Exhibit 10.11
e-automate Corporation
SECURITIES PURCHASE AGREEMENT
Dated as of June 19, 2000
TABLE OF CONTENTS
Page
Article I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions; Interpretation . . . . . . . . . . . . . . . 1
Article II - ISSUANCE AND SALE OF THE SECURITIES . . . . . . . . . . 6
2.1 Authorization of the Securities . . . . . . . . . . . . . 6
2.2 Issuance and Sale of the Securities . . . . . . . . . . . 6
2.3 Additional Issuances and Sales of the Securities. . . . . 6
Article III - CLOSING; CLOSING DELIVERIES. . . . . . . . . . . . . . 7
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Payment for and Delivery of the Securities. . . . . . . . 7
Article IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . 7
4.1 Existence; Qualification; Subsidiaries. . . . . . . . . . 7
4.2 Authorization and Enforceability; Issuance of the
Securities, the Conversion Shares and the Warrant
Shares. . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . 9
4.4 Private Sale. . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Financial Statements; Disclosure. . . . . . . . . . . . . 9
4.6 Absence of Certain Changes. . . . . . . . . . . . . . . .10
4.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . .12
4.8 Licenses, Compliance with Law, Other Agreements, Etc. . .12
4.9 Third-Party Approvals . . . . . . . . . . . . . . . . . .12
4.10 No Undisclosed Liabilities . . . . . . . . . . . . . . .12
4.11 Tangible Assets. . . . . . . . . . . . . . . . . . . . .12
4.12 Inventory. . . . . . . . . . . . . . . . . . . . . . . .12
4.13 Owned Real Property. . . . . . . . . . . . . . . . . . .12
4.14 Real Property Leases . . . . . . . . . . . . . . . . . .13
4.15 Agreements . . . . . . . . . . . . . . . . . . . . . . .13
4.16 Intellectual Property. . . . . . . . . . . . . . . . . .13
4.17 Employees. . . . . . . . . . . . . . . . . . . . . . . .14
4.18 Transactions With Affiliates . . . . . . . . . . . . . .14
4.19 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .14
4.20 Other Investors. . . . . . . . . . . . . . . . . . . . .15
4.21 Investment Company . . . . . . . . . . . . . . . . . . .15
4.22 Certain Fees . . . . . . . . . . . . . . . . . . . . . .15
4.23 Solicitation Materials . . . . . . . . . . . . . . . . .15
4.24 Registration Rights; Rights of Participation . . . . . .15
4.25 Seniority. . . . . . . . . . . . . . . . . . . . . . . .15
4.26 Reservation of Common Stock. . . . . . . . . . . . . . .16
4.27 Covenant as to Common Stock. . . . . . . . . . . . . . .16
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4.28 Payment of Series 2000-A Preferred Stock . . . . . . . .16
4.29 Stay, Extension and Usury Laws . . . . . . . . . . . . .16
4.30 Continued Existence. . . . . . . . . . . . . . . . . . .16
4.31 Further Assurances . . . . . . . . . . . . . . . . . . .16
4.32 Restricted Payments. . . . . . . . . . . . . . . . . . .16
4.33 Successors . . . . . . . . . . . . . . . . . . . . . . .17
Article V - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. . . . .17
5.1 Authorization and Enforceability. . . . . . . . . . . . .17
5.2 Purchaser's Ability to Perform. . . . . . . . . . . . . .17
Article VI - COMPLIANCE WITH SECURITIES LAWS . . . . . . . . . . . .17
6.1 Investment Intent of the Purchaser. . . . . . . . . . . .17
6.2 Status of Securities. . . . . . . . . . . . . . . . . . .17
6.3 Accredited Investor Status. . . . . . . . . . . . . . . .17
6.4 Access to Information . . . . . . . . . . . . . . . . . .17
6.5 Transfer of Securities, Conversion Shares and Warrant
Shares. . . . . . . . . . . . . . . . . . . . . . . .18
6.6 Right of First Refusal. . . . . . . . . . . . . . . . . .18
Article VII - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . .19
7.1 Conditions Precedent. . . . . . . . . . . . . . . . . . .19
7.2 Closing Deliveries to the Company . . . . . . . . . . . .21
Article VIII - COVENANTS OF THE COMPANY. . . . . . . . . . . . . . .21
8.1 Restricted Actions. . . . . . . . . . . . . . . . . . . .21
8.2 Required Actions. . . . . . . . . . . . . . . . . . . . .22
8.3 Reservation of Common Stock . . . . . . . . . . . . . . .23
8.4 Payments Free of Withholding. . . . . . . . . . . . . . .24
Article IX - REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . .24
9.1 Registration Rights . . . . . . . . . . . . . . . . . . .24
9.2 Piggyback Registration Rights . . . . . . . . . . . . . .25
Article X - SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . .25
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . .25
Article XI - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . .25
11.1 Indemnification. . . . . . . . . . . . . . . . . . . . .25
Article XII - ARBITRATION. . . . . . . . . . . . . . . . . . . . . .26
12.1 Arbitration. . . . . . . . . . . . . . . . . . . . . . .26
Article XIII - GENERAL PROVISIONS. . . . . . . . . . . . . . . . . .26
13.1 Governing Law. . . . . . . . . . . . . . . . . . . . . .26
13.2 Consent to Jurisdiction; Service of Process And Venue. .26
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13.3 Entire Agreement . . . . . . . . . . . . . . . . . . . .26
13.4 Headings . . . . . . . . . . . . . . . . . . . . . . . .26
13.5 Amendment and Waiver . . . . . . . . . . . . . . . . . .26
13.6 Severability . . . . . . . . . . . . . . . . . . . . . .27
13.7 Successors and Assigns . . . . . . . . . . . . . . . . .27
13.8 No Third Party Beneficiaries . . . . . . . . . . . . . .27
13.9 Notices. . . . . . . . . . . . . . . . . . . . . . . . .27
13.10 Purchaser Fees and Expenses . . . . . . . . . . . . . .28
13.11 Remedies Cumulative . . . . . . . . . . . . . . . . . .29
13.12 Timeliness. . . . . . . . . . . . . . . . . . . . . . .29
13.13 Counterparts. . . . . . . . . . . . . . . . . . . . . .29
SCHEDULES
Schedule 4.1 Subsidiaries
Schedule 4.2 Existing Indebtedness
Schedule 4.3 Capitalization
Schedule 4.6(c) Places of Business
Schedule 4.13 Owned Real Property
Schedule 4.16 Intellectual Property
Schedule 4.18 Transactions with Affiliates
Schedule 4.19 Taxes
Schedule 4.20 Other Investors
EXHIBITS
Exhibit A Certificate of Designation of Series 2000-A
Preferred Stock
Exhibit B Form of Warrant
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
June 19, 2000, by and between e-automate Corporation (the
"Company"), a Delaware corporation with an address at ▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; and ASPEN CAPITAL RESOURCES, LLC or
its assigns (the "Purchaser"), a Utah limited liability company with
an address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
The Company desires to issue to the Purchaser and the
Purchaser desires to purchase from the Company, upon the terms and
subject to the conditions set forth herein, (i) the Series 2000-A
Preferred Stock (as defined herein) of the Company and (ii) the
Warrants (as defined herein) of the Company.
In consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement,
the parties hereto agree as follows:
Article I - DEFINITIONS
1.1 Definitions; Interpretation. For purposes of this
Agreement, the following terms have the indicated meanings:
"Affiliate" of a Person means any officer, director or
employee of the Company and any other Person that directly, or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either (i) to vote 10% or more of the
Capital Stock having ordinary voting power for the election of
directors of such Person or (ii) to direct or cause the direction of
the management and policies of such Person whether by contract or
otherwise.
"Capital Stock" of any Person shall mean any and all shares,
interests (including membership and economic interests in a limited
liability company), rights to purchase, warrants, options,
participations or other equivalents of or interests in (however
designated) equity of such Person, but excluding any debt securities
convertible into such equity prior to such conversion.
"Capitalized Lease" means any lease which is required under
GAAP to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means obligations for the
payment of rent for any Capitalized Lease; for purposes hereof, the
amount of any such obligation shall be the capitalized amount
thereof determined in accordance with GAAP.
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"Certificate of Designation" mean the Certificate of
Designation of Series 2000-A Preferred Stock of the Company, set
forth as Exhibit A hereto, as the same may be amended from time to
time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means, collectively, the Company's Common
Stock, $.001 par value per share, and any Capital Stock of any class
of the Company hereafter authorized which is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of
the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding
up of the Company.
"Confidential Information" means any proprietary information
concerning the Company's business other than information that (i)
was already known to the Person having a duty to keep confidential
such information on a nonconfidential basis prior to the time of
disclosure, (ii) is or becomes generally available to the public
through no act or omission of such Person or (iii) becomes available
to such Person on a nonconfidential basis from a source other than
any party hereto (or any agent or representative thereof) if such
source was not under a prohibition against disclosing the
information or otherwise bound by a confidentiality agreement with
respect thereto.
"Conversion Shares" means shares of Common Stock issued or
issuable upon conversion of the Preferred Shares, whether or not a
Preferred Share is presently convertible; provided, that if there is
a change such that the securities issuable upon conversion of the
Preferred Shares are issued by an entity other than the Company or
there is a change in the securities so issuable, then the term
"Conversion Shares" shall mean shares of the security issuable upon
conversion of the Preferred Shares if such securities are issuable
in shares, or shall mean the equivalent units in which such security
is issuable if such security is not issuable in shares.
"Current Balance Sheet" means the unaudited balance sheet of
the Company as at March 31, 2000.
"Dividend Shares" means shares of Preferred Stock issued
pursuant to Section 2 of the Certificate of Designation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means the closing bid price of a share of
Common Stock quoted on the NASDAQ Stock Market System or reported on
the NASD's OTC Bulletin Board. However, until a share of Common
Stock is first quoted on the NASDAQ Stock Market System or reported
on the NASD's OTC Bulletin Board after the date of this Agreement,
"Fair Market Value" means $3.00 per share.
"Financial Statements" means (i) the unaudited consolidated
balance sheets of the Company as at March 31, 2000, and the related
unaudited consolidated statements of operations, consolidated
statements of cash flows and consolidated statements of
stockholders' equity (deficit) for the quarterly periods then ended,
and (ii) the audited consolidated balance sheets of the Company as
at March 31, 1999 and 1998, and the related audited consolidated
statements of operations, consolidated statements of cash flows and
consolidated statements of stockholders' equity (deficit) for the
fiscal year periods then ended.
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"GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied.
"Governmental Agency" means any federal, state, local,
foreign or other governmental agency, instrumentality, commission,
authority, board or body and the National Association of Securities
Dealers.
"Hedging Agreement" means any interest rate swap, collar,
cap, floor or forward rate agreement or other agreement regarding
the hedging of interest rate risk exposure executed in connection
with hedging the interest rate exposure of the Company, and any
confirming letter executed pursuant to such agreement, all as
amended, supplemented, restated or otherwise modified from time to
time.
"includes" and "including" mean includes and including,
without limitation.
"Indebtedness" means, without duplication, as to any Person
(i) indebtedness for borrowed money; (ii) indebtedness for the
deferred purchase price of property or services (other than current
trade payables incurred in the ordinary course of business and
payable in accordance with customary practices); (iii) indebtedness
evidenced by bonds, notes, debentures or other similar instruments
(other than performance, surety and appeal or other similar bonds
arising in the ordinary course of business); (iv) obligations and
liabilities secured by a Lien upon property owned by such Person,
whether or not owing by such Person and even though such Person has
not assumed or become liable for the payment thereof; (v)
obligations and liabilities directly or indirectly guaranteed by
such Person; (vi) obligations or liabilities created or arising
under any conditional sales contract or other title retention
agreement with respect to property used and/or acquired by such
Person, even though the rights and remedies of the lessor, seller
and/or lender thereunder are limited to repossession of such
property; (vii) Capitalized Lease Obligations; (viii) all
liabilities in respect of letters of credit, acceptances and similar
obligations created for the account of such Person; and (ix) net
liabilities of such Person under Hedging Agreements and foreign
currency exchange agreements, as calculated on a basis satisfactory
to the Purchaser and in accordance with accepted practice.
"Initial Closing" and "Additional Closing" have the meanings
set forth in Section 3.1.
"Initial Closing Date" and "Additional Closing Dates" have
the meanings set forth in Section 3.1.
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"Intellectual Property" means all domestic and foreign
patents, patent applications, disclosures, industrial designs,
discoveries and inventions; trademarks, service marks, trade dress,
trade names, d/b/a's, Internet domain names and corporate names and
all goodwill associated therewith; published and unpublished works
of authorship, copyrights; registrations, applications and renewals
for any of the foregoing; trade secrets, Confidential Information,
know-how, technical and computer data, databases, proprietary
information, documentation and software, financial, business and
marketing plans, customer and supplier lists and all other
intellectual property and proprietary rights; and all copies and
tangible embodiments of the foregoing.
"IRS" means the Internal Revenue Service.
"knowledge" or "know" when used with respect to the Company
means the knowledge of the senior management (vice president or
senior) of the Company, or any other management personnel that has
had significant involvement in the business and affairs of the Company.
"Liability" means any liability or obligation (whether
absolute or contingent, liquidated or unliquidated or due or to
become due).
"Lien" means any mortgage, deed of trust, pledge, lien,
security interest, charge, encumbrance, security arrangement,
restriction, covenant, encroachment or other title imperfection of
any nature whatsoever, including but not limited to any conditional
sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security.
"Material Adverse Change" means any material adverse change
in the business, condition (financial or otherwise), prospects or
results of operations of the Company and its Subsidiaries taken as a
whole.
"Material Adverse Effect" means any material adverse effect
on (i) the business, condition (financial or otherwise), prospects
or results of operations of the Company and its Subsidiaries taken
as a whole, or (ii) any of the transactions contemplated hereby or
by the Related Documents.
"ordinary course of business" means the ordinary course of
business of the Company consistent with past practice (including
with respect to quantity, quality and frequency).
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other entity.
"Preferred Shares" has the meaning set forth in Section 2.1.
"Preferred Stock" means the Series 2000-A Preferred Stock,
$.001 par value per share, of the Company.
"Related Documents" means all documents and instruments to be
executed or adopted by the Company in connection herewith, including
without limitation each of the Preferred Shares, each of the
Warrants and all other documents and instruments to be executed or
adopted by the Company pursuant thereto.
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"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning given that term in Section 2.1.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means any corporation, partnership, association
or other business entity of which (i) if a corporation, a majority
of the total voting power of shares of stock entitled (without
regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by the Company or (ii) if a
partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by the Company.
For purposes hereof, the Company shall be deemed to have a majority
ownership interest in a partnership, association or other business
entity if the Company, directly or indirectly, is allocated a
majority of partnership, association or other business entity gains
or losses, or is or controls the managing director or general
partner of such partnership, association or other business entity.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Section59A), customs duties, Capital
Stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not.
"Tax Returns" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Warrants" means the Warrants of the Company exercisable for
shares of Common Stock, to be issued by the Company on the Closing
Date and each Additional Closing Date, substantially in the form of
Exhibit B hereto.
"Warrant Shares" means shares of the Common Stock obtained or
obtainable upon exercise of the Warrants, whether or not a Warrant
is presently exercisable; provided, that if there is a change such
that the securities issuable upon exercise of the Warrants are
issued by an entity other than the Company or there is a change in
the class of securities so issuable, then the term "Warrant Shares"
shall mean shares of the security issuable upon exercise of the
Warrants if such security is issuable in shares, or shall mean the
equivalent units in which such security is issuable if such security
is not issuable in shares.
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Article II - ISSUANCE AND SALE OF THE SECURITIES
2.1 Authorization of the Securities. The Company has
authorized the issuance and sale to the Purchaser, on the terms and
subject to the conditions of this Agreement, of (a) its Preferred
Stock in an aggregate amount of up to 5,000 shares and containing
the terms and conditions and in the form of the Certificate of
Designation set forth in Exhibit "A" attached hereto (the "Preferred
Shares"), and (b) its Warrants containing the terms and conditions
and in the form of the Warrant set forth in Exhibit "B" attached
hereto (the "Warrants and, together with the Preferred Shares, the
"Securities"). The Preferred Shares are convertible into and the
Warrants are exercisable for shares of the Company's Common Stock.
2.2 Issuance and Sale of the Securities. At the Initial
Closing, on the terms and subject to the conditions of this
Agreement, the Company shall issue to the Purchaser and the
Purchaser shall purchase from the Company (a) 500 Preferred Shares
for aggregate consideration of $500,000.00, and (b) Warrants
initially exercisable for the purchase of 100,000 Warrant Shares.
2.3 Additional Issuances and Sales of the Securities.
On or before each date which is 30 days or a multiple thereof
after the Initial Closing Date, until the date which is 270 days
after the Initial Closing Date, on the terms and subject to the
conditions of this Agreement, the Company shall issue to the
Purchaser and the Purchaser shall purchase from the Company (a) 500
Preferred Shares for aggregate consideration of $500,000.00, and (b)
Warrants initially exercisable for the purchase of 100,000 Warrant
Shares.
Notwithstanding the foregoing, the Purchaser shall have no
obligation to purchase any Securities in connection with any
additional issuance and sale of the Securities pursuant to this
Section 2.3, provided that the Purchaser may in its sole discretion
purchase such Securities, (a) if the Company is in default or has
breached any of its obligations under this Agreement or any of the
Related Documents, (b) if an Event of Noncompliance has occurred
under the Certificate of Designation, or (c) if, after the first
date upon which the Company's Common Stock is quoted in the NASDAQ
Stock Market System or reported on the NASD's OTC Bulletin Board,
the average of the closing bid prices for the Company's Common Stock
for ten (10) consecutive trading days, as quoted in the NASDAQ Stock
Market System or reported on the NASD's OTC Bulletin Board, is less
than or equal to $3.25 per share.
Notwithstanding the foregoing, the Purchaser shall have no
obligation to purchase any Securities in connection with any
additional issuance and sale of the Securities pursuant to this
Section 2.3 if, and to the extent, such purchase would result in the
Purchaser becoming directly or indirectly the beneficial owner of
more than 9.9% of the Common Stock of the Company.
Article III - CLOSING; CLOSING DELIVERIES
3.1 Closing. The closing of the transactions contemplated by
Section 2.2 of this Agreement (the "Initial Closing") shall take
place at 3:00 p.m. on June 19, 2000, at the offices of ▇▇▇▇▇ &
Swensen, P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
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▇▇▇▇ ▇▇▇▇▇ or at such other date, time and/or place as shall be
agreed upon by the parties hereto. The date upon which the Initial
Closing occurs is referred to herein as the "Initial Closing Date."
The closings of the transactions contemplated by Section 2.3 of this
Agreement (the "Additional Closings") shall take place on the dates
indicated therein and at such times and/or places as shall be agreed
upon by the parties hereto. The dates upon which the Additional
Closings occur are referred to herein as the "Additional Closing
Dates."
3.2 Payment for and Delivery of the Securities. At the
Initial Closing, the Company shall issue and deliver to the
Purchaser, (a) a stock certificate for 500 Preferred Shares, against
payment by the Purchaser, by check or wire transfer of immediately
available funds to the account designated by the Company, of
$450,000.00 (net of 10% placement fee payable to Aspen Capital
Resources, LLC pursuant to Section 12.10), and (b) duly issued
Warrants initially exercisable for the purchase of 100,000 Warrant
Shares. At each Additional Closing, the Company shall issue and
deliver to the Purchaser, (a) stock certificates for the number of
Preferred Shares specified pursuant to Section 2.3, against payment
by the Purchaser, by check or wire transfer of immediately-available
funds to the account designated by the Company, of the price of the
Preferred Shares (net of a 10% placement fee payable to Aspen
Capital Resources, LLC pursuant to Section 12.10), and (b) duly
issued Warrants exercisable for the purchase of 100,000 Warrant Shares.
Article IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as
follows:
4.1 Existence; Qualification; Subsidiaries. Each of the
Company and its Subsidiaries is a corporation, partnership or
limited liability company, as the case may be, duly organized,
validly existing and in good standing under the laws of the state of
its incorporation or formation and has full corporate or partnership
power and authority, as the case may be, to conduct its business and
own and operate its properties as now conducted, owned and operated.
The copies of the Certificate of Incorporation, as amended, and
By-Laws of the Company and all amendments thereto previously
delivered to the Purchaser are true, correct and complete copies of
such documents. The Company and each Subsidiary is licensed or
qualified as a foreign corporation, partnership or limited liability
company and is in good standing in all jurisdictions where such
person is required to be so licensed or qualified, except where the
failure to be so licensed, qualified or in good standing would not
have a Material Adverse Effect. Except as set forth on SCHEDULE 4.1,
the Company has no Subsidiaries and owns no Capital Stock or other
securities of, and has not made any other investment in, any other
entity. All of the issued shares of Capital Stock, partnership
interests or membership interests, as the case may be, of each
Subsidiary have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities
or adverse claims.
4.2 Authorization and Enforceability; Issuance of the
Securities, the Conversion Shares and the Warrant Shares.
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(a) The Company has full power and authority and has taken
all required corporate and other action necessary to permit it to
execute and deliver this Agreement and the Related Documents and to
carry out the terms hereof and thereof and to issue and deliver the
Securities, the Conversion Shares and the Warrant Shares, and none
of such actions will violate any provision of the Certificate of
Incorporation of the Company, the By-Laws of the Company or of any
applicable law, regulation, order, judgment or decree or rule of any
stock exchange where the Company's Common Stock is listed or market
in which the Company's Common Stock is quoted, or result in the
breach of or constitute a default (or an event which, with notice or
lapse of time or both would constitute a default) under any material
agreement (including the Company's current secured debt instruments
set forth on SCHEDULE 4.2 (the "Existing Indebtedness")), instrument
or understanding to which the Company is a party or by which it is
bound or by which it will become bound as a result of the
transactions contemplated by this Agreement. This Agreement, each of
the Related Documents and all other agreements and instruments
contemplated hereby to which the Company is a party, have been duly
executed and delivered by the Company and each constitutes a legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
application related to the enforcement of creditor's rights
generally and (ii) general principles of equity.
(b) The execution, delivery and performance of this
Agreement, each of the Related Documents and all other agreements
and instruments contemplated hereby to which the Company is a party
have been duly authorized by the Company. The Conversion Shares and
the Warrant Shares, will be fully paid and nonassessable. The
Conversion Shares and the Warrant Shares have been duly reserved for
issuance upon conversion of the Preferred Shares and exercise of the
Warrants, as the case may be, and, when so issued, will be duly
authorized, validly issued and outstanding, fully paid and
nonassessable shares of Common Stock. Neither the issuance and
delivery of any Conversion Shares upon conversion of any Preferred
Shares nor the issuance and delivery of any Warrant Shares upon
exercise of the Warrants is subject to any preemptive right of any
stockholder of the Company or to any right of first refusal or other
similar right in favor of any Person.
4.3 Capitalization. The authorized Capital Stock of the
Company consists of (a) 20,000,000 shares of Common Stock, par value
$.001 per share, of which, as of the date of this Agreement,
5,398,001 shares were issued and outstanding, 236,228 shares have
been subscribed and paid for and are to be issued, 2,840,000 shares
are reserved for issuance upon the exercise of certain stock options
and warrants, and up to 166,667 shares may be sold on or before June
30, 2000 pursuant to the Company's current private placement, and
(b) 1,000,000 shares of preferred stock, par value $.001 per share,
of which, as of the date of this Agreement, no shares are issued and
outstanding and 125,796 shares of Series 2000-B Preferred Stock will
be issued immediately after the date of this Agreement. All of the
outstanding Capital Stock has been validly issued and is fully paid
and nonassessable and has been issued in compliance with all
applicable securities laws (including the provisions of the
Securities Act and the rules and regulations promulgated
thereunder). Except as set forth in Schedule 4.3, there are no
-8-
options, convertible securities, warrants, calls, pledges, transfer
restrictions (except restrictions imposed by federal and state
securities laws), voting restrictions, liens, rights of first offer,
rights of first refusal, antidilution provisions or commitments of
any character relating to any issued or unissued shares of Capital
Stock of the Company other than as contemplated in the Related
Documents. Except as contemplated by this Agreement and the Related
Documents or as set forth in Schedule 4.3 and Schedule 4.25, there
are no preferential rights applicable to the issuance and sale of
the Securities, the Conversion Shares and the Warrant Shares.
4.4 Private Sale. Assuming the accuracy of the
representations and warranties made by recipients of the Company's
Capital Stock in connection with the acquisition of such Capital
Stock, the Company has not violated any applicable federal or state
securities laws in connection with the offer, sale and issuance of
any of its Capital Stock. Subject to the accuracy of the Purchaser's
representations contained herein, neither the offer, sale and
issuance of the Securities hereunder nor the issuance and delivery
of any Conversion Shares upon conversion of any Preferred Shares or
any Warrant Shares upon exercise of any Warrants requires
registration under the Securities Act or any state securities laws.
4.5 Financial Statements; Disclosure.
(a) As of the date of this Agreement, the Financial
Statements (together with the notes thereto, as applicable), (i) are
true, correct and complete in all material respects, (ii) are in
accordance with the books and records of the Company and (iii)
fairly present the financial condition and results of operations of
the Company as of the dates and for the periods indicated in
accordance with GAAP, except that the unaudited balance sheets and
related financial statements do not contain an auditors' opinion and
do not contain footnotes and are subject to normal, recurring
year-end audit adjustments which are not material.
(b) This Agreement together with the schedules, attachments,
exhibits, written statements and certificates supplied to the
Purchaser by or on behalf of the Company with respect to the
transactions contemplated hereby does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
There is no fact which has not been disclosed to the Purchaser of
which the Company has knowledge, and which has had or could
reasonably be anticipated to have a Material Adverse Effect.
(c) As of its filing date, each document filed with the SEC
by the Company, as amended or supplemented prior to the date of this
Agreement or any Additional Closing Date, if applicable, pursuant to
the Securities Act and/or the Exchange Act, true and correct copies
of which have been given to the Purchaser, (i) complied in all
material respects with the applicable requirements of the Securities
Act and/or Exchange Act and (ii) did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading.
Each final registration statement filed with the SEC by the Company
pursuant to the Securities Act, as of the date such statement became
effective (i) complied in all material respects with the applicable
requirements of the Securities Act and (ii) did 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 (in the case of any prospectus, in
light of the circumstances under which they were made).
-9-
4.6 Absence of Certain Changes.
(a) Since the date of the Current Balance Sheet, neither the
Company nor any Subsidiary has:
(i) incurred any Liabilities other than current
Liabilities incurred, or obligations under contracts entered
into, in the ordinary course of business and for individual
amounts not greater than $50,000;
(ii) paid, discharged or satisfied any claim, Lien or
Liability, other than any claim, Lien or Liability (A)
reflected or reserved against on the Current Balance Sheet
and paid, discharged or satisfied in the ordinary course of
business since the date of the Current Balance Sheet or (B)
incurred and paid, discharged or satisfied since the date of
the Current Balance Sheet, in each case in the ordinary
course of business;
(iii) sold, leased, assigned or otherwise transferred
any of its assets, tangible or intangible (other than sales
of inventory in the ordinary course of business and use of
supplies in the ordinary course of business);
(iv) permitted any of its assets, tangible or
intangible, to become subject to any Lien;
(v) written off as uncollectible any accounts
receivable other than (A) in the ordinary course of business
or (B) for amounts not greater than $50,000 in the aggregate;
(vi) terminated or amended or suffered the
termination or amendment of, or other than in the ordinary
course of business, failed to perform in all material
respects all of its obligations or suffered or permitted any
material default to exist under, any material agreement,
license or permit;
(vii) suffered any damage, destruction or loss of
tangible property (whether or not covered by insurance) which
in the aggregate exceeds $100,000;
(viii) made any loan (other than intercompany
advances) to any other Person (other than advances to
employees in the ordinary course of business which do not
exceed $10,000 individually or $50,000 in the aggregate);
(ix) canceled, waived or released any debt, claim or
right in an amount or having a value exceeding $100,000;
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(x) paid any amount to or entered into any agreement,
arrangement or transaction with, or any series of agreements,
arrangements or transactions with, any Affiliate (including
its officers, directors and employees) having a value of in
excess of $50,000 in the aggregate (other than as
Company-wide employee benefits or termination benefits paid
in the ordinary course of business);
(xi) declared, set aside, or paid any dividend or
distribution with respect to its Capital Stock or redeemed,
purchased or otherwise acquired any of its Capital Stock;
(xii) other than in the ordinary course of business
or under existing contractual terms or obligations, granted
any increase in the compensation of any officer or employee
or made any other change in employment terms of any officer
or employee;
(xiii) made any change in any method of accounting or
accounting practice;
(xiv) suffered or caused any other occurrence, event
or transaction outside the ordinary course of business or
which could have a Material Adverse Effect; or
(xv) agreed, in writing or otherwise, to any of the
foregoing.
(b) Since the date of the Current Balance Sheet, there has
been no Material Adverse Change.
(c) Schedule 4.6(C) hereto sets forth a complete and
accurate list as of the date hereof of (i) each place of business of
the Company and each of its Subsidiaries and (ii) the chief
executive office of the Company and each of its Subsidiaries.
4.7 Litigation. No claim, suit, proceeding or investigation
is proceeding, pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any
officer or director thereof or the Company's or the Subsidiaries'
business which if decided adversely to any such person could have a
Material Adverse Effect.
4.8 Licenses, Compliance with Law, Other Agreements, Etc.
Each of the Company and its Subsidiaries has all material
franchises, permits, licenses and other rights to allow it to
conduct its business and is not in violation, in any material
respects of any order or decree of any court, or of any law, order
or regulation of any Governmental Agency, or of the provisions of
any contract or agreement to which it is a party or by which it is
bound, and neither this Agreement nor the Related Documents nor the
transactions contemplated hereby or thereby will result in any such
violation. Each of the Company's and its Subsidiary's business has
been conducted in compliance with all federal, state and local laws,
ordinances, rules and regulations, in all material respects. To the
knowledge of the Company, conditions or events of non-compliance
with respect to the Company's licensees that would have a Material
Adverse Effect on the Company or its contractual relationships with
its licensees.
-11-
4.9 Third-Party Approvals. Assuming the accuracy of the
representations and warranties of the Purchaser contained in this
Agreement, the Company is not required to obtain any order, consent,
approval or authorization of, or to make any declaration or filing
with, any Governmental Agency or other third party (including under
any state securities or "blue sky" laws) in connection with the
execution and delivery of this Agreement or the Related Documents,
or the consummation of the transactions contemplated hereby or
thereby to occur on the Initial Closing Date or any Additional
Closing Date.
4.10 No Undisclosed Liabilities. Neither the Company nor any
of its Subsidiaries has any material Liabilities except (i) as and
to the extent of the amounts reflected or reserved against on the
Current Balance Sheet and (ii) liabilities and obligations incurred
in the ordinary course of business since the date thereof that in
the aggregate could not result in a Material Adverse Effect.
4.11 Tangible Assets. Each of the Company and its
Subsidiaries has good and marketable title to, or valid leasehold
interests in, all material tangible assets used or reasonably
necessary in connection with the conduct of its business.
4.12 Inventory. All inventory of each of the Company and its
Subsidiaries, whether reflected on the Current Balance Sheet or
otherwise, consists of a quality and quantity usable or salable in
the ordinary course of business, subject to defect or obsolescence
consistent with the Company's historical experience.
4.13 Owned Real Property. Set forth on Schedule 4.13 is a
true and correct description of all real property owned by the
Company and its Subsidiaries. The Company and each of its
Subsidiaries has good and marketable title in fee simple, free and
clear of all Liens, to all of the real property owned by the Company
and each of its Subsidiaries.
4.14 Real Property Leases. There exists no event of default
(nor any event which with notice or lapse of time would constitute
an event of default) with respect to the Company, any Subsidiary
and, to the Company's knowledge, with respect to any other party
thereto under any agreement pursuant to which the Company is the
lessee or lessor of any real property, except for such defaults and
defects in enforceability as could not in the aggregate be expected
to have a Material Adverse Effect, and all such agreements are in
full force and effect and enforceable against the lessor or lessee
in accordance with their terms except for such defaults and defects
in enforceability as could not in the aggregate be expected to have
a Material Adverse Effect.
4.15 Agreements. Neither the Company nor any Subsidiary is in
default, nor to the knowledge of the Company is there any basis for
a valid claim of default, and to the Company's knowledge no event
has occurred which, with notice or lapse of time, would constitute a
default, under any agreement, arrangement or understanding to which
the Company or any Subsidiary is a party, and to the knowledge of
the Company, no Person other than the Company is in default under
any such agreement, in each case other than defaults which in the
aggregate could not be expected to have a Material Adverse Effect.
Additionally, neither the Company nor any Subsidiary is party to any
agreement the performance of which in accordance with its terms
(including any termination provision thereof) could be expected to
have a Material Adverse Effect.
-12-
4.16 Intellectual Property. Schedule 4.16 sets forth a
complete list of (i) all patented, registered, applied for or
otherwise material Intellectual Property owned, filed or used by the
Company; and (ii) all trade names and material unregistered
trademarks and other designations used by the Company in connection
with its business. The Company owns and possesses all right, title
and interest in and to, or has a valid and enforceable license to
use, all Intellectual Property used by the Company in its business
as currently conducted and as currently proposed to be conducted. No
claim by any third party contesting the validity, enforceability,
use or ownership of Intellectual Property owned, held or used by the
Company has been made or, to the knowledge of the Company, is
threatened. To the knowledge of the Company, neither it nor its
indemnitees has violated or misappropriated the Intellectual
Property of any third party and no third party has violated or
misappropriated Intellectual Property owned, held or used by the
Company. No claim by any third party has been asserted, or to the
knowledge of the Company threatened, that the Company or its
indemnitees is violating or misappropriating Intellectual Property.
To the knowledge of the Company, all Intellectual Property owned or
held by the Company is valid, subsisting and enforceable, and all
such Intellectual Property is free of all Liens, and, except as set
forth on Schedule 4.16, is fully assignable by the Company to any
Person, without payment, consent of any Person or other condition
or restriction. The Company has taken all reasonable measures to
protect the secrecy, confidentiality and value of all Confidential
Information, proprietary information and trade secrets owned, held
or used by the Company (including, without limitation, entering into
appropriate confidentiality agreements with all officers, directors,
employees, and other Persons with access to such information and
trade secrets). To the knowledge of the Company, such information
and trade secrets have not been disclosed to any Persons other than
Company employees or Company contractors who had a need to know and
use such information and trade secrets in the ordinary course of
employment or contract performance and who executed appropriate
confidentiality agreements.
4.17 Employees. The Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strike,
material grievance, material claim of unfair labor practice or other
collective bargaining dispute. To the knowledge of the Company there
is no organizational effort being made or threatened by or on behalf
of any labor union with respect to its employees. To the knowledge
of the Company, it has not committed any unfair labor practice or
violated any federal, state or local law or regulation regulating
employers or the terms and conditions of its employees' employment,
including laws regulating employee wages and hours, employment
discrimination, employee civil rights, equal employment opportunity
and employment of foreign nationals, except for such violations as
could not be expected to have a Material Adverse Effect.
4.18 Transactions With Affiliates. Except as set forth on
Schedule 4.18, neither the Company nor any Subsidiary is party to
any agreement, arrangement or transaction or series of agreements,
arrangements or transactions with any Affiliate which agreements,
arrangements, transactions and series of transactions in the
aggregate have a value over $50,000 (other than as Company-wide
employee benefits paid in the ordinary course of business).
-13-
4.19 Taxes.
(a) Except as disclosed on Schedule 4.19, each of the
Company and its Subsidiaries has filed all Tax Returns that it was
required to file, and has paid all Taxes due with respect to the
periods covered by such Tax Returns.
(b)None of the Company and its Subsidiaries (i) has been a
member of an affiliated group filing a consolidated federal Tax
Return (other than a group the common parent of which was the
Company) or (ii) has any Liability for the Taxes of any Person
(other than any of the Company and its Subsidiaries) under Treas.
Reg. Section1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise.
(c) Each of the Company and its Subsidiaries has withheld
and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(d) Except as set forth on Schedule 4.19, there is no
dispute or claim concerning any Tax Liability of any of the Company
and its Subsidiaries either (i) claimed or raised by any authority
in writing or (ii) as to which any of the directors and officers
(and employees responsible for Tax matters) of the Company and its
Subsidiaries has knowledge based upon personal contact with any
agent of such authority.
4.20 Other Investors. Set forth on Schedule 4.20 is a list of
all stockholders (including option and convertible security holders)
of the Company who as of the date hereof, based on SEC filings of
such stockholders, after giving effect to the terms hereof, own more
than 5% of the fully diluted common equity of the Company and sets
forth such percentage ownership.
4.21 Investment Company. The Company is not, and is not
controlled by or under common control with an affiliate of, an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
4.22 Certain Fees. Other than fees and expenses due and
payable to the Purchaser pursuant to Section 12.4 or otherwise
disclosed in writing to the Purchaser by the Company, no fees or
commissions will be payable by the Company to any broker, financial
advisor, finder, investment banker, or bank with respect to the
transactions contemplated by this Agreement. The Purchaser shall not
have any obligation with respect to any fees or with respect to any
claims made by or on behalf of any Persons for fees of a type
contemplated in this section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall
indemnify and hold harmless the Purchaser, its employees, officers,
directors, agents and partners, and their respective Affiliates from
and against all claims, losses, damages, costs (including attorney's
fees) and expenses suffered in respect to any such claimed or
existing fees.
-14-
4.23 Solicitation Materials. The Company has not (i)
distributed any offering materials to the Purchaser in connection
with the offering and sale of the Securities other than its public
filings with the SEC, or (ii) solicited any offer to buy or sell the
Securities by means of any form of general solicitation or general
advertising within the meaning of Regulation D under the Securities
Act. None of the information provided to the Purchaser by or on
behalf of the Company contain any untrue statement of material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
4.24 Registration Rights; Rights of Participation. (a) the
Company has not granted or agreed to grant to any Person any rights
(including "piggy-back" registration rights) to have any securities
of the Company registered with the SEC or any other Governmental
Agency which has not expired or been satisfied in full and (b) no
Person, including, but not limited to, current or former
stockholders of the Company, underwriters, brokers or agents, has
any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by this Agreement or any other related
document which has not been waived. None of the rights granted to
the Purchaser hereunder and under the Related Documents conflicts
with or would cause a default under any of the agreements or
arrangements listed on SCHEDULE 4.24 hereto.
4.25 Seniority. No Capital Stock of the Company whether or
not currently outstanding is senior to the Preferred Stock in right
of payment, whether with respect to dividends or redemption or upon
liquidation, dissolution or otherwise.
4.26 Reservation of Common Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock or out of the Common
Stock held in treasury, the full number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all
issued and outstanding Series 2000-A Preferred Stock and upon the
exercise of all outstanding Warrants.
4.27 Covenant as to Common Stock. The Company covenants that
all shares of Common Stock which may be issued upon conversion of
Series 2000-A Preferred Stock, including interest, additional shares
of Common Stock and penalties, will upon issue be fully paid and
nonassessable and the Company will pay all taxes, liens and charges
that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Series 2000-A Preferred Stock pursuant
hereto.
4.28 Payment of Series 2000-A Preferred Stock. The Company
shall pay the principal of, and interest on, the Series 2000-A
Preferred Stock on the dates and in manner provided herein and in
the Series 2000-A Preferred Stock.
4.29 Stay, Extension and Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of Series 2000-A Preferred
Stock; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay
or impede the execution of any right herein granted to the Purchaser.
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4.30 Continued Existence. The Company will do or cause to be
done all things necessary to preserve and keep in full force and
effect its existence as a corporation and will refrain from taking
any action that would cause its existence as a corporation to cease,
including without limitation any action that would result in the
liquidation, winding up or dissolution of the Company.
4.31 Further Assurances. From time to time the Company will
make, execute and deliver to the Purchaser, or cause to be made,
executed and delivered to the Purchaser, any and all such further
and other instruments and assurances as may be reasonably necessary
or proper to carry out the intention of, or to facilitate the
performance of, the terms of Series 2000-A Preferred Stock or to
secure the rights and remedies hereunder of the Purchaser.
4.32 Restricted Payments. The Company shall not declare and
pay any dividends on its capital stock or redeem, acquire or
otherwise retire for value any securities issued by it (other than
the Series 2000-A Preferred Stock) unless, at the time of the taking
of such action, no breach or default under this Agreement or the
Related Documents or event which with notice or lapse of time or
both would become an default under this Agreement or the Related
Documents has occurred and is continuing.
4.33 Successors. The Company shall not, whether in a single
transaction or through a series of related transactions, consolidate
or merge with or into, or sell, lease, convey or otherwise dispose
of all or substantially all of its assets to, any Person unless such
Person agrees in writing to assume all obligations of the Company
under the Series 2000-A Preferred Stock.
Article V - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as
follows:
5.1 Authorization and Enforceability. The Purchaser has full
power and authority and has taken all action necessary to permit it
to execute and deliver this Agreement and the other documents and
instruments to be executed by it pursuant hereto and to carry out
the terms hereof and thereof. This Agreement and each such other
document and instrument, when duly executed and delivered by the
Purchaser, will constitute a valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its
terms, except to the extent limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
application related to the enforcement of creditors' rights
generally and (ii) general principles of equity.
5.2 Purchaser's Ability to Perform. As of the Initial
Closing, the Purchaser has the financial resources to perform fully
its total obligations under this Agreement.
-16-
Article VI - COMPLIANCE WITH SECURITIES LAWS
6.1 Investment Intent of the Purchaser. The Purchaser
represents and warrants to the Company that it is acquiring the
Securities for its own account, with no present intention of selling
or otherwise distributing the same in violation of the Securities
Act.
6.2 Status of Securities. The Purchaser has been informed by
the Company that the Securities have not been registered under the
Securities Act or under any state securities laws and are being
offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering.
6.3 Accredited Investor Status. The Purchaser represents and
warrants to the Company that it is an "Accredited Investor" as
defined in Regulation D under the Securities Act.
6.4 Access to Information. The Purchaser has had access to
management of the Company and has been able to ask questions of
management related to the Company and has reviewed the Company's
filings pursuant to the Exchange Act. Notwithstanding any due
diligence investigations conducted by or on behalf of the Purchaser,
it is understood and agreed by each of the parties hereto that the
Purchaser is entitled to rely, and is relying, on the
representations and warranties made by the Company herein and in the
Related Documents.
6.5 Transfer of Securities, Conversion Shares and Warrant
Shares.
(a) Securities, Conversion Shares and Warrant Shares may be
transferred (i) pursuant to public offerings registered under the
Securities Act, (ii) pursuant to Rule 144 of the SEC (or any similar
rule then in force), (iii) to an Affiliate or member of the family
of the transferor (provided that the subsequent transfer of the
Securities, Conversion Shares or Warrant Shares is restricted), or
(iv) subject to the conditions set forth in Section 6.5(b), any
other legally available means of transfer.
(b) In connection with any transfer of any Securities,
Conversion Shares or Warrant Shares (other than a transfer described
in Section 6.5(a)(i), (ii) or (iii)), the holder of such shares
shall deliver written notice to the Company describing in reasonable
detail the proposed transfer, together with an opinion of counsel
(which, to the Company's reasonable satisfaction, is knowledgeable
in securities law matters), to the effect that such transfer may be
effected without registration of such shares under the Securities Act.
(c) Until transferred pursuant to clauses (a)(i) or (ii)
above or pursuant to clause (a)(i) above with an opinion of counsel
pursuant to paragraph (b) above that such legend is not required,
each Preferred Share, Warrant, Conversion Shares and Warrant Shares
shall be imprinted with a legend substantially in the following
form:
THE SECURITIES REPRESENTED BY THIS [PREFERRED SHARE/WARRANT]
WERE ORIGINALLY ISSUED ON ________, 2000 AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAW. THE TRANSFER OF THE
SECURITIES REPRESENTED BY THIS [PREFERRED SHARE/WARRANT] IS
SUBJECT TO THE CONDITIONS SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT, DATED AS OF JUNE 19, 2000, BETWEEN THE
-17-
ISSUER (THE "COMPANY") AND THE PURCHASER NAMED THEREIN. THE
COMPANY RESERVES THE RIGHT TO REFUSE ANY TRANSFER OF SUCH
SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH
RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN
REQUEST TO THE COMPANY.
6.6 Right of First Refusal. If, during the 18 months
following the Initial Closing Date, the Company proposes to issue,
offer or sell any of its securities, whether debt or equity, the
Company, at least 10 days prior to the date of any such sale, shall
deliver a written notice to the Purchaser, including the terms of
the sale and the Purchaser shall have the right, during such 10 day
period, to elect to acquire such securities upon the same terms and
subject to the same conditions as are contained in the notice. If
the Purchaser does not exercise this right, the Company may sell
such securities upon the terms and subject to the same conditions as
are contained in the notice during the 40 days following the date of
the notice. If the proposed sale is not completed during such 40 day
period, the Company shall treat any subsequent sale as a new sale
subject to the requirement to give notice to the Purchaser.
Article VII - CONDITIONS PRECEDENT
7.1 Conditions Precedent. The obligation of the Purchaser to
purchase any Securities hereunder is subject to the satisfaction of
each of the following conditions precedent:
(a) The issuance and sale of the Securities shall not
contravene any law, rule or regulation applicable to, or result in
any liability or obligation for, the Purchaser or the Company or any
of its Subsidiaries;
(b) The following conditions have been satisfied as of the
Initial Closing Date and each Additional Closing Date,
(i) The representations and warranties of the Company
contained herein and in any Related Document and in any
writing delivered pursuant hereto or thereto shall be true
and correct when made and materially true and correct as of
the time of the Initial Closing and each Additional Closing;
(ii) No action, suit, investigation or proceeding
shall be pending or threatened before any court or
Governmental Agency to restrain, prohibit, collect damages as
a result of or otherwise challenge this Agreement or any
Related Document or any transaction contemplated hereby or
thereby;
(iii) All acts or covenants required hereunder to be
performed by the Company prior to the Initial Closing and
each Additional Closing shall have been fully performed by
it; and
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(iv) No Material Adverse Change shall have occurred
between the date of the Current Balance Sheet and the Initial
Closing Date or Additional Closing Date and no event or
occurrence shall have occurred that could have a Material
Adverse Effect.
(c) The following documents and items shall be delivered to
the Purchaser at or prior to the Initial Closing and each Additional
Closing:
(i) A fully executed counterpart of this Agreement
(at the Initial Closing only), fully executed certificates
for the Preferred Shares (in such denominations as the
Purchaser shall request) and the Warrants being delivered by
the Company at the Initial Closing and at each Additional
Closing.
(ii) Certificates of a duly authorized officer of the
Company dated as of each Additional Closing Date:
(A) Stating that the following conditions
have been satisfied as of each Additional Closing Date:
(1) The representations and warranties
of the Company contained herein and in any
writing delivered pursuant hereto were true
and correct when made and are materially true
and correct as of the time of each Additional
Closing;
(2) No action, suit, investigation
or proceeding is pending or threatened before
any court or Governmental Agency to restrain,
prohibit, collect damages as a result of or
otherwise challenge this Agreement or any
Related Document or any transaction
contemplated hereby or thereby;
(3) All acts or covenants required
hereunder to be performed by the Company prior
to each Additional Closing have been fully
performed by it; and
(4) No Material Adverse Change shall
have occurred between the date of the Current
Balance Sheet and each Additional Closing Date
and there shall have been no event or
occurrence that could result in a Material
Adverse Effect; and
(B) Setting forth the resolutions of the
Board of Directors authorizing the execution and
delivery of this Agreement and the Related Documents
and the consummation of the transactions
contemplated hereby and thereby, and certifying that
such resolutions were duly adopted and have not been
rescinded or amended;
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(iii) The Company shall have paid fees payable
pursuant to Section 12.10 hereof;
(iv) A copy of a certificate of the appropriate
official(s) of the state of organization and each state of
foreign qualification of the Company and each of its
Subsidiaries certifying as of the date of the certificate to
the existence in good standing of, and the payment of taxes
by, such Person in such states;
(v) A true and complete copy of the Certificate of
Incorporation, as amended, of the Company, certified as of a
date not more than six months prior to the Initial Closing
Date by an appropriate official of the state of organization
of each such Person, a true and complete copy of the Bylaws
of the Company, certified as of the Initial Closing Date by
the Secretary of the Company, and a certificate as of each
Additional Closing Date by the Secretary of the Company that
there has been no change to the Certificate of Incorporation
or Bylaws of the Company since the Initial Closing Date; and
(vi) Such other documents relating to the
transactions contemplated hereby as the Purchaser may
reasonably request.
7.2 Closing Deliveries to the Company. The Purchaser will
deliver to the Company the aggregate purchase price for the
Securities to be acquired by the Purchaser, net of a 10% placement
fee payable to Aspen Capital Resources, LLC.
Article VIII - COVENANTS OF THE COMPANY
8.1 Restricted Actions. Without the prior written consent of
the Purchaser, and for so long as any of the Preferred Shares remain
outstanding, the Company shall not, and shall not permit any
Subsidiary to:
(a) become subject to any agreement or instrument which by
its terms would (under any circumstances) restrict or impair the
Company's right to comply with or fulfill its obligations under the
terms of this Agreement or any of the Related Documents;
(b) materially alter or change the business of the Company;
(c) issue any stock option or warrant at less than the Fair
Market Value at the time of grant;
(d) create, incur or suffer to exist any Indebtedness, other
than Indebtedness existing on the date hereof, and any extension of
maturity, refinancing or modification of the terms there of
provided, however, that such extension, refinancing or modification
(A) is pursuant to terms that are not materially less favorable to
the purchaser than the terms of the Indebtedness being extended,
refinanced or modified and (B) after giving effect to the extension,
refinancing or modification, such Indebtedness is not greater than
the amount of Indebtedness outstanding immediately prior to such
extension, refinancing or modification.
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(e) alter the rights, preferences and privileges of the
Securities, the Conversion Shares or the Warrant Shares; and
(f) grant any rights of registration under the Securities
Act relating to any of its shares of Capital Stock or other
securities to any Person other than pursuant to this Agreement,
unless (i) the rights so granted to another Person do not limit,
restrict or impair the rights of the Purchaser under this Agreement
and under the Related Documents and (ii) such rights so granted to
another Person do not grant priority in registration rights to such
other Person over rights granted to Purchaser under this Agreement
and under the Related Documents.
8.2 Required Actions. For so long as any of the Preferred
Shares remain outstanding, the Company shall, and shall cause each
Subsidiary to:
(a) cause all properties owned by the Company or any of its
Subsidiaries or used or held for use in the conduct of its business
or the business of any of its Subsidiaries to be maintained and kept
in good condition, repair and working order (reasonable wear and
tear excepted) and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the
Board of Directors may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted
at all times; provided, however, that the foregoing shall not
prevent the Company from discontinuing the maintenance or operation
of any of such properties if such discontinuance is, in the judgment
of the management of the Company, desirable in the conduct of its
business or the business of any of its Subsidiaries and is not
disadvantageous in any material respect to the holders of the
Securities;
(b) preserve and keep in full force and effect the corporate
existence, rights (charter and statutory), licenses and franchises
of the Company and each of its Subsidiaries; provided, however, that
the Company shall not be required to preserve any such right,
license or franchise if the Board of Directors shall determine that
the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries as a whole and that
the loss thereof is not disadvantageous in any material respect to
the holders of Securities;
(c) maintain the books, accounts and records of the Company
and its Subsidiaries in accordance with past custom and practice as
used in the preparation of the Financial Statements except to the
extent permitted or required by GAAP;
(d) keep all of its and its Subsidiaries' properties which
are of an insurable nature insured with insurers, believed by the
Company in good faith to be financially sound and responsible,
against loss or damage to the extent that property of similar
character is usually so insured by corporations similarly situated
and owning like properties (which may include self-insurance, if
reasonable and in comparable form to that maintained by companies
similarly situated);
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(e) comply with all material legal requirements and material
contractual obligations applicable to the operations and business of
the Company and its Subsidiaries and pay all applicable Taxes as
they become due and payable;
(f) permit representatives of any holder of the Securities
and its agents (including their counsel, accountants and
consultants), subject to the execution of a reasonable
confidentiality agreement, to have reasonable access upon reasonable
notice during business hours to the Company's books, records,
facilities, key personnel, officers, directors, customers,
independent accountants and legal counsel so long as such access
does not violate any applicable Federal or state law or cause the
loss of the attorney-client privilege;
(g) at all times (i) file all reports (including annual
reports, quarterly reports and the information, documentation and
other reports) required to be filed by the Company under the
Exchange Act and Sections 13 and 15 of the rules and regulations
adopted by the SEC thereunder, and the Company shall use its best
efforts to file each of such reports on a timely basis, and take
such further action as any holder or holders of the Securities, the
Conversion Shares or the Warrant Shares may reasonably request
(including providing copies of such reports to the holders of the
Securities, the Conversion Shares or the Warrant Shares), all to the
extent required to enable such holders to sell Securities pursuant
to Rule 144 adopted by the SEC under the Securities Act (as such
rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the SEC and to enable the Company to
register securities with the SEC on Form S-3 or any similar
short-form registration statement and upon the filing of each such
report deliver a copy thereof to each holder of the Securities, the
Conversion Shares or the Warrant Shares, (ii) if the Company is no
longer subject to the requirements of the Exchange Act, provide
reports to the holders of the Securities, the Conversion Shares or
the Warrant Shares in substantially the same form and at the same
times as would be required if the Company were subject to the
Exchange Act, and (iii) provide to each initial holder of the
Securities, the Conversion Shares or the Warrant Shares and each
other holder who has entered into a confidentiality agreement with
the Company, pursuant to mutually agreeable terms, any material
information distributed to the Board of Directors;
(h) commencing not later than 120 days after the Initial
Closing Date, maintain at all times a valid listing for the Common
Stock on a national securities exchange, the NASDAQ Stock Market
System or reporting on the NASD's OTC Bulletin Board;
(i) maintain all material Intellectual Property Rights
necessary to the conduct of its business and own or have a valid
license to use all right, title and interest in and to, such
material Intellectual Property Rights;
(j) deliver Conversion Shares in accordance with the terms
and conditions, and time periods, set forth in the Certificate of
Designation; and
(k) take such actions and execute, acknowledge and deliver,
and cause each of the Subsidiaries to take such actions and execute,
acknowledge and deliver, at its sole cost and expense such
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agreements, instruments or other documents as the Purchaser may
reasonably require from time to time in order to (i) carry out more
effectively the purposes of this Agreement and the Related
Documents, (ii) maintain the validity and effectiveness of any of
the Related Documents, and (iii) to better assure, convey, grant,
assign, transfer and confirm unto the Purchaser the rights now or
hereafter intended to be granted to the Purchaser under this
Agreement or any Related Document.
8.3 Reservation of Common Stock. The Company shall at all
times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purposes of issuance upon
conversion of the Preferred Shares and the exercise of the Warrants,
such number of shares of Common Stock as are issuable upon the
conversion or exercise of all Preferred Shares and all Warrants. All
shares of Common Stock which are so issuable shall, when issued, be
duly and validly issued, fully paid and nonassessable and free from
all Taxes, liens and charges. The Company, at its sole cost and
expense, shall take all such actions as may be necessary to assure
that all such shares of Common Stock may be so issued without
violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares
of Common Stock may be listed (except for official notice of
issuance which shall be immediately transmitted by the Company upon
issuance).
8.4 Payments Free of Withholding. All payments by the Company
hereunder or under the Preferred Shares or the Warrants shall be
made free and clear of, and without any deduction for, any Tax
imposed by any taxing jurisdiction, domestic or foreign.
Article IX - REGISTRATION RIGHTS
9.1 Registration Rights. The Company, at its sole cost and
expense, covenants to immediately register or qualify or cause to be
registered or qualified by one or more registrations or
qualifications under applicable federal and state securities laws
the sale and resale by the Purchaser of (i) all of the Conversion
Shares, (ii) all of the Warrant Shares, and (iii) all of the
additional shares of Common Stock issued or issuable to the
Purchaser pursuant to this Agreement, if any, (the "Registrable
Securities") and to maintain such registrations or qualifications
effective for all periods during which any Preferred Share may be
converted or any Warrants may be exercised. The Company covenants to
use its best efforts to cause such registrations or qualifications
to become effective as soon after filing as possible and to remain
effective for all periods during which any portion of any Preferred
Share may be converted or any Warrants may be exercised. The Company
covenants to prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registrations or
qualifications and the prospectus used in connection therewith as
may be necessary to keep such registrations or qualifications
effective and to comply with the provisions of the Securities Act of
1933, as amended, with respect to the disposition of all securities
covered by such registration or qualification in accordance with the
intended methods of disposition by the sellers thereof set forth in
such registration or qualification.
If such registrations or qualifications, registering all of
the Registrable Securities, have not become effective on or before
the date which is 120 days after the date of this Agreement or on
any date thereafter cease to remain effective as provided herein,
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the Company hereby covenants and agrees to issue or cause to be
issued to the Purchaser on such date and on every date which is 30
days or a multiple thereof after such date, until such registrations
or qualifications shall become effective with respect to all of the
Registrable Securities, as additional consideration for the
Preferred Share and not as a penalty, additional shares of Common
Stock equal in number to 7% of (i) the total number of shares of
Common Stock issued or issuable upon conversion of all issued and
outstanding Preferred Shares or portions thereof which are
convertible by the Purchaser and (ii) the additional shares of
Common Stock issued or issuable to the Purchaser pursuant to this
Agreement, if any, and to cause the sale and resale of all such
additional shares to be included in the registrations or
qualifications described herein.
9.2 Piggyback Registration Rights. The Company covenants that
if at any time when any Preferred Share may be converted or any
Warrant may be exercised the Company should file a non-underwritten
registration statement or offering statement on behalf of the
Company pursuant to applicable federal and state securities laws for
a public offering of securities, the Company will provide written
notification to the Purchaser at least 30 days but not more than 60
days prior to the filing date of such registration statement or
offering statement and will register or qualify or cause to be
registered or qualified, subject to the rights pursuant to which the
registration or qualification is filed, at the option of the
Purchaser and at the sole cost and expense of the Company, the sale
and resale by the Purchaser of (i) all of the Conversion Shares,
(ii) all of the Warrant Shares, and (iii) all of the additional
shares of Common Stock issuable to the Purchaser pursuant to this
Agreement, if any, and the Company will maintain such registration
statement effective for all periods during which any Preferred
Shares may be converted or any Warrants may be exercised.
Article X - SURVIVAL
10.1 Survival. The representations, warranties, covenants and
agreements of the parties hereto contained herein, or in any writing
delivered pursuant hereto, shall survive the Initial Closing and
each Additional Closing of the transactions contemplated hereby and
by the Related Documents notwithstanding any due diligence
investigation conducted by or on behalf of Purchaser and until such
time as all of the obligations of the parties hereto have been
satisfied.
Article XI - INDEMNIFICATION
11.1 Indemnification. In consideration of the Purchaser's
execution and delivery of this Agreement and acquiring the
Securities hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend, protect,
indemnify and hold harmless the Purchaser and each other holder of
the Securities and each of their respective officers, directors,
employees and agents (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties,
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fees, liabilities, damages, and expenses (including, without
limitation, costs of suit and attorneys' fees and expenses) in
connection therewith (irrespective of whether any such Indemnitee is
a party to the action for which indemnification hereunder is sought)
(the "Indemnified Liabilities"), incurred by the Indemnitees or any
of them as a result of, or arising out of, or relating to (a) the
material breach or inaccuracy of any representation or warranty
contained in this Agreement or any Related Document or any other
instrument, agreement or document delivered to the Purchaser in
accordance herewith or therewith, (b) the execution, delivery,
performance or enforcement of this Agreement, any Related Document
and any other instrument, document or agreement executed pursuant
hereto or thereto by any of the Indemnitees, or (c) resulting from
any material breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company herein or in any Related
Document. The Company shall reimburse the Indemnitees for the
Indemnified Liabilities as such Indemnified Liabilities are
incurred. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable
law.
Article XII - ARBITRATION
12.1 Arbitration. Any unresolved dispute or controversy
arising under or in connection with this Agreement or the Related
Documents shall be settled exclusively by arbitration, conducted in
accordance with the rules of the American Arbitration Association
then in effect. A decision by the arbitrator or by a majority of the
arbitration panel shall be final and binding. Judgement may be
entered on the arbitrators' award in any court having jurisdiction.
Any arbitration proceeding shall be held in Salt Lake City, Utah.
Notwithstanding the foregoing, the Purchaser shall be entitled to
seek injunctive or other equitable relief from any court of
competent jurisdiction, without the need to resort to arbitration.
Article XIII - GENERAL PROVISIONS
13.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws of the
State of Utah without giving effect to the laws of conflict or
choice of laws of the State of Utah of any other jurisdiction that
would result in the application of any laws other than those of the
State of Utah.
13.2 Consent to Jurisdiction; Service of Process And Venue.
Any legal action or proceeding with respect to this Agreement or any
related document may be brought in the courts of the State of Utah
in the County of Salt Lake or in the United States District Court
for the District of Utah, and, by execution and delivery of this
Agreement, the parties hereby irrevocably accept in respect of their
property, generally and unconditionally, the jurisdiction of the
aforesaid courts.
13.3 Entire Agreement. This Agreement and the other writings
referred to herein or delivered pursuant hereto constitute the
entire agreement among the parties with respect to the subject
matter hereof and supersede all prior oral or written arrangements
or understandings.
13.4 Headings. The headings of the various sections of this
Agreement have been inserted for reference only and shall not be
deemed to be a part of this Agreement.
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13.5 Amendment and Waiver. No amendment of any provision of
this Agreement shall be effective, unless the same shall be in
writing and signed by the Company and the Purchaser. Any failure of
the Company to comply with any provision hereof may only be waived
in writing by the Purchaser, and any failure of the Purchaser of the
Securities, the Conversion Shares or the Warrant Shares to comply
with any provision hereof may only be waived in writing by the
Company. No such waiver shall operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No failure by any
party to take any action against any breach of this Agreement or
default by any other party shall constitute a waiver of such party's
right to enforce any provision hereof or to take any such action.
13.6 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
13.7 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns, including each subsequent holder of
Securities, Conversion Shares or Warrant Shares. Except as otherwise
specifically provided herein, this Agreement shall not be assignable
by the Company without the prior written consent of the Purchaser.
13.8 No Third Party Beneficiaries. Except as specifically set
forth or referred to herein, nothing herein is intended or shall be
construed to confer upon any person or entity other than the parties
hereto and their successors or assigns, any rights or remedies under
or by reason of this Agreement.
13.9 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be
(i) delivered in person, (ii) transmitted by telecopy, (iii) sent by
registered or certified mail, postage prepaid with return receipt
requested, or (iv) sent by reputable overnight courier service, fees
prepaid, to the recipient at the address or telecopy number set
forth below, or such other address or telecopy number as may
hereafter be designated in writing by such recipient. Notices shall
be deemed given upon personal delivery, upon receipt of return
receipt in the case of delivery by mail, upon acknowledgment by the
receiving telecopier or one day following deposit with an overnight
courier service.
(a) If to the Company:
e-automate Corporation
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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(b) If to the Purchaser:
Aspen Capital Resources, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇
13.10 Purchaser Fees and Expenses.
(a) The Company shall pay a placement fee to Aspen Capital
Resources, LLC equal to 10% of the aggregate principal amount of
Preferred Shares issued pursuant to this Agreement, payable upon
issuance of each Preferred Share.
(b) The Company shall reimburse or pay, on demand, to or on
behalf of the Purchaser (i) the reasonable fees and expenses of
counsel(s) to the Purchaser incurred in connection with the
documentation, negotiation and consummation of the transactions
contemplated by this Agreement and the Related Documents and (ii)
reasonable due diligence expenses incurred by the Purchaser, limited
to $5,000.00 in connection with the Initial Closing and an aggregate
of $15,000.00 in connection with all Closings. The Company shall
reimburse or pay, on demand, to or on behalf of the Purchaser the
reasonable fees and expenses of counsel(s) to the Purchaser incurred
in connection with any Additional Closing and any future amendment
or waiver to this Agreement or any of the Related Documents. The
Company shall reimburse or pay, on demand, to or on behalf of the
Purchaser the costs and expenses, including reasonable fees and
expenses of counsel(s) to the Purchaser, incurred by the Purchaser
in connection with the enforcement, whether with or without suit, of
this Agreement and any of the Related Documents.
(c) The Company also agrees to pay or cause to be paid, on
demand, and to save the Purchaser harmless against liability for the
payment of all reasonable out-of-pocket expenses incurred by the
Company from time to time arising from or relating to: (i) the
preservation and protection of any of the Company's rights under
this Agreement or the Related Documents, (ii) the defense of any
claim or action asserted or brought against the Purchaser by any
Person that arises from or relates to this Agreement, any Related
Document, the Purchaser's claims against the Company, or any and all
matters in connection therewith, (iii) the commencement or defense
of, or intervention in, any court proceeding arising from or related
to this Agreement or any Related Document, (iv) the filing of any
petition, complaint, answer, motion or other pleading by the
Purchaser in connection with this Agreement or any Related Document,
(v) any attempt to collect from the Company, or (vi) the receipt of
any advice with respect to any of the foregoing. Without limitation
of the foregoing or any other provision of any Related Document: (A)
the Company agrees to pay all stamp, document, transfer, recording
or filing taxes or fees and similar impositions now or hereafter
determined by the Purchaser to be payable in connection with this
Agreement or any Related Document, and the Company agrees to save
the Purchaser harmless from and against any and all present or
future claims, liabilities or losses with respect to or resulting
-27-
from any omission to pay or delay in paying any such taxes, fees or
impositions, and (B) if the Company fails to perform any covenant or
agreement contained herein or in any Related Document, the Purchaser
may itself perform or cause performance of such covenant or
agreement, and the expenses of the Purchaser incurred in connection
therewith shall be reimbursed on demand by the Company.
13.11 Remedies Cumulative. Except as otherwise provided
herein, the remedies provided herein shall be cumulative and shall
not preclude the assertion by any party hereto of any other rights
or the seeking of any other remedies against any other party hereto.
13.12 Timeliness. The parties agree that time is of the
essence for the performance of each and every covenant and the
satisfaction of each and every condition contained in the Preferred
Share.
13.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one agreement.
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute this Agreement as of the date first
above written.
The Company: e-automate Corporation
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
▇▇▇ ▇▇▇▇▇, President
and Chief Executive Officer
By: /s/ ▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇ ▇▇▇▇▇, Director of Finance
and Corporate Secretary
The Purchaser: ASPEN CAPITAL RESOURCES, LLC
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, Manager
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