DEBENTURE AND WARRANT PURCHASE AGREEMENT
This
Debenture and Warrant Purchase Agreement (this “Agreement”), dated as
of September __, 2009, is made by and between Innovative Card Technologies,
Inc., a Delaware corporation (the “Company”), and the
Purchasers signatory hereto (collectively, the “Purchasers”).
For good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Issuance of Debenture and
Warrant. The Company hereby agrees to issue to the Purchasers
against payment therefor as described herein, a debenture of the Company in the
aggregate principal amount of up to $1,000,000 (the “Subscription Amount”)
and common stock purchase warrants, which debentures (a “Debenture”) and
warrants (the “Warrants”) shall be
in the form of the debentures and warrants as restated pursuant to that certain
Waiver, Amendment and Exchange Agreement (“Amendment
Agreement”), dated as of the date hereof, by and among the Company and
the Purchaser. Subject to the terms and conditions hereunder, at the
closing, the Company shall deliver to the Purchaser the Debenture and Warrant,
and the Purchaser shall cancel certain obligation owed by the Company to holder
in the amount of the Subscription Amount.
2. Documents. The
rights, obligations and covenants of the Purchaser and of the Company with
respect to the Debentures and Warrants and the shares of Common Stock issuable
under the Debenture and Warrants (the “Underlying Shares”)
shall be identical, as to the Debentures, Warrants and Underlying Shares, in all
respects to the rights, obligations and covenants of the Purchaser and the
Company with respect to the debentures, warrants and the underlying shares
issued pursuant to those certain Securities Purchase Agreements, dated January
8, 2008 and April 15, 2008 among the Company and the Purchasers signatory
thereto (the “Purchase
Agreements”), as amended by the Amendment Agreement. Defined terms not otherwise defined
herein shall have the meanings set forth in the Purchase
Agreements.
3. Representations and
Warranties of the Company. The Company hereby makes the
following representations and warranties set forth below to the Purchasers as of
the date of its execution of this Agreement:
(a) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder in accordance
with the terms hereof. The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection therewith. This Agreement
has been duly executed by the Company and, when delivered in accordance with the
terms hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
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(b)
No
Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, subject to the terms hereof and thereof, do not and will
not: (i) conflict with or violate any provision of the Company's or any
Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.
(c) Issuance of the Debentures
and Warrants. The Debentures and Warrants are duly authorized
and, upon the execution of this Agreement by the Purchasers, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Debenture and Warrants. The Underlying Shares, when issued in
accordance with the terms of the Debentures and Warrants, will be validly
issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company. Subject to the receipt of the Authorized Share Approval, the
Company will have reserved from its duly authorized capital stock a number of
shares of Common Stock for issuance of the Underlying Shares.
(d) Affirmation of Prior
Representations and Warranties. Except as set forth in this
Section and on Schedule 3(d) hereto,
the Company hereby represents and warrants to each Purchaser that the Company’s
representations and warranties listed in Section 3.1 of the Purchase Agreements,
as supplemented by the disclosures set forth in this Section and in the
disclosure schedule to the Purchase Agreements, are true and correct as of the
date hereof.
4. Representations and
Warranties of the Purchaser. Each Purchaser hereby represents
and warrants as of the date hereof to the Company as follows:
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(a)
Authority. The
execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of such Purchaser. This
Agreement has been duly executed by such Purchaser and, when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.
(b) Own
Account. Such Purchaser (i) understands that the Debentures
and Warrants are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law, (ii) is acquiring the
Debentures and Warrants as principal for its own account and not with a view to
or for distributing or reselling such Debentures or Warrants or any part thereof
in violation of the Securities Act or any applicable state securities law, (iii)
has no present intention of distributing any of such securities in violation of
the Securities Act or any applicable state securities law and (iv) has no
arrangement or understanding with any other persons regarding the distribution
of such Debenture and Warrant (this representation and warranty not limiting
such Purchaser’s right to sell the Underlying Shares pursuant to a registration
statement or otherwise in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state
securities law. Such Purchaser is acquiring the Debenture and Warrant
hereunder in the ordinary course of its business.
(c) Purchaser
Status. At the time such Purchaser was offered the Debentures
and Warrants, it was, and as of the date hereof it is, and on each date on which
it converts the Debenture and exercises the Warrants it will be an “accredited
investor” as defined in Rule 501 under the Securities Act. Such
Purchaser is not required to be registered as a broker-dealer under Section 15
of the Exchange Act.
(d) Experience of
Purchasers. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Debenture and Warrant, and has so evaluated
the merits and risks of such investment. Such Purchasers is able to
bear the economic risk of an investment in the Debenture and Warrant and, at the
present time, is able to afford a complete loss of such investment.
(e) General
Solicitation. Such Purchaser is not purchasing the Debentures
and Warrants as a result of any advertisement, article, notice or other
communication regarding such securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
5. Legal
Opinion. Concurrently herewith, the Company hereby agrees to
cause its legal counsel to issue a legal opinion to the undersigned Purchasers
regarding this Agreement and the issuance of the Debenture and Warrant, in form
and substance reasonably acceptable to the Purchasers.
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6. Public
Disclosure. On or before 8:30 am (Eastern Time) on the Trading
Day immediately following the date hereof, the Company shall file a Current
Report on Form 8-K, reasonably acceptable to the Purchasers disclosing the
material terms of the transactions contemplated hereby and attaching this
Agreement as an exhibit thereto. The Company shall consult with the
Purchasers in issuing any other press releases with respect to the transactions
contemplated hereby.
7. Fees and
Expenses. At the closing, the Company agrees to reimburse to
XX Xxxxxxx & Co., LLC (“TRW”) for any legal
fees and expenses incurred in connection herewith. Except as
expressly set forth herein, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.
8. Use of
Proceeds. The Company shall use the net proceeds from the sale
of the Debentures and Warrants hereunder for general working capital
needs.
9. Entire
Agreement. This Agreement, together with the exhibits and
schedules hereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
10. Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.
11. Amendments and
Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Purchasers
holding at least 70% of the principal amount of the Debentures then outstanding
or, in the case of a waiver, by the party against whom enforcement of any such
waived provision is sought.
12. Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
13. Successors and
Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Purchaser. The Company may not assign (except
by merger) its rights or obligations hereunder without the prior written consent
of the Purchaser (except by merger). The Purchaser may assign their
rights hereunder in the manner and to the persons as permitted under the
Debenture and Warrants.
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14. No Third-Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.10.
15. Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of the transaction documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other transaction documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
transaction documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law. If either party shall commence an action or
proceeding to enforce any provisions of the transaction documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
16. Execution and
Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
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17. Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
18. Independent Nature of
Purchasers' Obligations and Rights. The obligations of each
Purchaser hereunder are several and not joint with the obligations of any other
Purchasers hereunder, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser hereunder. Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Purchaser pursuant hereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose. Each Purchaser has been
represented by its own separate legal counsel in their review and negotiation of
the Transaction Documents. For reasons of administrative convenience
only, Purchasers and their respective counsel have chosen to communicate with
the Company through Xxxxxxxxx Xxxxx LLP (“WS”). WS
does not represent all of the Purchasers but only TRW. The Company has elected
to provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by the Purchasers.
19. Construction. The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise this Agreement and the transaction documents and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of the transaction documents or any amendments hereto. In
addition, each and every reference to share prices in this Agreement and the
Debentures and the Warrants shall be subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this
Agreement.
20. Secured
Obligation. The parties acknowledge and agree that the
obligations of the Company under this Agreement and the Debenture, are subject
to the security interest granted by the Company and its Subsidiaries pursuant to
those certain Security Agreements and Subsidiary Guarantees entered into in
connection with the Purchase Agreements and that such obligations are
“Obligations” under such Security Agreements and are guaranteed by the
Subsidiaries pursuant to any Subsidiary Guarantees entered into in connection
therewith. The Company and the Subsidiaries shall take any and all
actions as may be necessary or appropriate in order to grant the Purchasers a
first priority security interest in the assets of the Company and the
Subsidiaries, including all UCC-1 filing receipts if required.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have caused this Debenture and Warrant
Purchase Agreements to be duly executed by their respective authorized
signatories as of the date first indicated above:
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INNOVATIVE
CARD TECHNOLOGIES, INC.
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By:
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Name:
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Title:
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[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR HOLDERS FOLLOW]
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[HOLDER'S
SIGNATURE PAGE TO INVC DEBENTURE PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Amendment Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Name of
Purchaser: ________________________________________________________
Signature of Authorized Signatory of
Purchaser: __________________________________
Name of
Authorized Signatory:
____________________________________________________
Title of
Authorized Signatory:
_____________________________________________________
Email
Address of Purchaser:
________________________________________________
Facsimile
Number of Purchaser:
________________________________________________
Address
for Notice of Purchaser:
Subscription
Amount: _____________
Warrant
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