notice to the Investor
setting forth the intended Closing Date and the Investment Amount that the
Company intends to require the Investor to purchase pursuant to the terms of
this Agreement.
Section 1.37 "Put Notice Period" shall mean a period of five (5)
Trading Days immediately following the Put Date with respect to a Closing.
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Section 1.38 "Put Shares" shall mean all shares of Common Stock issued
or issuable pursuant to a Put that has been exercised or may be exercised in
accordance with the terms and conditions of this Agreement.
Section 1.39 "Registerable Securities" shall mean (i) the Put Shares,
(ii) the Warrant Shares and (iii) any securities issued or issuable with respect
to any of the foregoing by way of exchange, stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (w) the applicable Registration Statement has been declared effective by
the SEC and all such Registrable Securities have been disposed of pursuant to
the applicable Registration Statement, (x) all such Registrable Securities have
been sold under circumstances under which all of the applicable conditions of
Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (y) such time as all such Registrable Securities have been
otherwise transferred to holders who may trade such shares without restriction
under the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such securities not bearing a restrictive legend
or (z) in the opinion of counsel to the Company, which counsel shall be
reasonably acceptable to the Investor, all such Registrable Securities may be
sold without registration or the need for an exemption from any registration
requirements and without any time, volume or manner limitations pursuant to Rule
144(k) (or any similar provision then in effect) under the Securities Act.
Section 1.40 "Registration Rights Agreement" shall mean the
registration rights agreement in the form of Exhibit B hereto.
Section 1.41 "Registration Statement" shall mean a registration
statement on Form S-3 (if use of such form is then available to the Company
pursuant to the rules of the SEC and, if not, on such other form promulgated by
the SEC for which the Company then qualifies and which counsel for the Company
shall deem appropriate and which form shall be available for the resale of the
Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement, and the
Warrants and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.
Section 1.42 "Regulation D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.43 "Sale Price" shall mean the closing sale price (as
reported by the Principal Market.
Section 1.44 "SEC" shall mean the Securities and Exchange Commission.
Section 1.45 "SEC Documents" shall mean the Company's latest Form 10-K
as of the time in question, all Forms 10-Q and 8-K filed thereafter, and the
Proxy Statement for its latest fiscal year as of the time in question until such
time the Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights Agreement.
Section 1.46 "Section 4(2)" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.47 "Securities Act" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.48 "Securities Exchange Act" shall mean the United States
Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder.
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Section 1.49 "Short Sale" shall have the meaning specified in the Rule
3b-3 of the Securities Exchange Act; provided that this Agreement shall not
represent an unconditional contract (within the meaning of Rule 3b-3(2) of the
Securities Exchange Act) with respect to any shares of Common Stock until (a) a
Put Notice shall have been given with respect to such shares, and (b) a Closing
shall have occurred with respect to such shares.
Section 1.50 "Subscription Date" shall mean the date on which this
Agreement is executed and delivered by the parties hereto.
Section 1.51 "Trading Day" shall mean any day during which the
Principal Market shall be open for business.
Section 1.52 "Underwriter" shall mean any underwriter participating in
any disposition of the Registrable Securities on behalf of the Investor pursuant
to a Registration Statement.
Section 1.53 "Valuation Period" shall mean (i) with respect to the
Subscription Date, the twenty-two (22) Trading Day period immediately before the
Subscription Date, (ii) with respect to an Effective Date, the twenty-two (22)
Trading Day Period immediately before such Effective Date, (iii) with respect to
a Closing Date, the twenty-two (22) Trading Day period immediately before the
applicable Put Date, during which the Discounted Market Price of the Common
Stock is determined.
Section 1.54 "Warrants" shall mean the Additional Warrants and
Incentive Warrant.
Section 1.55 "Warrant Shares" shall mean the Additional Warrant Shares
and the Incentive Warrant Shares.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK;
TERMINATION OF OBLIGATIONS; INCENTIVE WARRANT
Section 2.1 Investments.
(a) Puts. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII
hereof), on any Put Date the Company may exercise a Put by the
delivery of a Put Notice. The number of Put Shares that the
Investor shall receive pursuant to such Put shall be
determined by dividing the Investment Amount specified in the
Put Notice by the Purchase Price with respect to such Put
Date.
(b) Maximum Amount of Puts. Unless the Company obtains the
requisite approval of its shareholders in accordance with the
corporate laws of Delaware and the applicable rules of the
Principal Market, no more than 19.9% of the Outstanding shares
of Common Stock may be issued and sold pursuant to Puts.
(c) First Put. The Company shall issue and sell and the
Investor shall purchase, on the Subscription Date, shares of
the Common Stock for an Investment Amount of $2,500,000 at the
Discounted Market Price for the Subscription Date (the
"Subscription Date Price"). For the purpose only of such first
Put, the Investor waives the requirements of Section 2.2, and
the conditions set forth in paragraphs (a), (b), and (g) of
Section 7.2, hereof.
(d) Additional Warrants. In addition to the Incentive Warrant
(as defined hereinafter), on the Subscription Date and on each
Closing Date, the Company shall issue to the Investor an
additional warrant (each an "Additional Warrant") with an
exercise price of $0.001 for each share of Common Stock.
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(e) Parent Letter of Comfort. Simultaneous with the execution
of this Agreement, the Parent Company has executed and
delivered to the Company a letter of comfort in the form
attached hereto as Exhibit A.
Section 2.2 Mechanics.
(a) Put Notice. At any time during the Commitment Period, the
Company may deliver a Put Notice to the Investor, subject to
the conditions set forth in Section 7.2; provided, however,
the Investment Amount for each Put as designated by the
Company in the applicable Put Notice shall be neither less
than the Minimum Put Amount nor more than the Maximum Put
Amount.
(b) Date of Delivery of Put Notice. A Put Notice shall be
deemed delivered on (i) the Trading Day it is received by
facsimile or otherwise by the Investor if such notice is
received prior to 12:00 noon New York time, or (ii) the
immediately succeeding Trading Day if it is received by
facsimile or otherwise after 12:00 noon New York time on a
Trading Day or at any time on a day which is not a Trading
Day. No Put Notice may be deemed delivered, on a day that is
not a Trading Day.
Section 2.3 Closings. On each Closing Date for a Put, (i) the Company
shall deliver irrevocable instructions to the Transfer Agent to prepare and
notify the Investor that a share certificate in the name of the Investor and in
the amount of the applicable Put Shares has been prepared and is then held by
the Transfer Agent and (ii) the Investor shall deliver to the company the
Investment Amount specified in the Put Notice by wire transfer of immediately
available funds to the account designated in the Put Notice. In addition, on or
prior to such Closing Date, each of the Company and the Investor shall deliver
to the other all documents, instruments and writings required to be delivered or
reasonably requested by either of them pursuant to this Agreement in order to
implement and effect the transactions contemplated herein.
Section 2.4 Termination of Agreement and Investment Obligation. The
Investor shall have the right to terminate this Agreement (including with
respect to any Put, notice of which has been given but the applicable Closing
Date has not yet occurred) in the event that: (i) the Registration Statement
with respect to shares of Common Stock purchased through the first Put is not
effective within one hundred and fifty (150) days following the Subscription
Date, (ii) a Registration Statement with respect to shares of Common Stock
purchased through any subsequent Put is not effective within ninety (90) days
following the applicable Closing Date, (iii) there shall occur any stop order or
suspension of the effectiveness of the Registration Statement for an aggregate
of thirty (30) Trading Days during the Commitment Period, (iv) the Company shall
at any time fail to comply with the requirements of Section 6.3, 6.4, 6.5 or
6.6, or (v) the Company has given to the Investor thirty (30) days' written
notice of termination of this Agreement and such obligations.
Section 2.5 The Incentive Warrant. On the Subscription Date, the
Company shall issue the Incentive Warrant to the Investor. The Incentive Warrant
shall be delivered by the Company to the Investor upon execution of this
Agreement by the parties hereto. The Incentive Warrant Shares shall be
registered for resale pursuant to the Registration Rights Agreement.
Section 2.6 Put Fees. The Company shall pay the Investor's advisor,
Greenlight (Switzerland) SA, the following fees (the "Put Fees"): (i) the sum of
$150,000 and an amount equivalent to one and a quarter percent (1.25%) of the
Investment Amount for the First Put on the Subscription Date and (ii) an amount
equivalent to one and a quarter percent (1.25%) percent of the Investment Amount
for any subsequent Put on the applicable Closing Date.
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Section 2.7 Right of First Refusal. If the Company, for the purpose of
obtaining any additional financing in connection with an acquisition of 50% or
more of the outstanding common stock of a corporation, a partnership, an
association, a trust or other entity or organization (the "Acquisition"), wishes
to sell its Common Stock for cash (the "Sale"), in a transaction exempt from
registration under the Securities Act, to a party (the "Third Party") other than
the Investor, the Company shall first offer (the "Offer") to the Investor, in
writing, the right to purchase such Common Stock (the "Offered Shares") at (a)
the bona fide price offered by the Third Party (the "Third Party Offer Price"),
within a five (5) business day period (the "Offer Period"). The Offer shall
grant the Investor the right during the five (5) business days next following
the date of the Offer to elect to purchase all of the Offered Shares. The
Company, in connection with such an Acquisition, shall refrain from
circumventing or attempting to circumvent the Investor's right of first refusal
by way of making such a Sale to any of its affiliates without first making an
Offer to the Investor. If, however, the Company, prior to such a Sale to an
affiliate, makes an Offer to the Investor, and the Investor declines such Offer,
the Company shall have a right to make such a Sale pursuant to the terms and
conditions of this Section 2.7. If the Investor so exercises it right to
purchase all of the Offered Shares, (i) the purchase price for the Offered
Shares shall be the Investor Offer Price, and the closing and method of payment
shall be as provided for in Section 2.3 hereof and the Closing Date shall be
five (5) Trading Days after the Investor exercises such right and (ii) the
Maximum Commitment Amount shall be increased by the purchase price for the
Offered Shares and such Offered Shares shall be deemed Put Shares. If the
Investor fails to exercise its right to purchase all of the Offered Shares, then
during the sixty (60) calendar days next following the expiration of such right,
the Company shall be free to sell any or all of the Offered Shares to a
purchaser for a purchase price not lower than the Third Party Offer Price
payable on terms and conditions that are not more favorable to such purchaser
than those contained in the Offer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1 Intent. The Investor is entering into this Agreement for
its own account and the Investor has no view to the distribution of the
Registrable Securities or Warrants and has no present arrangement (whether or
not legally binding) at any time to sell the Registrable Securities or Warrants
to or through any person or entity; provided, however, that by making the
representations herein, the Investor does not agree to hold the Registrable
Securities or Warrants for any minimum or other specific term and reserves the
right to dispose of the Registrable Securities or Warrants at any time pursuant
to the Registration Statement and in accordance with federal and state
securities laws applicable to such disposition.
Section 3.2 Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in Common Stock. The Investor acknowledges
that an investment in the Common Stock is speculative and involves a high degree
of risk.
Section 3.3 Authority. Each of this Agreement, the Registration Rights
Agreement, and the Escrow Agreement has been duly authorized by all necessary
corporate action and no further consent or authorization of the Investor, or its
Board of Directors or stockholders is required. Each of this Agreement and the
Registration Rights Agreement was validly executed and delivered by the Investor
and each is a valid and binding agreement of the Investor enforceable against it
in accordance with its terms, subject to applicable bankruptcy, insolvency,
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or similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application.
Section 3.4 Not an Affiliate. The Investor is not an officer, director
or "affiliate" (as that term is defined in Rule 405 of the Securities Act) of
the Company.
Section 3.5 Organization and Standing. Investor is duly organized,
validly existing, and in good standing under the laws of Bermuda.
Section 3.6 Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument contemplated hereby, and the
consummation of the transactions contemplated thereby, and compliance with the
requirements thereof, will not (a) violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on Investor, or, to the
Investor's knowledge, (b) violate any provision of any indenture, instrument or
agreement to which Investor is a party or is subject, or by which Investor or
any of its assets is bound, (c) conflict with or constitute a material default
thereunder, (d) result in the creation or imposition of any lien pursuant to the
terms of any such indenture, instrument or agreement, or constitute a breach of
any fiduciary duty owed by Investor to any third party, or (e) require the
approval of any third-party (that has not been obtained) pursuant to any
material contract to which Investor is subject or to which any of its assets,
operations or management may be subject.
Section 3.7 Disclosure; Access to Information. Investor has received
all documents, records, books and other information pertaining to Investor's
investment in the Company that have been requested by Investor. The Investor has
received and reviewed copies of the SEC Documents.
Section 3.8 Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.
Section 3.9 Resale Restrictions. It is acknowledged by Investor that
any Registrable Securities and Warrants to be acquired by Investor have not been
registered under the federal securities laws or any applicable state securities
laws in reliance upon exemptions available for non-public or limited offerings.
Investor understands that Investor must bear the economic risk of the investment
in the Registrable Securities and Warrants because the Registrable Securities
and Warrants have not been so registered and therefore are subject to
restrictions upon transfer such that they may not be sold or otherwise
transferred unless registered under the applicable securities laws or an
exemption from such registration is available. Investor will not reoffer, sell,
assign, transfer, pledge, encumber, hypothecate or otherwise dispose of any
Registrable Securities or the Warrants in the absence of an effective
registration statement, qualification or authorization relating thereto under
federal and applicable state securities laws or an opinion of qualified counsel
satisfactory to the Company to the effect that the proposed transaction in the
Registrable Securities or the Warrants will neither constitute or result in any
violation of the federal or state securities laws. Subject to Section 8.1 of
this Agreement, any certificate or other document that may be issued
representing any shares of Registrable Securities or the Warrants may be
endorsed with a legend to this effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that:
Section 4.1 Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Except as set forth in the SEC Documents, the Company does
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not own more than fifty percent (50%) of the outstanding capital stock of or
control any other business entity. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to qualify
would not have a Material Adverse Effect.
Section 4.2 Authority. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement, the Warrants and the Escrow
Agreement and to issue the Put Shares, the Warrants, the Warrant Shares; (ii)
the execution and delivery of this Agreement and the Registration Rights
Agreement, and the execution, issuance and delivery of the Warrants, by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required; and (iii) each of this Agreement and the Registration
Rights Agreement has been duly executed and delivered, and the Warrants have
been duly executed, issued and delivered, by the Company and constitute valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 4.3 Capitalization. As of September 28, 1998, the authorized
capital stock of the Company is as set forth on Schedule 4.3.
Section 4.4 Common Stock. The Company has registered its Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued listing or quotation of its Common
Stock, and such Common Stock is currently listed or quoted on the Principal
Market. As of the date hereof, the Principal Market is the American Stock
Exchange.
Section 4.5 SEC Documents. The Company has delivered or made available
to the Investor true and complete copies of the SEC Documents (including,
without limitation, proxy information and solicitation materials). The Company
has not provided to the Investor any information that, according to applicable
law, rule or regulation, should have been disclosed publicly prior to the date
hereof by the Company, but which has not been so disclosed. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
other federal, state and local laws, rules and regulations applicable to such
SEC Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may include summary notes
and may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).]
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Section 4.6 Exemption from Registration; Valid Issuances. The sale and
issuance of the Warrants, the Warrant Shares, and the Put Shares in accordance
with the terms and on the bases of the representations and warranties set forth
in this Agreement, may and shall be properly issued pursuant to Rule 4(2),
Regulation D and/or any applicable state law. When issued and paid for as herein
provided, the Put Shares and the Warrant Shares shall be duly and validly
issued, fully paid, and nonassessable. Neither the sales of the Put Shares, the
Warrants, or the Warrant Shares pursuant to, nor the Company's performance of
its obligations under, this Agreement, the Registration Rights Agreement, or the
Warrants shall (i) result in the creation or imposition of any liens, charges,
claims or other encumbrances upon the Put Shares, the Warrant Shares, or any of
the assets of the Company, or (ii) entitle the holders of Outstanding Capital
Shares to preemptive or other rights to subscribe to or acquire the Capital
Shares or other securities of the Company. The Put Shares and the Warrant Shares
shall not subject the Investor to personal liability by reason of the ownership
thereof.
Section 4.7 No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising with respect to any of the Put Shares, the Warrants, or
the Warrant Shares, or (ii) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the Common Stock under the Securities Act.
Section 4.8 Corporate Documents. The Company has furnished or made
available to the Investor true and correct copies of the Company's Certificate
of Incorporation, as amended and in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as amended and in effect on the date
hereof (the "By-Laws").
Section 4.9 No Conflicts. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, including without limitation the
issuance of the Put Shares, the Warrants and the Warrant Shares do not and will
not (i) result in a violation of the Certificate or By-Laws or (ii) conflict
with, or constitute a material default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture, instrument or any "lock-up" or similar provision of any underwriting
or similar agreement to which the Company is a party, or (iii) result in a
violation of any federal, state, local or foreign law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect) nor is the
Company otherwise in violation of, conflict with or in default under any of the
foregoing; provided, however, that for purposes of the Company's representations
and warranties as to violations of foreign law, rule or regulation referenced in
clause (iii), such representations and warranties are made only to the best of
the Company's knowledge insofar as the execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby are or may be affected by the status of the
Investor under or pursuant to any such foreign law, rule or regulation. The
business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Common Stock or the Warrants in accordance with
the terms
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hereof (other than any SEC, NASD or state securities filings that may be
required to be made by the Company subsequent to any Closing, any registration
statement that may be filed pursuant hereto, and any shareholder approval
required by the rules applicable to companies whose common stock trades on the
American Stock Exchange); provided that, for purposes of the representation made
in this sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Investor herein.
Section 4.10 No Material Adverse Change. Since December 31, 1997, no
event has occurred that would have a Material Adverse Effect on the Company,
except as disclosed in the SEC Documents.
Section 4.11 No Undisclosed Liabilities. The Company has no liabilities
or obligations that are material, individually or in the aggregate, and that are
not disclosed in the SEC Documents or otherwise publicly announced, other than
those incurred in the ordinary course of the Company's businesses since December
31, 1997 and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.
Section 4.12 No Undisclosed Events or Circumstances. Since December 31,
1997, no event or circumstance has occurred or exists with respect to the or its
businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.
Section 4.13 No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement, under circumstances
that would require registration of the Common Stock under the Securities Act.
Section 4.14 Litigation and Other Proceedings. Except as may be set
forth in the SEC Documents, there are no lawsuits or proceedings pending or to
the best knowledge of the Company threatened, against the Company, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which might have a Material Adverse Effect. Except as set
forth in the SEC Documents, no judgment, order, writ, injunction or decree or
award has been issued by or, so far as is known by the Company, requested of any
court, arbitrator or governmental agency which might result in a Material
Adverse Effect.
Section 4.15 No Misleading or Untrue Communication. The Company, any
Person representing the Company, and, to the knowledge of the Company, any other
Person selling or offering to sell the Put Shares, the Warrants or the Warrant
Shares in connection with the transactions contemplated by this Agreement, have
not made, at any time, any oral communication in connection with the offer or
sale of the same which contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements, in
the light of the circumstances under which they were made, not misleading.
Section 4.16 Material Non-Public Information. The Company is not in
possession of, nor has the Company or its agents disclosed to the Investor, any
material non-public information that (i) if disclosed, would, or could
reasonably be expected to have, an effect on the price of the Common Stock and
(ii) according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed.
ARTICLE V
COVENANTS OF THE INVESTOR
Section 5.1 Compliance. The Investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities
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laws, rules and regulations and the rules and regulations of the Principal
Market on which the Company's Common Stock is listed.
Section 5.2 Short Sale. The Investor or its affiliates shall not engage
in any Short Sale of the Common Stock during the Commitment Period.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all respects with the terms thereof.
Section 6.2 Reservation of Common Stock. As of the date hereof, the
Company has available and the Company shall reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to satisfy any obligation to issue the Put Shares and the
Warrant Shares; such amount of shares of Common Stock to be reserved shall be
calculated based upon the minimum Purchase Price for the Put Shares under the
terms and conditions of this Agreement and the Exercise price of the Incentive
Warrant and the maximum amount of Additional Warrant Shares issuable pursuant to
the Registration Rights Agreement. The number of shares so reserved from time to
time, as theretofore increased or reduced as hereinafter provided, may be
reduced by the number of shares actually delivered hereunder.
Section 6.3 Listing of Common Stock. The Company shall exercise best
efforts to maintain the listing of the Common Stock on a Principal Market, and
as soon as practicable (but in any event prior to the Closing Date for any Put)
will cause the Put Shares and the Warrant Shares with respect to such Put to be
listed on the Principal Market. The Company further shall, if the Company
applies to have the Common Stock traded on any other Principal Market, include
in such application the Put Shares and the Warrant Shares, and shall take such
other action as is necessary or desirable in the opinion of the Investor to
cause the Common Stock to be listed on such other Principal Market as promptly
as possible. The Company shall use commercially reasonable efforts to continue
the listing and trading of its Common Stock on the Principal Market (including,
without limitation, maintaining sufficient net tangible assets) and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the NASD and the Principal Market.
Section 6.4 Exchange Act Registration. After each Registration
Statement becomes effective, the Company shall cause the Common Stock covered by
such Registration Statement to continue to be registered under Section 12(g) or
12(b) of the Exchange Act, will comply in all respects with its reporting and
filing obligations under said Act, and will not take any action or file any
document (whether or not permitted by said Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said Act.
Section 6.5 Legends. The certificates evidencing the Put Shares and the
Warrant Shares shall be free of legends, except as provided for in Article VIII.
Section 6.6 Corporate Existence. The Company shall take all steps
necessary to preserve and continue the corporate existence of the Company.
Section 6.7 Additional SEC Documents. During the Commitment Period, the
Company shall deliver to the Investor, as and when the originals thereof are
submitted to the SEC for filing, copies of all SEC Documents so furnished or
submitted to the SEC.
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Section 6.8 Notice of Certain Events Affecting Registration; Suspension
of Right to Make a Put. The Company shall immediately notify the Investor upon
the occurrence of any of the following events in respect of a Registration
Statement or related prospectus in respect of an offering of Registrable
Securities: (i) receipt of any request for additional information by the SEC or
any other federal or state governmental authority during the period of
effectiveness of the registration statement for amendments or supplements to the
registration statement or related prospectus; (ii) the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the registration statement, related prospectus or documents so that,
in the case of a Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the registration
statement would be appropriate, and the Company shall promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Put Notice during the continuation
of any of the foregoing events.
Section 6.9 Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver to the Investor
such shares of stock and/or securities as the Investor is entitled to receive
pursuant to this Agreement and the Warrants.
Section 6.10 Issuance of Put Shares, Warrant Shares and Additional
Shares. The sale of the Put Shares and the issuance of the Warrant Shares
pursuant to exercise of the Warrants shall be made in accordance with the
provisions and requirements of Regulation D and any applicable state law.
Issuance of the Warrant Shares pursuant to exercise of the Warrants through a
cashless exercise shall be made in accordance with the provisions and
requirements of Section 3(a)(9) under the Securities Act and any applicable
state law.
Section 6.11 Legal Opinion on Subscription Date. The Company's
independent counsel shall deliver to the Investor on the Subscription Date an
opinion in the form of Exhibit D, except for paragraph 7 thereof.
Section 6.12 No Similar Arrangements. The Company shall refrain from
entering into any other agreements, arrangements or understandings granting to
the Company the right to put shares of its securities to one or more investors
in placements exempt from registration under the Securities Act until two (2)
months after this Agreement is terminated pursuant to Section 2.4 hereof;
provided, however that nothing herein shall prohibit the Company from entering
into such arrangements in connection with any acquisition.
ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING
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Section 7.1 Conditions Precedent to the Obligation of the Company to
Issue and Sell Common Stock. The obligation hereunder of the Company to issue
and sell the Put Shares to the Investor incident to each Closing is subject to
the satisfaction, at or before each such Closing, of each of the conditions set
forth below.
(a) Accuracy of the Investor's Representation and Warranties.
The representations and warranties of the Investor shall be
true and correct in all material respects as of the date of
this Agreement and as of the date of each such Closing as
though made at each such time.
(b) Performance by the Investor. The Investor shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Investor at or prior to such Closing.
Section 7.2 Conditions Precedent to the Right of the Company to Deliver
a Put Notice and the Obligation of the Investor to Purchase Put Shares.
Following completion of the first Put, the right of the Company to deliver a Put
Notice and the obligation of the Investor hereunder to acquire and pay for the
Put Shares incident to a Closing is subject to the satisfaction, on (i) the
applicable Put Date and (ii) the applicable Closing Date (each a "Condition
Satisfaction Date"), of each of the following conditions:
(a) Registration of the Registrable Securities with the SEC.
As set forth in the Registration Rights Agreement, the Company
shall have filed with the SEC: (i) a Registration Statement
covering the resale of the Common Stock purchased by the
Investor through the first Put that shall have been declared
effective by the SEC in no event later than one hundred and
fifty (150) days after the Subscription Date, and (ii) a
Registration Statement covering the resale of the Common Stock
purchased by the Investor through each subsequent Put that
shall have been declared effective by the SEC in no event
later than ninety (90) days after the applicable Closing Date.
(b) Effective Registration Statement. As set forth in the
Registration Rights Agreement, each Registration Statement
shall have previously become effective and shall remain
effective on each Condition Satisfaction Date and (i) neither
the Company nor the Investor shall have received notice that
the SEC has issued or intends to issue a stop order with
respect to a Registration Statement or that the SEC otherwise
has suspended or withdrawn the effectiveness of a Registration
Statement, either temporarily or permanently, or intends or
has threatened to do so (unless the SEC's concerns have been
addressed and the Investor is reasonably satisfied that the
SEC no longer is considering or intends to take such action),
(ii) no other suspension of the use or withdrawal of the
effectiveness of such Registration Statement or related
prospectus shall exist and (iii) the Company shall have
notified the Investor in writing at least 15 days prior to the
delivery of any Put Notice that the Registration Statement
covering the Registrable Securities purchased by the Investor
through the immediately preceding Put has been declared
effective by the SEC.
(c) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be
true and correct as of each Condition Satisfaction Date as
though made at each such time (except for representations and
warranties specifically made as of a particular date).
(d) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement, the Registration Rights Agreement and the
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Warrants to be performed, satisfied or complied with by the
Company at or prior to each Condition Satisfaction Date.
(e) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted,
entered, promulgated or adopted by any court or governmental
authority of competent jurisdiction that prohibits the
transactions contemplated by this Agreement or otherwise has a
Material Adverse Effect, and no actions, suits or proceedings
shall be in progress, pending or threatened by any Person,
that seek to enjoin or prohibit the transactions contemplated
by this Agreement or otherwise could reasonably be expected to
have a Material Adverse Effect. For purposes of this paragraph
(e), no proceeding shall be deemed pending or threatened
unless one of the parties has received written or oral
notification thereof prior to the applicable Closing Date.
(f) No Suspension of Trading In or Delisting of Common Stock.
The trading of the Common Stock shall not have been suspended
by the SEC, the Principal Market or the NASD and the Common
Stock shall have been approved for listing or quotation on and
shall not have been delisted from the Principal Market. The
issuance of shares of Common Stock with respect to the
applicable Closing, if any, shall not violate the shareholder
approval requirements of the Principal Market.
(g) Legal Opinion. The Company shall have caused to be
delivered to the Investor, within five (5) Trading Days of the
effective date of a Registration Statement, an opinion of the
Company's independent counsel in the form of Exhibit E hereto,
addressed to the Investor.
(h) Due Diligence. No dispute between the Company and the
Investor shall exist pursuant to Section 7.3 as to the
adequacy of the disclosure contained in the Registration
Statement.
(i) Ten Percent Limitation. On each Closing Date, the number
of Put Shares then to be purchased by the Investor shall not
exceed the number of such shares that, when aggregated with
all other shares of Registrable Securities then owned by the
Investor beneficially or deemed beneficially owned by the
Investor, would result in the Investor owning no more than
9.9% of all of such Common Stock as would be outstanding on
such Closing Date, as determined in accordance with Section 16
of the Exchange Act and the regulations promulgated
thereunder. For purposes of this Section, in the event that
the amount of Common Stock outstanding as determined in
accordance with Section 16 of the Exchange Act and the
regulations promulgated thereunder is greater on a Closing
Date than on the date upon which the Put Notice associated
with such Closing Date is given, the amount of Common Stock
outstanding on such Closing Date shall govern for purposes of
determining whether the Investor, when aggregating all
purchases of Common Stock made pursuant to this Agreement and,
if any, Warrant Shares would own more than 9.9% of the Common
Stock following such Closing Date.
(j) Minimum Sale Price. The Sale Price equals or exceeds the
Floor Price on each of the seven Trading Days immediately
preceding the Subscription Date and on each Trading Day during
any Put Notice Period, and the Lowest Average Price with
respect to any Put Date equals or exceeds the Floor Price.
(k) Minimum Average Daily Trading Volume. The Average Daily
Trading Volume for the Common Stock equals or exceeds 20,000
shares per Trading Day during the thirty (30) Trading Day
period immediately preceding the Subscription Date and during
any applicable Put Notice Period.
(l) No Knowledge. The Company shall have no knowledge of any
event more likely than not to have the effect of causing any
Registration Statement to be suspended or otherwise
ineffective (which event is more likely than not to occur
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within the fifteen Trading Days following the Trading Day on
which such Notice is deemed delivered).
(m) Minimum Time Interval. The Minimum Time Interval shall
have elapsed since the immediately preceding Put Date.
(n) Shareholder Vote. The issuance of shares of Common Stock
with respect to the applicable Closing, if any, shall not
violate the shareholder approval requirements of the Principal
Market.
(o) No Lock-up Agreement. The Investor shall not be a party to
any effective "lock-up" agreement in connection with a
Piggyback Registration (as defined in the Registration Rights
Agreement), including, without limitation, the type of
"lock-up" agreement described in Section 1(b) of the
Registration Rights Agreement.
(p) Other. On each Condition Satisfaction Date, the Investor
shall have received and been reasonably satisfied with such
other certificates and documents as shall have been reasonably
requested by the Investor in order for the Investor to confirm
the Company's satisfaction of the conditions set forth in this
Section 7.2., including, without limitation, a certificate in
substantially the form and substance of Exhibit F hereto,
executed in either case by an executive officer of the Company
and to the effect that all the conditions to such Closing
shall have been satisfied as at the date of each such
certificate.
Section 7.3 Due Diligence Review; Non-Disclosure of Non-Public
Information.
(a) The Company shall make available for inspection and review
by the Investor, advisors to and representatives of the
Investor (who may or may not be affiliated with the Investor
and who are reasonably acceptable to the Company), any
Underwriter, any Registration Statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Documents and other
filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for
the purpose of such review, and cause the Company's officers,
directors and employees to supply all such information
reasonably requested by the Investor or any such
representative, advisor or Underwriter in connection with such
Registration Statement (including, without limitation, in
response to all questions and other inquiries reasonably made
or submitted by any of them), prior to and from time to time
after the filing and effectiveness of such Registration
Statement for the sole purpose of enabling the Investor and
such representatives, advisors and Underwriters and their
respective accountants and attorneys to conduct initial and
ongoing due diligence with respect to the Company and the
accuracy of such Registration Statement.
(b) Each of the Company, its officers, directors, employees
and agents shall in no event disclose non-public information
to the Investor, advisors to or representatives of the
Investor unless prior to disclosure of such information the
Company identifies such information as being non-public
information and provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to
accept such non-public information for review. The Company
may, as a condition to disclosing any non-public information
hereunder, require the Investor's advisors and representatives
to enter into a confidentiality agreement in form reasonably
satisfactory to the Company and the Investor.
(c) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any investors
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who purchase stock in the Company in a public offering, to
money managers or to securities analysts; provided, however,
that notwithstanding anything herein to the contrary, the
Company shall, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and any
Underwriters of any event or the existence of any circumstance
(without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the
Company specifically or generally during the course of due
diligence by such persons or entities), which, if not
disclosed in the prospectus included in the applicable
Registration Statement would cause such prospectus to include
a material misstatement or to omit a material fact required to
be stated therein in order to make the statements, therein, in
light of the circumstances in which they were made, not
misleading. Nothing contained in this Section 7.3 shall be
construed to mean that such persons or entities other than the
Investor (without the written consent of the Investor prior to
disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in
accordance with the terms and conditions of this Agreement and
nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due
diligence by such persons or entities, that such Registration
Statement contains an untrue statement of a material fact or
omits a material fact required to be stated in such
Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they
were made, not misleading.
ARTICLE VIII
LEGENDS
Section 8.1 Legends. Each of the Warrant and, unless otherwise provided
below, each certificate representing Registrable Securities will bear the
following legend (the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY
SET FORTH IN A STOCK PURCHASE AGREEMENT BETWEEN INFOCURE CORPORATION
AND CRESCENT INTERNATIONAL LIMITED DATED AS OF SEPTEMBER 28, 1998. A
COPY OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES.
As soon as practicable after the execution and delivery hereof, but in
any event within five (5) Trading Days hereafter, the Company shall issue to the
transfer agent for its Common Stock (and to any substitute or replacement
transfer agent for its Common Stock upon the Company's appointment of any such
substitute or replacement transfer agent) instructions in substantially the form
of Exhibit G hereto, with a copy to the Investor. Other than as required as
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a result of change in law, such instructions shall be irrevocable by the Company
from and after the date hereof or from and after the issuance thereof to any
such substitute or replacement transfer agent, as the case may be, except as
otherwise expressly provided in the Registration Rights Agreement. It is the
intent and purpose of such instructions, as provided therein, to require the
transfer agent for the Common Stock from time to time upon transfer of
Registrable Securities by the Investor to issue certificates evidencing such
Registrable Securities free of the Legend during the following periods and under
the following circumstances and without consultation by the transfer agent with
the Company or its counsel and without the need for any further advice or
instruction or documentation to the transfer agent by or from the Company or its
counsel or the Investor:
(a) At any time after the applicable Effective Date, upon
surrender of one or more certificates evidencing Common Stock
that bear the Legend, to the extent accompanied by a notice
requesting the issuance of new certificates free of the Legend
to replace those surrendered; provided that (i) the applicable
Registration Statement shall then be effective and (ii) if
reasonably requested by the transfer agent the Investor
confirms to the transfer agent that the Investor has
transferred the Registrable Securities pursuant to such
Registration Statement and has complied with the prospectus
delivery requirement.
(b) At any time upon any surrender of one or more certificates
evidencing Registrable Securities that bear the Legend, to the
extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered
and containing representations that (i) the Investor is
permitted to dispose of such Registrable Securities without
limitation as to amount or manner of sale pursuant to Rule
144(k) under the Securities Act.
Section 8.2 No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 8.1 has been or shall be placed on the
share certificates representing the Common Stock and no instructions or "stop
transfers orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article VIII.
Section 8.3 Investor's Compliance. Nothing in this Article VIII shall
affect in any way the Investor's obligations under any agreement to comply with
all applicable securities laws upon resale of the Common Stock.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification. (a) The Company agrees to indemnify and
hold harmless the Investor, its partners, affiliates, officers, directors,
employees, and duly authorized agents, and each Person or entity, if any, who
controls the Investor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, together with the Controlling Persons (as
defined in the Registration Rights Agreement) from and against any Damages,
joint or several, and any action in respect thereof to which the Investor, its
partners, affiliates, officers, directors, employees, and duly authorized
agents, and any such Controlling Person becomes subject to, resulting from,
arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Company contained in this Agreement, as such Damages are incurred, unless such
Damages result primarily from the Investor's gross negligence, recklessness or
bad faith in performing its obligations under this Agreement; provided, however,
that the maximum aggregate liability of the Company shall be limited to the
amount actually invested by the Investor under this Agreement, and provided
further that in no event shall this provision be deemed to limit any rights to
indemnification arising under the Registration Rights Agreement.
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(b) The Investor agrees to indemnify and hold harmless the
Company, its partners, affiliates, officers, directors,
employees, and duly authorized agents, and each Person or
entity, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act, together with the Controlling Persons from and against
any Damages, joint or several, and any action in respect
thereof to which the Company, its partners, affiliates,
officers, directors, employees, and duly authorized agents,
and any such Controlling Person becomes subject to, resulting
from, arising out of or relating to any misrepresentation,
breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of the Investor
contained in this Agreement, as such Damages are incurred,
unless such Damages result primarily from the Company's gross
negligence, recklessness or bad faith in performing its
obligations under this Agreement; provided, however, that the
maximum aggregate liability of the Investor shall be limited
to the amount actually invested by the Investor under this
Agreement, and provided further that in no event shall this
provision be deemed to limit any rights to indemnification
arising under the Registration Rights Agreement.
Section 9.2 Method of Asserting Indemnification Claims. All claims for
indemnification by any Indemnified Party (as defined below) under Section 9.1
shall be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which any
person claiming indemnification under any provision of Section
9.1 (an "Indemnified Party") might seek indemnity under
Section 9.1 is asserted against or sought to be collected from
such Indemnified Party by a person other than the Company, the
Investor or any affiliate of the Company or (a "Third Party
Claim"), the Indemnified Party shall deliver a written
notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for
indemnification that is being asserted under any provision of
Section 12.2 against any person (the "Indemnifying Party"),
together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such Third Party Claim (a "Claim Notice") with reasonable
promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness
after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to
indemnify the Indemnified Party with respect to such Third
Party Claim to the extent that the Indemnifying Party's
ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party shall
notify the Indemnified Party as soon as practicable within the
period ending thirty (30) calendar days following receipt by
the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period")
whether the Indemnifying Party disputes its liability or the
amount of its liability to the Indemnified Party under Section
9.1 and whether the Indemnifying Party desires, at its sole
cost and expense, to defend the Indemnified Party against such
Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant
to this Section 9.2(a), then the Indemnifying Party
shall have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at
the sole cost and expense of the Indemnifying Party,
such Third Party Claim by all appropriate
proceedings, which proceedings shall be vigorously
and diligently prosecuted by the Indemnifying Party
to a final conclusion or
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will be settled at the discretion of the Indemnifying
Party (but only with the consent of the Indemnified
Party in the case of any settlement that provides for
any relief other than the payment of monetary damages
or that provides for the payment of monetary damages
as to which the Indemnified Party shall not be
indemnified in full pursuant to Section 9.1). The
Indemnifying Party shall have full control of such
defense and proceedings, including any compromise or
settlement thereof; provided, however, that the
Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice referred
to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other
action that the Indemnified Party reasonably believes
to be necessary or appropriate to protect its
interests; and provided further, that if requested by
the Indemnifying Party, the Indemnified Party will,
at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to contest.
The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party
Claim controlled by the Indemnifying Party pursuant
to this clause (i), and except as provided in the
preceding sentence, the Indemnified Party shall bear
its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the
Indemnified Party may take over the control of the
defense or settlement of a Third Party Claim at any
time if it irrevocably waives its right to indemnity
under Section 9.1 with respect to such Third Party
Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 9.2(a), or if the
Indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the
Third Party Claim, or if the Indemnifying Party fails
to give any notice whatsoever within the Dispute
Period, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings shall be
prosecuted by the Indemnified Party in a reasonable
manner and in good faith or will be settled at the
discretion of the Indemnified Party (with the consent
of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will
have full control of such defense and proceedings,
including any compromise or settlement thereof;
provided, however, that if requested by the
Indemnified Party, the Indemnifying Party will, at
the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnified
Party and its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this
clause (ii), if the Indemnifying Party has notified
the Indemnified Party within the Dispute Period that
the Indemnifying Party disputes its liability or the
amount of its liability hereunder to the Indemnified
Party with respect to such Third Party Claim and if
such dispute is resolved in favor of the Indemnifying
Party in the manner provided in clause (iii) below,
the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's
defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the
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Indemnified Party's request, and the Indemnified
Party shall reimburse the Indemnifying Party in full
for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate
in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this
clause (ii), and the Indemnifying Party shall bear
its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its
liability or the amount of its liability to the
Indemnified Party with respect to the Third Party
Claim under Section 9.1 or fails to notify the
Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes its liability or the
amount of its liability to the Indemnified Party with
respect to such Third Party Claim, the Loss in the
amount specified in the Claim Notice shall be
conclusively deemed a liability of the Indemnifying
Party under Section 9.1 and the Indemnifying Party
shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability
with respect to such claim, the Indemnifying Party
and the Indemnified Party shall proceed in good faith
to negotiate a resolution of such dispute, and if not
resolved through negotiations within the Resolution
Period, such dispute shall be resolved by arbitration
in accordance with paragraph (c) of this Section 9.2.
(b) In the event any Indemnified Party should have a claim
under Section 9.1 against the Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall
deliver a written notification of a claim for indemnity under
Section 9.1 specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such claim (an "Indemnity Notice") with reasonable
promptness to the Indemnifying Party. The failure by any
Indemnified Party to give the Indemnity Notice shall not
impair such party's rights hereunder except to the extent that
the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the
claim or the amount of the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the
claim or the amount of the claim described in such Indemnity
Notice, the Loss in the amount specified in the Indemnity
Notice will be conclusively deemed a liability of the
Indemnifying Party under Section 9.1 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the
Resolution Period, such dispute shall be resolved by
arbitration in accordance with paragraph (c) of this Section
9.2.
(c) Any dispute under this Agreement or the Warrants shall be
submitted to arbitration (including, without limitation,
pursuant to this Section 12.3) and shall be finally and
conclusively determined by the decision of a board of
arbitration consisting of three (3) members (the "Board of
Arbitration") selected as hereinafter provided. Each of the
Indemnified Party and the Indemnifying Party shall select one
(1) member and the third member shall be selected by mutual
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agreement of the other members, or if the other members fail
to reach agreement on a third member within twenty (20) days
after their selection, such third member shall thereafter be
selected by the American Arbitration Association upon
application made to it for such purpose by the Indemnified
Party. The Board of Arbitration shall meet on consecutive
business days in New York County, New York or such other place
as a majority of the members of the Board of Arbitration
determines more appropriate, and shall reach and render a
decision in writing (concurred in by a majority of the members
of the Board of Arbitration) with respect to the amount, if
any, which the Indemnifying Party is required to pay to the
Indemnified Party in respect of a claim filed by the
Indemnified Party. In connection with rendering its decisions,
the Board of Arbitration shall adopt and follow such rules and
procedures as a majority of the members of the Board of
Arbitration deems necessary or appropriate. To the extent
practical, decisions of the Board of Arbitration shall be
rendered no more than thirty (30) calendar days following
commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered
to the Indemnified Party and the Indemnifying Party. Any
decision made by the Board of Arbitration (either prior to or
after the expiration of such thirty (30) calendar day period)
shall be final, binding and conclusive on the Indemnified
Party and the Indemnifying Party and entitled to be enforced
to the fullest extent permitted by law and entered in any
court of competent jurisdiction. The non-prevailing party to
any arbitration shall bear the expense of both parties in
relation thereto, including but not limited to the parties'
attorneys' fees, if any, and the expenses and fees of the
Board of Arbitration.
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses. Each of the Company and the Investor
agrees to pay its own expenses incident to the performance of its obligations
hereunder, except that the Company shall pay the fees, expenses and
disbursements of the Investor's counsel in an amount not to exceed $10,000.
Section 10.2 Reporting Entity for the Common Stock. The reporting
entity relied upon for the determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this Agreement
shall be the American Stock Exchange. The written mutual consent of the Investor
and the Company shall be required to employ any other reporting entity.
Section 10.3 Brokerage. Each of the parties hereto represents that it
has no dealings in connection with this transaction with any finder or broker
which would impose a legal obligation to pay any fee or commission. The Company
on the one hand, and the Investor, on the other hand, agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
persons claiming brokerage commissions or finder's fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.
Section 10.4 Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted
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to be given hereunder shall be deemed effective (a) upon hand delivery or
delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to the Company:
Infocure Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
Telephone: (▇▇▇) ▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
1600 Atlanta Financial Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇▇
If to the Investor:
Crescent International Limited
▇/▇ ▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇▇▇) ▇▇
▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇/Maxi Brezzi
Telephone: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
Facsimile: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party hereto may from time to time change its address or
facsimile number for notices under this Section by giving at least ten
(10) days' prior written notice of such changed address or facsimile
number to the other party hereto.
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Section 10.5 Assignment. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
person. Notwithstanding the foregoing, the Investor's interest in this Agreement
may be assigned at any time, in whole or in part, to any affiliate of the
Investor upon the prior written consent of the Company, which consent shall not
to be unreasonably withheld provided, however, that any such assignment or
transfer shall relieve the Investor of its duties under this Agreement only upon
performance thereof by any such assignee or transferee and no such assignment
shall alter the undertaking of the Parent Company to the Investor under the
Letter of Comfort.
Section 10.6 Amendment; No Waiver. No party shall be liable or bound to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth in this Agreement or therein. Except as
expressly provided in this Agreement, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by both parties hereto. The failure of the either party to
insist on strict compliance with this Agreement, or to exercise any right or
remedy under this Agreement, shall not constitute a waiver of any rights
provided under this Agreement, nor estop the parties from thereafter demanding
full and complete compliance nor prevent the parties from exercising such a
right or remedy in the future.
Section 10.7 Annexes and Exhibits; Entire Agreement. All annexes and
exhibits to this Agreement are incorporated herein by reference and shall
constitute part of this Agreement. This Agreement, the Warrants, the
Registration Rights Agreement and the Letter Agreement set forth the entire
agreement and understanding of the parties relating to the subject matter hereof
and thereof and supersede all prior and contemporaneous agreements, negotiations
and understandings between the parties, both oral and written, relating to the
subject matter hereof.
Section 10.8 Survival. The provisions of Articles VI, VIII, IX and X,
and of Section 7.3, shall survive the termination of this Agreement.
Section 10.9 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
Section 10.10 Title and Subtitles. The titles and subtitles used in
this Agreement are used for the convenience of reference and are not to be
considered in construing or interpreting this Agreement.
Section 10.11 Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
Section 10.12 Choice of Law. This Agreement shall be construed under
the laws of the State of New York.
Section 10.13 Other Expenses. In the event that a dispute between the
parties is not determined by a Board of Arbitration, the non-prevailing party in
any action, suit or proceeding shall bear all investigative, legal and other
expenses reasonably incurred in connection with, and any and all amounts paid in
defense or settlement of such action, suit or proceeding.
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
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CRESCENT INTERNATIONAL LIMITED
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
INFOCURE CORPORATION
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chairman
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ANNEX A
MAXIMUM PUT AMOUNT
Subject to Section 2.1(b), the Maximum Put Amount with respect to a Put
shall be determined based on the daily average trading value of the Common Stock
in denomination of US dollars (the "Daily Average Trading Value") during thirty
(30) Trading Days immediately before the relevant Put Date.
Minimum Daily Average Trading Value ($) Maximum Put Amount ($)
--------------------------------------- ----------------------
$200,000 - 499,999 $1,000,000
$500,000 - 799,999 $1,500,000
$800,000 or more $2,000,000
Daily Average Trading Value is determined, with respect to each Trading
Day, as the product of the trading volume for such Trading Day multiplied by the
Sale Price, as published by the Principal Trading Market.
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