SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
CRESCENT INTERNATIONAL LTD.
AND
FIBERCORE, INC.
DATED AS OF JUNE 9, 2000
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS......................................
Section 1.1. "Affiliate".........................................
Section 1.2. "Capital Shares"....................................
Section 1.3. "Closing"...........................................
Section 1.4. "Closing Date"......................................
Section 1.5. "Commitment Period".................................
Section 1.6. "Common Stock"......................................
Section 1.7. "Condition Satisfaction Date".......................
Section 1.8. "Convertible Notes".................................
Section 1.9. "Daily Trading Value"...............................
Section 1.10. "Damages"...........................................
Section 1.11. "Early Put".........................................
Section 1.12. "Early Put Shares"..................................
Section 1.13. "Early Put Warrant".................................
Section 1.14. "Early Put Warrant Shares"..........................
Section 1.15. "Effective Date"....................................
Section 1.16. "Escrow Amount".....................................
Section 1.17. "Exchange Act"......................................
Section 1.18. "Incentive Warrant".................................
Section 1.19. "Incentive Warrant Shares"..........................
Section 1.20. "Investment Amount".................................
Section 1.21. "Legend"............................................
Section 1.22. "Lowest Average Price"..............................
Section 1.23. "Material Adverse Effect"...........................
Section 1.24. "Maximum Commitment Amount".........................
Section 1.25. "Maximum Put Amount"................................
Section 1.26. "Minimum Time Interval".............................
Section 1.27. "Minimum Trade Price"...............................
Section 1.28. "NASD"..............................................
Section 1.29. "Net Amount"........................................
Section 1.30. "Note Conversion Shares"............................
Section 1.31. "Outstanding".......................................
Section 1.32. "Person"............................................
Section 1.33. "Principal Market"..................................
Section 1.34. "Purchase Price"....................................
Section 1.35. "Put"...............................................
Section 1.36. "Put Date"..........................................
Section 1.37. "Put Fees"..........................................
Section 1.38. "Put Notice"........................................
Section 1.39. "Put Notice Period".................................
Section 1.40. "Put Shares"........................................
Section 1.41. "Registrable Securities"............................
Section 1.42. "Registration Rights Agreement".....................
Section 1.43. "Registration Statement"............................
Section 1.44. "Regulation D"......................................
Section 1.45. "Representative"....................................
Section 1.46. "SEC"...............................................
Section 1.47. "SEC Documents".....................................
Section 1.48. "Section 4(2)"......................................
Section 1.49. "Securities Act"....................................
Section 1.50. "Short Sale"........................................
Section 1.51. "Strategic Investor"................................
Section 1.52. "Subscription Date".................................
Section 1.53. "Subsidiary"........................................
Section 1.54. "Trade Price".......................................
Section 1.55. "Trading Day".......................................
Section 1.56. "Underwriter".......................................
Section 1.57. "Valuation Period"..................................
Section 1.58. "Warrants"..........................................
Section 1.59. "Warrant Shares"....................................
ARTICLE II PURCHASE AND SALE OF COMMON STOCK; TERMINATION OF
OBLIGATIONS; INCENTIVE WARRANT...........................
Section 2.1. Investments.........................................
Section 2.2. Twenty Percent Limitation...........................
Section 2.3. Mechanics...........................................
Section 2.4. Closings............................................
Section 2.5. Termination of Agreement and Investment Obligation..
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR...............
Section 3.1. Intent..............................................
Section 3.2. Sophisticated Investor..............................
Section 3.3. Authority...........................................
Section 3.4. Not an Affiliate....................................
Section 3.5. Organization and Standing...........................
Section 3.6. Absence of Conflicts................................
Section 3.7. Disclosure; Access to Information...................
Section 3.8. Manner of Sale......................................
Section 3.9. Resale Restrictions.................................
Section 3.10. Short Sales.........................................
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............
Section 4.1. Organization of the Company.........................
Section 4.2. Authority...........................................
Section 4.3. Corporate Documents.................................
Section 4.4. Books and Records...................................
Section 4.5. Capitalization......................................
Section 4.6. Registration and Listing of Common Stock............
Section 4.7. Financial Statements................................
Section 4.8. SEC Documents.......................................
Section 4.9. Exemption from Registration; Valid Issuances;
New Issuances.......................................
Section 4.10. No General Solicitation or Advertising..............
Section 4.11. No Conflicts........................................
Section 4.12. No Material Adverse Change..........................
Section 4.13. No Undisclosed Liabilities..........................
Section 4.14. No Undisclosed Events or Circumstances..............
Section 4.15. No Integrated Offering..............................
Section 4.16. Litigation and Other Proceedings....................
Section 4.17. No Misleading or Untrue Communication...............
Section 4.18. Material Non-Public Information.....................
Section 4.19. Berliner Bank Credit Facilities.....................
ARTICLE V COVENANTS OF THE INVESTOR................................
Section 5.1. Compliance..........................................
Section 5.2. Short Sale..........................................
Section 5.3. Confidential Information............................
Section 5.4. Periodic Reports....................................
ARTICLE VI COVENANTS OF THE COMPANY.................................
Section 6.1. Registration Rights.................................
Section 6.2. Reservation of Common Stock.........................
Section 6.3. Listing of Common Stock.............................
Section 6.4. Exchange Act Registration...........................
Section 6.5. Legends.............................................
Section 6.6. Corporate Existence.................................
Section 6.7. Additional SEC Documents............................
Section 6.8. Notice of Certain Events Affecting Registration;
Suspension of Right to Make a Put...................
Section 6.9. Consolidation; Merger...............................
Section 6.10. Issuance of Put Shares, Note Conversion Shares,
Warrant Shares and Additional Shares................
Section 6.11. Legal Opinions on Subscription Date.................
Section 6.12. No Similar Arrangement; Right of First Refusal......
Section 6.13. Confidential Information............................
Section 6.14. Public Announcements................................
Section 6.15. Acquisition of Xtal Fibras Opticas, S.A.............
Section 6.16. Berliner Bank Credit Facilities.....................
ARTICLE VII CONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO
INITIAL CLOSING AND SUBSEQUENT CLOSINGS..................
Section 7.1. Conditions Precedent to the Obligation of the
Company to Issue and Sell Common Stock..............
Section 7.2. Conditions Precedent to the Right of the Company
to Deliver a Put Notice and the Obligation of the
Investor to Purchase Convertible Notes and Put
Shares..............................................
Section 7.3. Due Diligence Review; Non-Disclosure of Non-Public
Information.........................................
ARTICLE VIII LEGENDS..................................................
Section 8.1. Legends.............................................
Section 8.2. No Other Legend or Stock Transfer Restrictions......
Section 8.3. Investor's Compliance...............................
ARTICLE IX INDEMNIFICATION; ARBITRATION.............................
Section 9.1. Indemnification.....................................
Section 9.2. Method of Asserting Indemnification Claims..........
Section 9.3. Arbitration.........................................
ARTICLE X MISCELLANEOUS............................................
Section 10.1. Put Fees and Transaction Costs......................
Section 10.2. Reporting Entity for the Common Stock...............
Section 10.3. Brokerage...........................................
Section 10.4. Notices.............................................
Section 10.5. Assignment..........................................
Section 10.6. Amendment; No Waiver................................
Section 10.7. Annexes and Exhibits; Entire Agreement..............
Section 10.8. Survival............................................
Section 10.9. Severability........................................
Section 10.10. Title and Subtitles.................................
Section 10.11. Counterparts........................................
Section 10.12. Choice of Law.......................................
Section 10.13. Other Expenses......................................
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
CRESCENT INTERNATIONAL LTD.
AND
FIBERCORE, INC.
DATED AS OF JUNE 9, 2000
This SECURITIES PURCHASE AGREEMENT is entered into as of the 9th day of
June, 2000 (this "Agreement"), by and between Crescent International Ltd. (the
"Investor"), an entity organized and existing under the laws of Bermuda, and
FiberCore, Inc., a corporation organized and existing under the laws of the
State of Nevada (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
$30,000,000 worth of securities, which will include shares of Common Stock (as
defined below), and Convertible Notes (as defined below) in the aggregate amount
of up to $7,500,000; 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 U.S.
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, in consideration of the premises, representations,
warranties covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. "Affiliate" shall mean any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by, or
is under direct or indirect common control with any other Person. For the
purposes of this definition, "control," when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise, and the term "controls" and "controlled" have meanings correlative
to the foregoing.
Section 1.2. "Capital Shares" shall mean the Common Stock, the Note
Conversion Shares 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 1.3. "Closing" shall mean one of the closings of a purchase and
sale of the Common Stock and the Convertible Notes pursuant to Section 2.1 of
this Agreement.
Section 1.4. "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.
Section 1.5. "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 2.5, or (iii) the date occurring two
years from the Subscription Date.
Section 1.6. "Common Stock" shall mean the Company's common stock, $0.001
par value per share.
Section 1.7. "Condition Satisfaction Date" shall have the meaning set
forth in Section 7.2 of this Agreement.
Section 1.8. "Convertible Notes" shall mean the convertible secured note
to be issued by the Company to the Investor in the amount of up to $6,000,000,
in the form attached hereto as Exhibit A-1, and the convertible secured note to
be issued by the Company to the Investor in the amount of up to $1,500,000, in
the form attached hereto as Exhibit A-2.
Section 1.9. "Daily Trading Value" shall mean, on any Trading Day, the
Trade Price multiplied by the trading volume of the Common Stock.
Section 1.10. "Damages" shall mean any and all losses, claims, damages,
liabilities, 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 1.11. "Early Put" shall have the meaning set forth in Section
2.1(a) of this Agreement.
Section 1.12. "Early Put Shares" shall have the meaning set forth in
Section 2.1(a) of this Agreement.
Section 1.13. "Early Put Warrant" shall mean the Early Put Warrant in the
form of Exhibit B hereto issued pursuant to Section 2.1(b) of this Agreement.
Section 1.14. "Early Put Warrant Shares" shall mean all shares of Common
Stock issued or issuable pursuant to exercise of the Early Put Warrant.
Section 1.15. "Effective Date" shall mean the earlier to occur of: (i) the
date on which 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 1.16. "Escrow Amount" shall mean an amount of $250,000 retained by
the Investor in a separate account in respect of the Company's obligations under
Section 1.1(c) of the Registration Rights Agreement.
Section 1.17. "Exchange Act" shall mean the U.S. Securities Exchange Act
of 1934, as amended and the rules and regulations promulgated thereunder.
Section 1.18. "Incentive Warrant" shall mean the Incentive Warrant in the
form of Exhibit C hereto issued pursuant to Section 2.1(d) of this Agreement.
Section 1.19. "Incentive Warrant Shares" shall mean all shares of Common
Stock issued or issuable pursuant to exercise of the Incentive Warrant.
Section 1.20. "Investment Amount" shall mean (i) with respect to a Put,
the dollar amount 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 2.3 hereof, or (ii) with respect to the Convertible Notes, the
amount of each Convertible Note.
Section 1.21. "Legend" shall have the meaning specified in Section 8.1 of
this Agreement.
Section 1.22. "Lowest Average Price" shall mean the average of the lowest
three consecutive Trade Prices during the applicable Valuation Period.
Section 1.23. "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 or to the Company and such
other entities controlling or controlled by the Company, taken 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 this Agreement, the Registration Rights Agreement
and the Convertible Notes.
Section 1.24. "Maximum Commitment Amount" shall mean $30,000,000.
Section 1.25. "Maximum Put Amount" shall mean twice the average of the
Daily Trading Value during the applicable Valuation Period, with a maximum of
$3,500,000; provided, however, that if the Trade Price on each Trading Day
during the Put Notice Period is less than the Minimum Trade Price, the Maximum
Put Amount shall be $20,000.
Section 1.26. "Minimum Time Interval" shall mean twenty-two (22) Trading
Days between any two Put Dates.
Section 1.27. "Minimum Trade Price" shall mean $2.50.
Section 1.28. "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.29. "Net Amount" shall mean the Investment Amount less Put Fees
and Transaction Costs, as set out in Section 10.1 and Schedule 10.1. For the
purposes of the first Closing only, the term Net Amount shall mean the
Investment Amount less the Put Fees, Transaction Costs and Escrow Amount, as set
out in Section 10.1 and Schedule 10.1.
Section 1.30. "Note Conversion Shares" shall mean shares of Common Stock
into which the Convertible Notes are or may be converted.
Section 1.31. "Outstanding" when used with reference to Common Stock 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 1.32. "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 1.33. "Principal Market" shall mean the Nasdaq National Market,
the Nasdaq SmallCap Market, the American Stock Exchange, the Electronic Bulletin
Board or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
Section 1.34. "Purchase Price" shall mean, with respect to a Put,
ninety-three percent (93%) of the Lowest Average Price.
Section 1.35. "Put" shall mean the Early Put and each occasion the Company
elects to exercise its right to require the Investor to purchase a discretionary
amount of the Company's Common Stock, subject to the terms and conditions of
this Agreement.
Section 1.36. "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 2.3(b) hereof.
Section 1.37. "Put Fees" shall have the meaning specified in Section 10.1
hereof.
Section 1.38. "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 1.39. "Put Notice Period" shall mean a period beginning on a Put
Date and ending on a Closing Date; provided that in no event shall a Put Notice
Period be less than seven (7) Trading Days.
Section 1.40. "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 1.41. "Registrable Securities" shall mean (i) the Put Shares, (ii)
the Note Conversion Shares, (iii) the Warrant Shares and (iv) 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 by the Investor
without registration and without any time, volume or manner limitations pursuant
to Rule 144 (or any similar provision then in effect) under the Securities Act.
Section 1.42. "Registration Rights Agreement" shall mean the registration
rights agreement in the form of Exhibit D hereto.
Section 1.43. "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, the Convertible Notes 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 1.44. "Regulation D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.45. "Representative" of a party shall mean any officer,
director, employee, agent, counsel, accountant, financial advisor, consultant or
other representative of such party.
Section 1.46. "SEC" shall mean the U.S. Securities and Exchange
Commission.
Section 1.47. "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 1.48. "Section 4(2)" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.49. "Securities Act" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.50. "Short Sale" shall have the meaning specified in Rule 3b-3
of the Exchange Act; provided that this Agreement shall not represent an
unconditional contract (within the meaning of Rule 3b-3(2) of the 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 1.51. "Strategic Investor" shall mean any Person that (i) is
engaged in or intends to enter into the business of buying, selling,
manufacturing, servicing, or licensing fiber optic or high quality glass
products or related products bought, sold, manufactured, serviced or licensed in
the ordinary course of the Company's business, (ii) is a present or potential
vendor to or vendee of the Company, (iii) intends to participate in the
corporate governance of the Company or in the conduct of its business or (iv) as
to whom the Company's Board of Directors has made a determination in good faith
that such Person has a potential to develop a material strategic relationship
with the Company in connection with its present or future business.
Section 1.52. "Subscription Date" shall mean the date on which this
Agreement is executed and delivered by the parties hereto.
Section 1.53. "Subsidiary" shall mean any Person in which the Company,
directly or indirectly through Subsidiaries or otherwise, beneficially owns more
than fifty percent (50%) of either the equity interests in, or the voting
control of, such Person.
Section 1.54. "Trade Price" shall mean the volume-weighted average price
as reported by Bloomberg L.P. using the Average Quote Recap function.
Section 1.55. "Trading Day" shall mean any day during which the Principal
Market shall be open for business.
Section 1.56. "Underwriter" shall mean any underwriter participating in
any disposition of the Registrable Securities on behalf of the Investor pursuant
to a Registration Statement.
Section 1.57. "Valuation Period" shall mean (i) with respect to the
Subscription Date, the twenty-two (22) Trading Day period immediately preceding
the Subscription Date, (ii) with respect to an Effective Date, the twenty-two
(22) Trading Day period immediately preceding such Effective Date and (iii) with
respect to a Closing Date, the twenty-two (22) Trading Day period immediately
preceding the applicable Put Date, during which the Purchase Price of the Common
Stock is determined.
Section 1.58. "Warrants" shall mean the Early Put Warrant and Incentive
Warrant.
Section 1.59. "Warrant Shares" shall mean the Early Put 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) Early 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 $3,500,000 at the Purchase Price on the Subscription Date
(such transaction is referred to herein as the "Early Put," and all such shares
are referred to herein as the "Early Put Shares").
(b) Early Put Warrant. In partial consideration for the Investor
entering into this Agreement, on the Subscription Date the Company shall issue
to the Investor an Early Put Warrant with an exercise price of $0.01 for each
share of Common Stock.
(c) Convertible Notes. On the Subscription Date the Company shall
issue to the Investor and the Investor shall purchase a secured convertible note
in the aggregate principal amount of up to $6,000,000, in the form attached
hereto as Exhibit A-1. Prior to the Effective Date, the Company may, upon seven
(7) days prior written notice to the Investor, issue to the Investor, and if
such secured convertible note is so issued the Investor shall purchase, an
additional secured convertible note in the aggregate principal amount of
$1,500,000, in the form attached hereto as Exhibit A-2.
(d) Incentive Warrant. In partial consideration for the Investor
entering into this Agreement, 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.
(e) 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.
Section 2.2. Twenty Percent Limitation. Unless the Company obtains the
requisite approval of its shareholders in accordance with the applicable rules
of the Principal Market, and only to the extent such shareholder approval is
required by 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 the Puts,
the Warrants and the Convertible Notes.
Section 2.3. 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 not be 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 2.4. Closings. On each Closing Date for a Put (i) the Company
shall execute and deliver irrevocable instructions to the transfer agent to
prepare and deliver to the Investor a share certificate in the name of the
Investor and in the amount of the applicable Put Shares, the transfer agent
shall confirm and accept such instructions, and a copy of such instructions
shall be delivered to the Investor's legal counsel and (ii) the Investor shall
deliver to the Company the Net 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 2.5. Termination of Agreement and Investment Obligation. The
Company shall have the right to terminate this Agreement at any time upon thirty
(30) days' written notice to the Investor. The Investor shall have the right to
immediately 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
accordance with Section 6.12 or in the event that: (i) the Registration
Statement with respect to Registrable Securities relating to the Early Put and
the Note Conversion Shares is not effective within ninety (90) days following
the Subscription Date, (ii) 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, or (iii) the Company shall at any
time fail to comply with the requirements of Section 6.2, 6.3, 6.4, 6.5, 6.6,
6.8 or 6.9.
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, the Convertible Notes or the Warrants and has no present arrangement
(whether or not legally binding) at any time to sell, assign, transfer, pledge,
encumber, hypothecate or otherwise dispose of the Registrable Securities, the
Convertible Notes or the 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, the Convertible Notes or the Warrants for
any minimum or other specific term and reserves the right to dispose of the
Registrable Securities, the Convertible Notes or the 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 the Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Common Stock and the Convertible
Notes. The Investor acknowledges that an investment in the Common Stock and the
Convertible Note is speculative and involves a high degree of risk.
Section 3.3. Authority. Each of this Agreement and the Registration Rights
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, 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 or
had access to 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. Investor acknowledges that any
Registrable Securities, the Convertible Notes 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 it must bear the
economic risk of the investment in the Registrable Securities, the Convertible
Notes and Warrants because the Registrable Securities, the Convertible Notes 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. The Investor will not reoffer, sell, assign,
transfer, pledge, encumber, hypothecate or otherwise dispose of any Registrable
Securities, the Convertible Notes or 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, the Convertible Notes or 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, the Convertible
Notes or Warrants may be endorsed with a legend to this effect.
Section 3.10. Short Sales. In the thirty (30) Trading Days preceding the
Subscription Date, the Investor has not directly or indirectly engaged in any
Short Sale of the Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that on the Subscription
Date, each Effective Date and each Closing Date:
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 Nevada 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 not own more than
fifty percent (50%) of the outstanding capital stock of or control any other
Person. 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 Convertible Notes and the Warrants and to
issue the Put Shares, the Convertible Notes, the Note Conversion Shares, the
Warrants and the Incentive Warrant Shares; (ii) the execution and delivery of
this Agreement and the Registration Rights Agreement, and the execution,
issuance and delivery of the Convertible Notes and 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 Convertible Notes
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. Corporate Documents. The Company has furnished or made
available to the Investor true and correct copies of the Company's Articles of
Incorporation, as amended and in effect on the date hereof (the "Articles"), and
the Company's By-Laws, as amended and in effect on the date hereof (the
"By-Laws").
Section 4.4. Books and Records. The minute books and other similar records
of the Company and its subsidiaries as made available to Investor prior to the
execution of this Agreement contain a true and complete record, in all material
respects, of all action taken at all meetings and by all written consents in
lieu of meetings of the stockholders, the boards of directors and committees of
the boards of directors of the Company and the subsidiaries. The stock transfer
ledgers and other similar records of the Company and the subsidiaries as made
available to Investor prior to the execution of this Agreement accurately
reflect all record transfers prior to the execution of this Agreement in the
capital stock of the Company and the subsidiaries. Neither the Company nor any
subsidiary has any of its Books and Records recorded, stored, maintained,
operated or otherwise wholly or partly dependent upon or held by any means
(including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the Company or a
subsidiary.
Section 4.5. Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock, of which 50,317,418 shares are
issued and outstanding, and 10,000,000 shares of preferred stock, none of which
are issued and outstanding. Except for (i) options to purchase not more than
5,473,217 shares of Common Stock with purchase prices between $0.003 and $6.90
per share; (ii) warrants to purchase not more than 2,524,552 shares of Common
Stock with purchase prices between $0.25 and $3.906 per share; and (iii) shares
issuable pursuant to the instruments set forth in Schedule 4.5 hereto, there are
no options, warrants, or rights to subscribe to, securities, rights or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock of the Company. All of the outstanding
shares of Common Stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable.
Section 4.6. Registration and Listing of 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 Electronic Bulletin Board.
Section 4.7. Financial Statements. Prior to the execution of this
Agreement, the Company has delivered to the Investor true and complete copies of
the following financial statements:
(a) the audited balance sheets of the Company and its consolidated
subsidiaries as of December 31, 1999, 1998 and 1997, and the related audited
consolidated statements of operations, stockholders' equity and cash flows for
each of the fiscal years then ended, together with a true and correct copy of
the report on such audited information by Deloite & Touche LLP, and all letters
from such accountants with respect to the results of such audits; and
(b) the unaudited balance sheets of the Company and its consolidated
subsidiaries as of March 31, 2000, and the related unaudited consolidated
statements of operations and cash flows for the portion of the fiscal year then
ended.
The financial statements of the Company delivered to the Investor 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 not include
footnotes or 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).
Section 4.8. 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 as to form and substance 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).
Section 4.9. Exemption from Registration; Valid Issuances; New Issuances.
The sale and issuance of the Warrants, the Warrant Shares, the Convertible
Notes, the Note Conversion Shares and the Put Shares in accordance with the
terms and on the bases of the representations and warranties set forth in this
Agreement, will 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, the Note Conversion Shares and the Warrant Shares will be duly and
validly issued, fully paid, and nonassessable. When issued as herein provided
the Convertible Notes shall be duly and validly executed, issued and delivered
by the Company and constitute a valid and binding obligation of the Company.
Neither the sales of the Put Shares, the Convertible Notes, the Note Conversion
Shares, the Warrants, or the Warrant Shares pursuant to, nor the Company's
performance of its obligations under, this Agreement, the Registration Rights
Agreement, the Convertible Notes or the Warrants will (i) result in the creation
or imposition of any liens, charges, claims or other encumbrances upon the Put
Shares, the Note Conversion Shares, the Warrant Shares, or any of the assets of
the Company, other than as provided in the Security Agreement dated as of June
9, 2000, between FiberCore Jena GmbH and the Investor, and in the Share Pledge
Agreement dated as of June 9, 2000, between the Company and the Investor 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, other than pursuant to this Agreement and the transactions contemplated
hereby. The Put Shares, the Note Conversion Shares and the Warrant Shares will
not subject the Investor to personal liability by reason of the ownership
thereof. The Put Shares, the Note Conversion Shares and the Warrant Shares have
been duly authorized by the Company, but have not been issued (whether or not
subsequently repurchased by the Company) to any Person, and when issued to the
Investor in accordance with this Agreement, the Convertible Notes and the
Warrants will not have been issued (whether or not subsequently repurchased by
the Company) to any Person other than the Investor.
Section 4.10. No General Solicitation or Advertising. In regard to the
transactions contemplated hereby, neither the Company nor any of its Affiliates
nor any distributor or any person acting on its or their behalf 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
Convertible Notes, the Note Conversion Shares, the Warrants, or the Warrant
Shares.
Section 4.11. 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 Convertible Notes, the Note Conversion Shares, the Warrants
and the Warrant Shares do not and will not (i) result in a violation of the
Articles 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, the Put Shares, the
Note Conversion Shares, the Convertible Notes, the Warrants or the Warrant
Shares in accordance with the terms 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 Principal Market); 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 4.12. No Material Adverse Change. Since December 31, 1999, no
event has occurred that would have a Material Adverse Effect on the Company.
Section 4.13. No Undisclosed Liabilities. The Company has no liabilities
or obligations that are material, individually or in the aggregate, other than
those incurred in the ordinary course of the Company's businesses since December
31, 1999 and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.
Section 4.14. No Undisclosed Events or Circumstances. Since December 31,
1999, no event or circumstance has occurred or exists with respect to the
Company 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.
Section 4.15. 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 Put Shares, the Convertible Notes, the
Note Conversion Shares, the Warrants or the Warrant Shares under the Securities
Act.
Section 4.16. Litigation and Other Proceedings. Except as may be set forth
in the SEC Documents or as disclosed in Schedule 4.16 hereto, 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 4.17. 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 Convertible Notes, the
Note Conversion 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 4.18. 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 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.
Section 4.19. Berliner Bank Credit Facilities. The Company has not
borrowed any funds under, and no amounts are owed to Berliner Bank AG arising
out of, (i) the Letter of Credit (Kreditvertrag) dated November 13, 1996 between
FiberCore Glasfaser Jena GmbH, currently FiberCore Jena GmbH, and Berliner Bank
AG or (ii) the Loan Agreement (Darlehenvertag) dated September 6, 1996 between
the Company and Berliner Bank AG.
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 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. Neither the Investor nor any of its Affiliates
will directly or indirectly engage in any Short Sale of Common Stock during the
Commitment Period.
Section 5.3. Confidential Information. The Investor will hold, and will
use its best efforts to cause its Affiliates, and each of their respective
Representatives to hold, in strict confidence from any Person (other than any
such Affiliate or Representative), unless (i) compelled to disclose by judicial
or administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of governmental or regulatory authorities) or by other
requirements of law or (ii) disclosed in an action or proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential.
Section 5.4. Periodic Reports. The Investor shall, upon the written
request of the Company, deliver to the Company a written statement of the number
of shares of Common Stock held by the Investor on the date of such statement;
provided, however, that the Investor shall not be required to deliver such
statement to the Company more frequently than once per calendar week.
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 (i) 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 Trade Price and the Exercise Price of the
Incentive Warrant, and the maximum number of Early Put Warrant Shares issuable
pursuant to the Early Put Warrant, and (ii) any obligation to issue the Note
Conversion Shares, such amount of Note Conversion Shares to be reserved shall be
calculated based upon the conversion price set forth in Section 3.1 of each of
the Convertible Notes. 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.
Section 6.3. Listing of Common Stock. The Company shall exercise best
efforts to maintain the listing or quotation 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, the Note Conversion 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, the Note Conversion 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 the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules thereunder)
to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act.
Section 6.5. Legends. The certificates evidencing the Put Shares, the
Convertible Notes, the Note Conversion 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.
Section 6.8. Notice of Certain Events Affecting Registration; Suspension
of Right to Make a Put. The Company shall immediately notify the Investor, but
in no event later than two (2) business days by facsimile and by overnight
courier, 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; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) 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. While in possession of material non-public
information received from the Company, the Investor shall not dispose of any
Registrable Securities until such information is disclosed to the public (a
"Restricted Period"); provided that, if such Restricted Period exceeds one
hundred twenty (120) days, the liquidated damages described in Section 1.1(c) of
the Registration Rights Agreement shall be increased to three percent (3.0%)
until such Restricted Period shall have elapsed.
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, Note Conversion Shares, Warrant
Shares and Additional Shares. The sale of the Put Shares, the issuance of the
Convertible Notes, the issuance of the Warrant Shares pursuant to exercise of
the Warrants, and the issuance of Note Conversion Shares upon conversion of the
Convertible Notes 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 Opinions on Subscription Date. The Company's
independent Nevada counsel shall deliver to the Investor on the Subscription
Date an opinion in the form of Exhibit E-1 hereto. The Company's special New
York counsel shall deliver to the Investor on the Subscription Date an opinion
in the form of Exhibit E-2 hereto.
Section 6.12. No Similar Arrangement; Right of First Refusal. The Company
shall refrain from entering into any other agreements, arrangements or
understandings granting to the Company the right to sell shares of its
securities to one or more investors in placements exempt from registration under
the Securities Act until thirty (30) calendar days after this Agreement is
terminated pursuant to Section 2.5 hereof (the "Exclusivity Period"). If the
Company, for the purpose of obtaining any additional financing, wishes to sell
shares of its securities in placements exempt from registration under the
Securities Act during the Exclusivity Period (a "Sale") to a party other than a
Strategic Investor and other than the Investor (the "Third Party"), the Company
shall first offer (the "Offer") to the Investor, in writing, the right to
purchase such shares (the "Offered Shares") at the bona fide price offered by
the Third Party (the "Offer Price"). The Offer shall grant the Investor the
right during the five (5) Trading Days immediately following the date of the
Offer to elect to purchase any or all of the Offered Shares. The Company, in
connection with such a Sale, 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 the
Investor so exercises its right to purchase any or all of the Offered Shares,
the purchase will be treated as a Put except that the purchase price for the
Offered Shares shall be the Offer Price. The closing and method of payment shall
be as provided for in Section 2.3 hereof and the Closing Date shall be seven (7)
Trading Days after the Investor exercises such right. If the Investor fails to
exercise its right to purchase any or all of the Offered Shares, then during the
sixty (60) calendar days immediately 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 Offer Price payable on terms and
conditions that are not more favorable to such purchaser than those contained in
the Offer. In the event that the Company effects a Sale to a Third Party, the
Investor may immediately terminate this Agreement. Notwithstanding the
foregoing, the Company shall be permitted to issue shares of its securities in
connection with an acquisition of another entity or assets related to the
Company's current or future business.
Section 6.13. Confidential Information. The Company will hold, and will
use its best efforts to cause its Affiliates, and each of their respective
Representatives to hold, in strict confidence from any Person (other than any
such Affiliate or Representative), unless (i) compelled to disclose by judicial
or administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of governmental or regulatory authorities) or by other
requirements of law or (ii) disclosed in an action or proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential.
Section 6.14. Public Announcements At all times at or before the Closing,
the Company, its Representatives and legal advisors, and the Investor will not
issue or make any reports, statements or releases to the public or to any third
party with respect to this Agreement or the transactions contemplated hereby
without the consent of both the Company and the Investor, which consent shall
not be unreasonably withheld. The Company, its Representatives and legal
advisors, and the Investor will also obtain both the Company's and the
Investor's prior approval of any press release to be issued announcing the
consummation of the transactions contemplated by this Agreement or in any way
referring to the other party or Affiliates of the other party. If either party
is unable to obtain the approval of its public report, statement, or press or
other release from the other party and such report, statement, or press or other
release is, in the opinion of legal counsel to such party, required by
applicable law in order to discharge such party's disclosure obligations, then
such party may make or issue the legally required report, statement, or press or
other release and promptly furnish the other party with a copy thereof.
Section 6.15. Acquisition of Xtal Fibras Opticas, S.A. The Company shall
use commercially reasonable efforts to ensure that by July 31, 2000 the
acquisition by the Company or its Subsidiary of 90% of the issued and
outstanding capital stock of Xtal Fibras Opticas S.A. from ▇▇▇▇▇ ▇.▇. will be
consummated, and by such date, all necessary consents, authorizations and
approvals pertaining thereto will be obtained by the Company.
Section 6.16. Berliner Bank Credit Facilities. The Company shall at no
time borrow any funds under, or otherwise make use of, (i) the Letter of Credit
(Kreditvertrag) dated November 13, 1996 between FiberCore Glasfaser Jena GmbH,
currently FiberCore Jena GmbH, and Berliner Bank, AG , or (ii) the Loan
Agreement (Darlehenvertrag) dated September 6, 1996 between the Company and
Berliner Bank AG.
ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO
INITIAL CLOSING AND SUBSEQUENT CLOSINGS
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 Convertible Notes and
Put Shares. The obligation of the Investor to pay for the Convertible Notes, 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 Subscription Date, (ii) the applicable Put Date
and (iii) the applicable Closing Date (each, a "Condition Satisfaction Date"),
of each of the following conditions; provided, however, that with respect to the
initial Closing occurring on the Subscription Date only, the Investor waives the
conditions set forth in paragraphs (a), (b) and (l) of this Section 7.2:
(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 a Registration Statement covering the resale of Registrable Securities
relating to the Early Put and Note Conversion Shares that shall have been
declared effective by the SEC in no event later than ninety (90) days after the
Subscription Date, and a Registration Statement covering the resale of
Registrable Securities relating to all subsequent Puts that shall have been
declared effective by the SEC prior to any subsequent Put.
(b) Effective Registration Statement. As set forth in the
Registration Rights Agreement, the Registration Statement(s) 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) with respect to the second Put only,
the Company shall have notified the Investor in accordance with Section 6.8
hereof that the Registration Statement covering the Registrable Securities
relating to the Early Put and Note Conversion Shares has been declared effective
by the SEC, and (iv) at least twenty-two (22) Trading Days shall have elapsed
since the Initial Registration Statement (as defined in the Registration Rights
Agreement) 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, the
Convertible Notes and the 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 Opinions. 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 opinions of the Company's special New York counsel in
the forms of Exhibit E-2 and Exhibit E-3 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 Common Stock and
Registrable Securities then owned by the Investor beneficially or deemed
beneficially owned by the Investor, as determined in accordance with the
definition of beneficial ownership in Rule 13d-3 promulgated under the Exchange
Act, would result in the Investor owning more than 9.9% of all of such Common
Stock as would be outstanding on such Closing Date. For purposes of this
Section, in the event that the amount of Common Stock outstanding as determined
in accordance with Section 13(d) 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, Incentive Warrant Shares would own more
than 9.9% of the Common Stock following such Closing Date.
(j) [INTENTIONALLY OMITTED].
(k) 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 within the fifteen Trading Days following the Trading Day on which such
notice is deemed delivered).
(l) Minimum Time Interval. The Minimum Time Interval shall have
elapsed since the immediately preceding Put Date.
(m) Shareholder Vote. The issuance of shares of Common Stock and the
Convertible Notes with respect to the applicable Closing, if any, shall not
violate the shareholder approval requirements of the Principal Market. Following
each Put Notice, the Company shall promptly provide the Investor with a written
schedule stating as of such applicable Put Date (i) the total number of shares
of Outstanding Common Stock, (ii) the number of Put Shares issuable with respect
to the applicable Closing, (iii) the number of Early Put Shares issued, (iv) the
number of Early Put Warrant Shares issued, if any, (v) the number of Incentive
Warrant Shares issued, if any, (vi) the number of Note Conversion Shares issued,
if any, and (vii) the number of Note Conversion Shares issuable, calculated
based upon the conversion price on such Put Date as set forth in Section 3.1 of
each of the Convertible Notes. If the issuance by the Company of a number of
shares of Common Stock equal to the sum of the amounts stated in clauses (ii)
through (vii), inclusive, hereof would result in a violation by the Company of
the shareholder approval requirements of the Principal Market, the applicable
Put Notice shall be deemed null and void.
(n) 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; provided, however, that such certificate shall not be required to
be delivered with respect to the initial Closing occurring on the Subscription
Date.
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), and 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) None of the Company, its officers, directors, employees and
agents shall in any event disclose material 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
material 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 material non-public information to any
investors 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 Warrants, the Convertible Notes 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 SECURITIES PURCHASE AGREEMENT,
DATED AS OF JUNE 9, 2000, BETWEEN FIBERCORE, INC. AND CRESCENT
INTERNATIONAL LTD. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM FIBERCORE, INC.'S
EXECUTIVE OFFICES."
On the Subscription Date, 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 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 the
Investor is permitted to dispose of such Registrable Securities without
limitation as to amount or manner of sale pursuant to Rule 144 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
transfer 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 to comply with all applicable
securities laws.
ARTICLE IX
INDEMNIFICATION; ARBITRATION
Section 9.1. Indemnification. 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 its controlling persons 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.
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 (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 9.1 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 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 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 Damages 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 Damages 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 period of thirty (30) calendar days
immediately following the Dispute Period, such dispute shall be
resolved by arbitration in accordance with Section 9.3.
(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 Damages 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 Damages 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 period of thirty (30) calendar
days immediately following the Dispute Period, such dispute shall be resolved by
arbitration in accordance with
Section 9.3. Arbitration. Any dispute under this Agreement (including,
without limitation, pursuant to Section 9.2) the Convertible Notes or the
Warrants shall be submitted to arbitration 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 Company, on the one hand, and the Investor and/or any other Indemnified
Party, on the other hand, shall select one (1) member, and the third member
shall be selected by mutual 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
other members. The Board of Arbitration shall meet on consecutive business days
in New York City, 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). In connection with rendering its decision, 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 practicable, 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 Company and the Investor and/or any other Indemnified 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 Company and the Investor and/or any other Indemnified 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. Put Fees and Transaction Costs. In connection with the
execution of this agreement the following Put Fees and Transaction Costs (as
defined below) are payable by the Company. Crescent is authorized by the Company
to retain and to pay on behalf of the Company the Put Fees and Transaction
Costs, to the payee entities in accordance with Schedule 10.1.
(a) Put Fees. The Company shall pay certain fees (the "Put Fees") to
the payee entities in accordance with Schedule 10.1.
(b) Transaction Costs. The fees, expenses and disbursements of the
Investor's counsel (the "Investor Legal Fees") shall be paid as follows: (i) the
Investor shall pay the initial $10,000 of Investor Legal Fees and (ii) the
Company shall pay all Investor Legal Fees in excess of $10,000. The Company
shall pay the Investor due diligence costs in connection with the consummation
of this Agreement and the transactions contemplated hereby (the "Due Diligence
Costs," and together with the Investor Legal Fees, the "Transaction Costs"), up
to a maximum amount of $15,000. The Company shall pay to the Investor the
Company's share of the Transaction Costs on the Subscription Date, to the extent
such share of the Transaction Costs can be determined on the Subscription Date.
The Company shall pay its share of the remaining Transaction Costs to the
Investor not later than ten (10) days after receipt of notice from the Investor
that such amount is due. The Company agrees to pay its own expenses incident to
the performance of its obligations hereunder.
Section 10.2. Reporting Entity for the Common Stock. The reporting entity
relied upon for the determination of the Trade Price or trading volume of the
Common Stock on the Principal Market on any given Trading Day for the purposes
of this Agreement shall be the Bloomberg L.P. The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.
Section 10.3. Brokerage. Except for fees to be paid by the Company to
Gruntal & Co., each of the parties hereto represents that it has had 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 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:
FiberCore, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Cadwalader ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇/Maxi Brezzi
Telephone: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
Facsimile: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq./▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, 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.
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.
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 Convertible Notes, the
Warrants and the Registration Rights 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 Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
CRESCENT INTERNATIONAL LTD.
By:
-----------------------------------
Name:
Title:
FIBERCORE, INC.
By:
-----------------------------------
Name:
Title:
SCHEDULE 10.1
The Company shall pay to the payee entities the following Put Fees and
Transaction Costs under Section 10.1, which Crescent shall then allocate as
follows:
--------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
EVENTS TRIGGERING THE FEES / TRANSACTION AMOUNT ON WHICH THE FEE IS PAYEE ENTITY AMOUNT
PAYMENT COSTS CALCULATED
--------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Put Fee Investment Amount of the GreenLight (Switzerland) S.A. 2.25%
Subscription Date Early Put
--------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Subscription Date Put Fee Principal Amount of GreenLight (Switzerland) S.A. 2.25%
$6,000,000 Convertible Note
--------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Subscription Date Legal Fees Investor Legal Fees Crescent International Ltd. Investor Legal
Fees less
$10,000
--------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Subscription Date Due Diligence Costs Due Diligence Costs with a GreenLight (Switzerland) S.A. 100%
maximum amount of $15,000
--------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Put Fee
Closing Date for a Put Investment Amount of the Put GreenLight (Switzerland) S.A. 2.25%
--------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Delivery of Second Put Fee Principal Amount of GreenLight (Switzerland) S.A. 2.25%
Convertible Note $1,500,000 Convertible Note
--------------------------- -------------------- ------------------------------ ---------------------------------- ---------------