SECURITIES PURCHASE AGREEMENT
dated as of
November 24, 2003
among
UCAP INCORPORATED
(the "Company"),
and
THE PURCHASERS NAMED HEREIN
(the "Purchasers")
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT") dated as of November
24, 2003, among UCAP INCORPORATED, a Colorado corporation (the "COMPANY"), and
the Purchasers listed on SCHEDULE I (collectively, the "PURCHASERS").
The Company desires to raise an initial sum of Two Million One Hundred
Thousand Dollars ($2,100,000) in equity financing and an additional investment
of Three Million Dollars ($3,000,000) in equity financing, and the Purchasers
are willing to purchase shares of the Company's common stock in connection
therewith, all on the terms and subject to the conditions set forth herein.
ACCORDINGLY, in consideration of the foregoing and the covenants,
agreements, representations and warranties contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties hereto hereby agree as follows:
ARTICLE I:
DEFINED TERMS; RULES OF CONSTRUCTION
1.1 DEFINED TERMS. Capitalized terms used and not otherwise defined in this
Agreement have the meanings ascribed to them below or in the other locations of
this Agreement specified below:
"AFFILIATE," as applied to any specified Person, means any
other Person that, directly or indirectly, controls, is controlled by or is
under common control with such specified Person. For purposes of the foregoing,
"control," when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by contract or otherwise, and the terms "controlled" and "controlling" shall
have meanings correlative to the foregoing. In the case of a Person who is an
individual, the term "Affiliate" shall include, with respect to such specified
Person, (i) members of such specified Person's immediate family (as defined in
Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act), and
(ii) trusts, the trustee or the beneficiaries of which are such specified Person
or members of such Person's immediate family as determined in accordance with
the foregoing clause (i). Notwithstanding the foregoing, the Purchasers and
their respective Affiliates shall not be deemed Affiliates of the Company for
purposes of this Agreement. In addition to the foregoing, any Person meeting the
definition of "affiliate" set forth in Rule 405 promulgated pursuant to the
Securities Act, including all executive officers and directors of the Company,
shall be an "Affiliate" for purposes hereof.
"AUDIT" means any audit, assessment of Taxes, other
examination by any Tax Authority, proceeding or appeal of such proceeding
relating to Taxes.
"AGREEMENT" shall have the meaning given to such term in the
caption to this Agreement.
"APPLICABLE LAWS," with respect to any Person, means all
provisions of laws, statutes, ordinances, rules, regulations, permits,
certificates or orders of any Governmental Authority applicable to such Person
or any of its assets or property or to which such Person or any of its assets or
property is subject, and all judgments, injunctions, orders and decrees of all
courts and arbitrators in proceedings or actions in which such Person is a party
or by which it or any of its assets or properties is or may be bound or subject.
"ARTICLES OF INCORPORATION" means the Articles of
Incorporation of the Company, as amended and in effect at the time in question.
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" means any day that is not a Saturday, Sunday,
legal holiday or other day on which banks are required to be closed in New York,
New York.
"BY-LAWS" means the by-laws of the Company, as amended and in
effect at the time in question.
"CLAIM" means any claim, demand, assessment, judgment, order,
decree, action, cause of action, litigation, suit, investigation or other
Proceeding.
"COMMON STOCK" has the meaning ascribed thereto in SECTION
3.2.
"CODE" means the Internal Revenue Code of 1986, as amended, or
any similar Federal law then in force, and the rules and regulations promulgated
thereunder, all as the same may from time to time be in effect.
"COMPANY" has the meaning given to it in the caption to this
Agreement.
"COMPANY PUBLIC FILINGS" shall mean those filings made by the
Company with the SEC's XXXXX database, and shall specifically include the
Company's annual report on Form 10-KSB for the fiscal year ended September 30,
2002, filed with the SEC on January 15, 2003, and all reports filed thereafter.
"CONTRACTS" has the meaning ascribed thereto in SECTION 3.6.
"DOCUMENTS" means this Agreement and the other documents,
agreements and certificates executed pursuant to or in connection with this
Agreement.
"EMPLOYEE BENEFIT PLAN" has the meaning ascribed thereto in
SECTION 3.15.
"ENVIRONMENTAL CLAIM" means any claim, action, cause of
action, investigation of which the Company or any of its Subsidiaries, including
any of their management employees, are aware, or written notice by any Person
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
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resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location owned,
leased, used or operated by the Company or any of its Subsidiaries, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"ENVIRONMENTAL LAWS" means all Applicable Laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata and natural resources), including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern.
"EQUITY INTEREST" means with respect to the Company, any and
all issued and outstanding capital stock and warrants, options or other rights
to acquire capital stock .
"ERISA" means The Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute or law thereto.
"ERISA AFFILIATE" has the meaning ascribed thereto in SECTION
3.15.
"ESCROW AGENT" means the law firm of Xxxxxxxxx Traurig, LLP.
"FINANCIAL STATEMENTS" has the meaning ascribed thereto in
SECTION 3.7.
"FUNDAMENTAL DOCUMENTS" means the documents by which any
Person (other than an individual) establishes its legal existence or which
govern its internal affairs. The Fundamental Documents of the Company are the
Certificate of Incorporation and By-Laws and any other organizational document
each as amended or restated (or both) to date.
"GAAP" means United States generally accepted accounting
principles.
"GOVERNMENTAL AUTHORITY" means any domestic or foreign
government or political subdivision thereof, whether on a federal, state or
local level and whether executive, legislative or judicial in nature, including
any agency, authority, board, bureau, commission, court, department or other
instrumentality thereof.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in a charge against real or
personal property, or security interest of any kind (including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell and any filing of
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect
upon the business, operations, prospects, properties, assets or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
or (b) a material adverse effect on the ability of the Company to perform its
obligations under this Agreement or any of the other Documents.
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"MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals,
pollutants, contaminants, industrial, toxic or hazardous wastes, substances or
constituents, petroleum and petroleum products (or any by-product or constituent
thereof), asbestos or asbestos-containing materials or PCBs.
"ORDER" means any judgment, writ, decree, injunction, order,
stipulation, compliance agreement or settlement agreement issued or imposed by,
or entered into with, a Governmental Authority, whether or not having the force
of law.
"PERSON" shall be construed as broadly as possible and shall
include an individual, a partnership (including a limited liability
partnership), a company, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a Governmental Authority.
"PROCEEDING" means any legal, administrative or arbitration
action, suit, complaint, charge, hearing, inquiry, investigation or proceeding
(including any partial or threatened proceedings).
"PURCHASER" has the meaning given to it in the caption to this
Agreement and any Person succeeding to the rights of a Purchaser pursuant to the
terms hereof.
"SEC" means the United States Securities and Exchange
Commission.
"SECURITIES" means, with respect to any Person, such Person's
"securities" as defined in Section 2(1) of the Securities Act and includes such
Person's capital stock or other equity interests or any options, warrants or
other securities or rights that are directly or indirectly convertible into, or
exercisable or exchangeable for, such Person's capital stock or other equity
interests.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same may from time to time be in
effect.
"SUBSIDIARY" shall mean, at any time, with respect to any
Person (the "SUBJECT PERSON"), (i) any Person of which either (x) more than 50%
of the shares of stock or other interests entitled to vote in the election of
directors or comparable Persons performing similar functions (excluding shares
or other interests entitled to vote only upon the failure to pay dividends
thereon or other contingencies) or (y) more than a 50% interest in the profits
or capital of such Person are at the time owned or controlled directly or
indirectly by the Subject Person or through one or more Subsidiaries of the
Subject Person or by the Subject Person and one or more Subsidiaries of the
Subject Person, or (ii) any Person whose assets, or portions thereof, are
consolidated with the net earnings of the Subject Person and are recorded on the
books of the Subject Person for financial reporting purposes in accordance with
GAAP.
"TAX" means any Taxes and the term "TAXES" means, with respect
to any Person, (A) all income taxes (including any tax on or based upon net
income, or gross income, or income as specially defined, or earnings, or
profits, or selected items of income, earnings or profits) and all gross
receipts, sales, use, ad valorem, transfer, franchise, license, withholding,
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payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties or
other taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts imposed
by any taxing authority (domestic or foreign) on such Person and (B) any
Liability for the payment of any amount of the type described in the immediately
preceding clause (A) as a result of being a "transferee" (within the meaning of
Section 6901 of the Code or any other Applicable Laws) of another Person or a
member of an affiliated or combined group.
"TAX AUTHORITY" means the Internal Revenue Service and any
other domestic or foreign governmental authority responsible for the
administration of any Taxes.
"TAX RETURNS" means all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"TRANSACTIONS" shall have the meaning ascribed to such term in
SECTION 3.4.
1.2 RULES OF CONSTRUCTION. The term "THIS AGREEMENT" means this agreement
together with all schedules and exhibits hereto, as the same may from time to
time be amended, modified, supplemented or restated in accordance with the terms
hereof. The use in this Agreement of the term "including" means "including,
without limitation." The words "HEREIN," "HEREOF," "HEREUNDER" and other words
of similar import refer to this Agreement as a whole, including the schedules
and exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular section, subsection,
paragraph, subparagraph or clause contained in this Agreement. All references to
sections, schedules and exhibits mean the sections of this Agreement and the
schedules and exhibits attached to this Agreement, except where otherwise
stated. The title of and the section and paragraph headings in this Agreement
are for convenience of reference only and shall not govern or affect the
interpretation of any of the terms or provisions of this Agreement. The use
herein of the masculine, feminine or neuter forms shall also denote the other
forms, as in each case the context may require or permit. Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Unless expressly provided otherwise, the measure of a period of one month
or year for purposes of this Agreement shall be that date of the following month
or year corresponding to the starting date, provided that if no corresponding
date exists, the measure shall be that date of the following month or year
corresponding to the next day following the starting date. For example, one
month following February 18 is March 19, and one month following March 31 is
May 1.
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ARTICLE II:
PURCHASE AND SALE of shares; CLOSINGS
2.1 AUTHORIZATION OF ISSUANCE OF COMMON SHARES. Subject to the terms and
conditions hereof, the Company has authorized the issuance at the Initial
Closing (as defined hereafter) of an aggregate of up to 210,000,000 shares (the
"COMMON SHARES") of the Company's Common Stock for the aggregate purchase price
of $2,100,000 or $0.01 per share (the "Purchase Price").
2.2 INITIAL SALE OF SECURITIES; INITIAL CLOSING. At the closing (the "Initial
Closing"), to be held on November __, 2003 (the "Initial Closing Date") at the
offices of Xxxxxxxxx Xxxxxxx, LLP, 0000 Xxxxxxxxx Xxxxxxx, X.X., Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000, the Company shall issue and sell to each Purchaser, and
subject to the satisfaction or waiver of conditions set forth in Article V, each
Purchaser shall severally purchase from the Company, that number of Common
Shares set forth opposite its name on SCHEDULE I upon delivery of the Purchase
Price. The parties acknowledge that $100,000 has been previously delivered to
the Company, which shall be applied to and reduce the Purchase Price. Any Person
acquiring Common Shares in accordance with this Section 2.3 shall be considered
a "Purchaser" for purposes of this Agreement.
2.3 OPTION TO PURCHASE ADDITIONAL COMMON SHARES. After the Initial Closing, the
Purchasers shall have the option to purchase up to 300,000,000 additional Common
Shares at the purchase price of $0.01 per share pursuant to the following
schedule: Purchasers may purchase (a) up to an additional 100,000,000 Common
Shares for $1,000,000 within sixty (60) days of the Initial Closing Date; (b) up
to an additional 100,000,000 Common Shares for $1,000,000 within ninety (90)
days of the Initial Closing Date; and (c) 100,000,000 Common Shares for
$1,000,000 within one hundred twenty (120) days of the Initial Closing Date
(collectively the "Option Dates"). Prior to the each Option Date, the Company
shall ensure the provisions in Articles VI have been met.
2.4 USE OF PROCEEDS. The Purchasers have previously deposited Two Million One
Hundred Thousand Dollars ($2,100,000) with Escrow Agent and have previously
authorized the Escrow Agent to disburse One Hundred Thousand Dollars ($100,000)
to Company for the payment of salaries, rent utilities and other operating
expenses of the Company and the costs and expenses associated with the issuance
and sale of the Common Shares. The remaining Two Million Dollars ($2,000,000)
shall be used by the Company for general working capital, payment of accounts
payable and settlement of claims in litigation and for any other purpose that
the Board of Directors believes is in the best interest of the Company.
2.5 BOARD OF DIRECTORS. Upon the Initial Closing, the current Directors of the
Board shall resign, and shall be replaced by such persons as directed by the
Purchasers prior to the Initial Closing.
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ARTICLE III:
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers that as of the
date hereof:
3.1 DUE INCORPORATION AND GOOD STANDING. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Colorado with corporate power and authority to own, lease and operate
its properties, to conduct its business as currently conducted and as proposed
to be conducted and to enter into and perform its obligations under this
Agreement and the other Documents to which it is a party. The Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required.
3.2 CAPITALIZATION.
(a) As of the Closing Date, the authorized capital stock of the Company
consists of 800,000,000 shares of Common Stock, no par value per share (the
"COMMON STOCK") of which approximately 36,613,437 shares are currently issued
and outstanding. Except as set forth above and or in the Company Public Filings,
as of the date hereof, after giving effect to the transactions contemplated by
this Agreement and the other Documents, there are no Equity Interests of the
Company or any Subsidiary of the Company, or agreements obligating the Company
or any Subsidiary of the Company to issue, transfer, grant or sell any Equity
Interests in the Company or any Subsidiary of the Company, except as disclosed
on Schedule 3.2(a) hereof..
(b) The Company has complied in all material respects with all federal
and state securities laws in connection with the issuance of all outstanding
Equity Interests.
(c) Except as disclosed in Company Public Filings, or as contemplated
by the Documents, and Schedule 3.2(c) hereof, there are no preemptive rights,
voting agreements, transfer restrictions (except those imposed by applicable
federal and state securities laws) or registration rights affecting the Equity
Interests in the Company.
3.3 SUBSIDIARIES. Each Subsidiary of the Company is duly incorporated and is in
good standing in its respective state or jurisdiction of incorporation and has
the corporate authority to own, lease or operate its properties and to conduct
its business as currently conducted and as proposed to be conducted. Each
Subsidiary of the Company is duly qualified to transact business and is in good
standing as a foreign corporation in each state or jurisdiction in which such
qualification is required, except where the failure to be so qualified would not
reasonably be expected to have a Material Adverse Effect.
3.4 AUTHORITY. The Company has all necessary corporate power and authority to
execute and deliver this Agreement and each of the other Documents to which it
is a party, and to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby (the
"TRANSACTIONS"). The execution and delivery of this Agreement and the other
Documents to which it is a party has been authorized by all necessary corporate
action on the part of the Company and no other corporate proceedings or
approvals are required on the part of the Company to authorize this Agreement or
the other Documents to which it is a party or to consummate the Transactions.
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The sale of the Common Shares is not and will not be subject to any preemptive
rights or rights of first refusal. This Agreement and the other Documents have
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery thereof by the Purchasers, constitutes
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.5 AUTHORIZATION OF COMMON SHARES. The issuance and sale of the Common Shares
have been duly authorized and the Common Shares when issued to the Purchasers
for the consideration set forth herein will be fully paid and non-assessable,
with no personal liability attached to the ownership thereof, and free of
restrictions on transfer other than under this Agreement, and applicable state
and federal securities laws.
3.6 NO VIOLATION OR CONFLICT; NO DEFAULT.
(a) Neither the nature of the business of the Company, the execution,
delivery or performance of this Agreement or any of the other Documents by the
Company, nor the compliance with its obligations hereunder or thereunder, nor
the consummation of the Transactions, nor the issuance, sale or delivery of the
Common Shares will:
(i) violate or conflict with any provision of the Fundamental
Documents of the Company;
(ii) violate or conflict with any Applicable Laws, except
where such violation would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; or
(iii) violate, be in conflict with, or constitute a breach or
default (or any event which, with the passage of time or notice or
both, would become a default) under, or permit the termination of, or
require the consent of any Person under, result in the creation or
imposition of any Lien upon any property of the Company under, result
in the loss (by the Company) or modification in any manner adverse to
the Company of any right or benefit under, or give to any other Person
any right of termination, amendment, acceleration, repurchase or
repayment, increased payments or cancellation under, any mortgage,
indenture, note, debenture, agreement, lease, license, permit,
franchise or other instrument or obligation, whether written or oral
(collectively, "CONTRACTS") to which the Company is a party or by which
their properties may be bound or affected except as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) The Company is not in default (without giving effect to any grace
or cure period or notice requirement) under any Contract, any of the Fundamental
Documents or any applicable judgments or orders, except where such default would
not, individually or in the aggregate, reasonably be expected to have a Material
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Adverse Effect, except as disclosed on Schedule 3.6(a).
(c) The execution and delivery of this Agreement and the other
Documents to which the Company is a party do not, and the performance of its
obligations under this Agreement and the other Documents and the consummation of
the Transactions will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority
pursuant to any Applicable Laws, except for (i) required filings under the
federal securities laws or state "blue sky" laws, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or prevent or delay in
any material respect consummation of the Transactions, or otherwise prevent the
Company from performing its obligations under this Agreement or the other
Documents.
3.7 FINANCIAL STATEMENTS: NO MATERIAL ADVERSE CHANGE.
(a) Except as set fort on SCHEDULE 3.7(A) hereto, the Company has
materially complied with its Company Public Filings requirements, including the
filings of Financial Statements through the quarter ended March 31, 2003.
Attached hereto as SCHEDULE 3.7(A) are the unaudited Financial Statements of the
Company for the fiscal year ended June 30, 2003. The Financial Statements have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods indicated. The Financial Statements fairly present the financial
condition and operating results of the Company as of the dates, and for the
periods, indicated therein.
(b) Except as set forth on SCHEDULE 3.7(A) hereto, or as reported by
the Company in its Company Public Filings, there has not been (i) any material
adverse change in the properties, business, prospects, operations, assets or
condition (financial or otherwise) of the Company taken as a whole, (ii) any
incurrence, satisfaction or discharge of any material Lien on any asset or
property of the Company, (iii) any waiver or compromise of any valuable right of
the Company, or the cancellation of any material debt or material claim held by
the Company, (iv) any payment of dividends on, or other distributions with
respect to, or any direct or indirect redemption or acquisition of, any shares
of the capital stock of the Company, or any agreement or commitment therefor,
(v) any mortgage, pledge, sale, assignment or transfer of any material tangible
or intangible assets of the Company, except in the ordinary course of business,
(vi) any loan or guaranty by the Company to or for the benefit of any officer,
director, employee, consultant or stockholder, or any member of their immediate
families, or any agreement or commitment therefor, other than travel expense
advances made by the Company to its officers, directors, employees, consultants
or stockholders in the ordinary course of business, (vii) any material damage,
destruction or loss (whether or not covered by insurance) affecting the assets
of the Company, (viii) any increase, direct or indirect, in the compensation
(including salary, bonus, insurance or pension benefits) paid or payable to or
for the benefit of any officer, director, employee or consultant of the Company
other than in the ordinary course of business, (ix) any material change to a
material contract or agreement by which the Company or any of its assets is
bound or subject, (x) any sale, assignment or transfer of any material
intangible or tangible assets, other than in the ordinary course of business,
(xi) any resignation or termination of employment of any officer or key employee
of the Company; and the Company, is not aware of any impending resignation or
termination of employment of any such officer or key employee, (xii) any change
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or amendment to any of the governing documents of the Company (including the
Certificate of Incorporation and By-Laws of the Company), except as contemplated
hereunder, or (xiii) any arrangement or commitment by the Company to do any of
the things described in this SECTION 3.7(B).
(c) Except as set forth on SCHEDULE 3.7(C), or as reported by the
Company in its Company Public Filings, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations (whether absolute,
accrued, fixed, contingent, liquidated, unliquidated or otherwise and whether
due or to become due) of any nature, except for liabilities, obligations or
contingencies which would individually or in the aggregate reasonably be
expected to have a Material Adverse Effect. Except as set forth on SCHEDULE
3.7(C) or in its Company Public Filings, there has been no change in any
significant accounting (including tax accounting) policies, practices or
procedures of the Company. All financial statements concerning the Company that
will hereafter be furnished by the Company to the Purchasers pursuant to this
Agreement will be prepared in accordance with GAAP consistently applied (except
as disclosed therein) (except for, in the case of the unaudited financial
statements, the exclusion of footnotes and normal year end adjustments) and will
present fairly in all material respects the financial condition of the entities
covered thereby as at the dates thereof and the results of their operations for
the periods then ended.
3.8 OWNERSHIP OF PROPERTIES. Except as set forth on SCHEDULE 3.8, or as reported
in its Company Public Filings, the Company possesses good, valid and marketable
title to, and owns its property and assets free and clear of all Liens. With
respect to the property and assets it leases, the Company is in compliance with
such leases and, to its knowledge, holds a valid leasehold interest free of any
Liens. Such properties, assets and leasehold interests are all of the assets
that are necessary to conduct the business of the Company as presently
conducted. All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company to conduct its business are in
good operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used.
3.9 PRIVATE OFFERING. Assuming the correctness of the representations and
warranties set forth in SECTIONS 4.1 AND 4.2 hereof, the issuance, offer and
sale of the Common Shares to the Purchasers hereunder is exempt from the
registration and prospectus delivery requirements of the Securities Act. In the
case of each offer or sale of the Common Shares, no form of general solicitation
or general advertising was used by the Company and its representatives,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
3.10 NO BROKERS. Except as set forth on SCHEDULE 3.10, the Company has not
engaged any broker, finder, commission agent or other such intermediary in
connection with the sale of the Common Shares and the transactions contemplated
by this Agreement and the other Documents, and the Company is under no
obligation to pay any broker's or finder's fee or commission or similar payment
in connection with such transactions.
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3.11 LITIGATION.
(a) Except as set forth on SCHEDULE 3.11 (which includes regarding the
unresolved litigation with Citicorp) or as disclosed in Company Public Filings,
there is no Proceeding, whether commenced, or to the knowledge of the Company,
threatened against or affecting the Company, except for such Proceedings that
would not reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect, and there is no Proceeding seeking to restrain, enjoin, prevent
the consummation of or otherwise challenge this Agreement or any of the other
Documents or the Transactions.
(b) Except as set forth on SCHEDULE 3.11, or as disclosed in Company
Public Filings, the Company is not subject to (i) any Claim, (ii) any Order or
(iii) any rule or regulation of any Governmental Authority that has had a
Material Adverse Effect or that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.12 EMPLOYEES, LABOR RELATIONS, LABOR AGREEMENT. Except as set forth on
SCHEDULE 3.12 or in the Company's Public Filings:
(a) The Company is not a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which
pertain to current employees of the Company.
(b) There are no (i) strikes, work stoppages or lockouts or (ii)
material grievances or other material labor disputes pending or, as of the date
of this Agreement and, to the knowledge of Seller, threatened against or
involving the Company which, individually or in the aggregate, could result in a
Material Adverse Effect.
3.13 TAXES. Except as otherwise disclosed in SCHEDULE 3.13, or as disclosed in
the Company Public Filings:
(a) The Company has timely filed or will timely file or cause to be
timely filed, all Tax Returns (or extensions) required by Applicable Laws to be
filed prior to or as of the Initial Closing Date or the Option Dates. All such
Tax Returns and amendments thereto are or will be true, complete and correct in
all material respects.
(b) The Company has paid, or where payment is not yet due, have
established, or will establish or cause to be established on or before the
Initial Closing Date, an adequate accrual for the payment of, all Taxes due with
respect to any period ending prior to or as of the Initial Closing Date or the
Option Dates.
(c) To the Company's knowledge, no Audit by a Tax Authority is pending
or threatened with respect to any Tax Returns filed by, or Taxes due from, the
Company or its Subsidiaries. No issue has been raised by any Tax Authority in
any Audit of the Company or its Subsidiaries that if raised with respect to any
other period not so audited would reasonably be expected to result in a material
proposed deficiency for any period not so audited. No deficiency or adjustment
for any Taxes has been threatened, proposed, asserted or assessed against the
Company or its Subsidiaries. There are no liens for Taxes upon the assets of the
Company or its Subsidiaries, except liens for current Taxes not yet due.
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(d) The Company has not given or been requested to give any waiver of
statutes of limitations relating to the payment of Taxes or has executed powers
of attorney with respect to Tax matters, which will be outstanding as of the
Initial Closing Date.
(e) The Company is not a party to, or bound by, any tax sharing, cost
sharing or similar agreement or policy relating to Taxes.
(f) The Company has not entered into any agreement that would result in
the disallowance of any tax deductions pursuant to SECTION 280G of the Code. No
"consent" within the meaning of SECTION 341(F) of the Code has been filed with
respect to the Company.
(g) The Company has not made any elections pursuant to the CODE (other
than elections that relate solely to methods of accounting, depreciation or
amortization).
(h) The Company has withheld or collected from each payment made to
each of its employees, the amount of Taxes required to be withheld or collected
therefrom, and has paid the same to the proper Tax Authorities or authorized Tax
depositaries.
3.14 ERISA. Except as set forth on SCHEDULE 3.14, or as disclosed in the Company
Public Filings, neither the Company nor its Subsidiaries, or any other trade or
business, whether or not incorporated that together with the Company or its
Subsidiaries would be deemed a "single employer" (within the meaning of Section
4001 of ERISA (an "ERISA AFFILIATE") is a "party in interest" (as defined in
Section 3(14) of ERISA) or a "disqualified person" (within the meaning of
Section 4975 of the Code), with respect to any profit-sharing, pension or
retirement plan, program, arrangement or agreement, or any other "employee
benefit plan" (within the meaning of Section 3(3) of ERISA) or any "plan"
(within the meaning of Section 4975 of the Code) (collectively, each such plan,
program, arrangement or agreement an "EMPLOYEE BENEFIT PLAN").
3.15 INTELLECTUAL PROPERTY RIGHTS. Each of the Company and its Subsidiaries owns
or possesses adequate licenses or other rights to use all intellectual property
rights material to its business as currently conducted and as proposed to be
conducted, and neither the Company nor any of its Subsidiaries has received any
written notice of infringement of or conflict with asserted rights of others
with respect to the use of such rights.
3.16 COMPLIANCE WITH LAWS. Each of the Company and its Subsidiaries has obtained
and has maintained in good standing any licenses, permits, consents and
authorizations required to be obtained by it under all Applicable Laws relating
to its business, the absence of which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and any such
licenses, permits, consents and authorizations remain in full force and effect,
except as to any of the foregoing the absence of which would not reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect. Each of
the Company and its Subsidiaries is in compliance, in all material respects,
with all Applicable Laws and there is no pending or, to the Company's knowledge,
threatened, Claim or Proceedings against either the Company or its Subsidiaries,
other than any such Claim or Proceedings which, if adversely determined, would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
3.17 INSURANCE. The Company has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties that might
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be damaged or destroyed and to satisfy its contractual obligations. The Company
has in full force and effect products liability and errors and omissions
insurance in amounts customary for companies similarly situated.
3.18 AGREEMENTS. Except as set forth on SCHEDULE 3.18 hereto, or as reported in
the Company Public Filings, the Company and its Subsidiaries are not a party to
any written or oral (a) Contract with any labor union; (b) material Contract for
the future purchase of fixed assets or for the future purchase of materials,
supplies or equipment in excess of normal operating requirements; (c) Contract
for the employment of any officer, individual employee or other person on a
full-time basis or any contract with any Person on a consulting basis providing
for a payment to such officer, employee or other person in excess of $100,000
per year; (d) agreement or indenture relating to the borrowing of money or to
the mortgaging, pledging or otherwise placing a material Lien on any assets of
the Company; (e) guaranty of any material obligation for borrowed money; (f)
material lease or agreement under which the Company is lessee of or holds or
operates any property, real or personal, owned by any other party; (g) material
lease or agreement under which the Company is lessor of or permits any third
party to hold or operate any property, real or personal, owned or controlled by
the Company; (h) agreement or other commitment for capital expenditures in
excess of $100,000; (i) Contract, agreement or commitment under which the
Company is obligated to pay any broker's fees, finder's fees or any such similar
fees, to any third party in connection with the Transactions; (j) contract with
any present or former officer, director, stockholder or Affiliate of the Company
or its Subsidiaries; or (k) any other Contract, agreement, arrangement or
understanding, other than customer contracts, which is material to the business
of the Company. All such Contracts constitute the valid and binding obligations
of the Company and, to the knowledge of the Company, the other parties thereto,
enforceable in accordance with their terms, except as enforcement may be limited
by general principles of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally. For the purposes of this
SECTION 3.18, "material" shall mean any Contract involving more than $100,000.
3.19 SIGNIFICANT CUSTOMERS AND SUPPLIERS. Except as set forth in SCHEDULE 3.19
or in the Corporate Public Filings, no customer or supplier that was significant
to the Company during the period from June 30, 2003 to the date hereof has
terminated, materially reduced or threatened to terminate or materially reduce
its purchases from or provision of products or services to the Company, as the
case may be.
3.20 FULL DISCLOSURE. Neither this Agreement, the Financial Statements referred
to in Section 3.7 nor any Document or Exhibit hereto or any other document
identified on SCHEDULE 3.21 hereto contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. The foregoing notwithstanding, with regard to any
projections or forward looking statements contained in any of the Company Public
Filings, no representation is being made that such projections or forward
looking statements will occur, but only that when made, such projections or
forward looking statements were believed to be reasonable by the Company, based
upon all facts known or assumed by the Company when made.
3.21 OBLIGATIONS TO RELATED PARTIES. Except as set forth on SCHEDULE 3.21, or as
reported in the Company Public Filings, (1) there are no obligations of the
Company to officers, directors, stockholders or employees of the Company other
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than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees, (2) none of the
officers, directors or stockholders of the Company or any members of their
immediate families are indebted to the Company or have any direct or indirect
ownership interest in any firm or corporation with which the Company is
Affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company, except that officers, directors
and/or stockholders of the Company may own stock in publicly traded companies
which may compete with the Company, (3) no officer, director or stockholder, or
any member of their immediate families, is, directly or indirectly, interested
in any material contract with the Company (other than such contracts as relate
to any such person's ownership of capital stock or other securities of the
Company or employment with the Company).
ARTICLE IV:
Representations and Warranties of the Purchasers
Each Purchaser represents and warrants to the Company as to itself
severally, and not jointly as to any other Purchaser, as of the date hereof, as
follows:
4.1 PURCHASE FOR OWN ACCOUNT. Such Purchaser is purchasing the Common Shares to
be purchased by it solely for its own account and not as nominee or agent for
any other person and not with a view to, or for offer or sale in connection
with, any current distribution thereof (within the meaning of the Securities
Act) that would cause the original purchase of the Common Shares to be in
violation of the securities laws of the United States of America or any state
thereof, without prejudice, however, to its right at all times to sell or
otherwise dispose of all or any part of such Common Shares pursuant to a
registration statement under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act, and subject, nevertheless,
to the disposition of its property being at all times within its control.
4.2 ACCREDITED INVESTOR. Such Purchaser is knowledgeable, sophisticated and
experienced in business and financial matters and in investing in privately held
business enterprises; it has previously invested in securities similar to the
Common Shares and it acknowledges that the Securities have not been registered
under the Securities Act and understands that the Common Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
such sale is permitted pursuant to an available exemption from such registration
requirement; it is able to bear the economic risk of its investment in the
Common Shares and is presently able to afford the complete loss of such
investment; and it is an "accredited investor" as defined in Regulation D
promulgated under the Securities Act.
4.3 COMPANY INFORMATION. The Purchasers have been provided with the Company
Public Information through the SEC XXXXX datable and have had an opportunity to
ask questions and to obtain such additional information concerning the Company
as the Purchasers deems necessary in connection with the Purchasers' acquisition
of the Common Shares. The Purchasers acknowledge that information with respect
to existing business and historical operating results of the Company and
estimates and projections as to future operations involve significant subjective
judgment and analysis, which may or may not be correct, and that the Company
cannot, and does not, make any representation or warranty as to the accuracy of
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the information concerning the future results of the Company. The Purchasers
understand the risks associated the purchase of the Common Shares and have read
the section concerning RISK FACTORS contained in the Company's annual report on
Form 10-KSB for the year ended September 30, 2002 (filed with the SEC on January
15, 2003).
4.4 AUTHORIZATION. Each Purchaser has taken all actions necessary to authorize
it (i) to execute, deliver and perform all of its obligations under this
Agreement, (ii) to perform all of its obligations under the Documents and (iii)
to consummate the transactions contemplated hereby and thereby. This Agreement
is a legally valid and binding obligation of each Purchaser enforceable against
it in accordance with its terms, except for (a) the effect thereon of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally and (b) limitations
imposed by Federal or state law or equitable principles upon the specific
enforceability of any of the remedies, covenants or other provisions thereof and
upon the availability of injunctive relief or other equitable remedies.
4.5 NO BROKERS OR FINDERS. No Purchaser has engaged any broker, finder or other
such intermediary, and no Purchaser has acted in such capacity, in connection
with the sale of the Common Shares and the transactions contemplated by this
Agreement and the other Documents, and no Purchaser is under any obligation to
pay, and is not entitled to receive, any broker or finder fee or commission
similar payment in connection with such transaction. The Purchasers will
indemnify the Company for any finder's fee or commission for which it is
responsible.
ARTICLE V:
COVENANTS
5.1 ACCESS TO INFORMATION. The Company agrees that, prior to the Initial
Closing, Purchasers shall be entitled, through their officers, employees and/or
representatives (including, without limitation, its legal advisors and
accountants), to make such investigation of the business and operations of the
Company and such examination of the books, records and financial condition of
the Company as they reasonably requests and to make extracts and copies of such
books and records. Any such investigation and examination shall be conducted
during regular business hours and under reasonable circumstances, and the
Company shall cooperate fully therein.
5.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING. Except as otherwise expressly
contemplated by this Agreement or with the prior written consent of Purchasers,
prior to the Initial Closing, the Company shall not conduct its business in any
manner which is not both in the ordinary course and consistent with past
practice.
5.3 BEST EFFORTS. The Company and the Purchasers will cooperate and use their
respective best efforts to fulfill the conditions precedent to the other party's
obligations hereunder, including but not limited to securing as promptly as
practicable all consents, approvals, waivers and authorizations required in
connection with the transactions contemplated hereby.
5.4 CORPORATE ACTIONS. Prior to the Initial Closing, the Board will not permit
the Company, without the prior written consent of Purchasers, to:
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(a) increase or decrease the number of authorized shares of Common
Stock or any other class of Equity Interests, including preferred stock;
(b) create any new class of shares having a preference over or being on
parity with the Common Stock;
(c) enter into any agreement to merge or consolidate with another
Person or sell all or substantially all of the assets of the Company;
(d) cause a repurchase of Equity Interests or cause a dividend or
distribution to be paid on any Equity Interest;
(e) offer any shares of its capital stock for sale to any Person; or
(f) amend or restate the Company's Articles of Incorporation or Bylaws.
ARTICLE VI:
CONDITIONS TO CLOSING
6.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER. The obligation of each
Purchaser to authorize the Escrow Agent to disburse the Purchase Price to the
Company for the Common Shares to be purchased hereunder at the Initial Closing
is subject to the satisfaction of the following conditions precedent (unless
waived by such Purchaser). The Company shall use its best efforts to ensure that
all conditions to the Initial Closing set forth in this SECTION 6.1 are
satisfied on or prior to the Initial Closing Date, including executing and
delivering all documents required to be delivered by the Company at the Initial
Closing and taking any and all actions which may be necessary on its part to
cause each other party to the Documents to so execute and deliver each Document.
(a) ISSUANCE OF COMMON SHARES. The Company shall have duly issued and
delivered to the Purchasers of Common Shares at the Initial Closing the
certificate(s) for the number of Common Shares purchased by such Purchasers.
(b) DEBT RESTRUCTURING AGREEMENT. The Company shall deliver an executed
Debt Restructuring Agreement in the form of EXHIBIT "A" by Xxxxxxx XxXxxx and
Xxxxxxx Xxxxxx.
(c) OFFICER'S CERTIFICATE. The Company shall deliver a certificate in
substantially the form of EXHIBIT "B", executed by an officer of the Company
stating, among other things, that (a) the representations and warranties
contained in ARTICLE III are true, correct and complete in all material respects
on and as of the Initial Closing Date and (b) the Company has performed and
complied in all material respects with all agreements and conditions contained
in the Documents required to be performed or complied with by it prior to or at
the Initial Closing.
(d) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken and all waivers, consents, approvals, qualifications and
registrations required to be obtained or effected in connection with the
execution, delivery and performance of this Agreement and the other Documents
and the Transactions shall have been taken, obtained or effected (except for the
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filing of any notice subsequent to the Initial Closing that may be required
under applicable Federal or state securities laws, which notice shall be filed
on a timely basis following the Initial Closing as so required), and all
documents incident thereto shall be reasonably satisfactory in form and
substance to such Purchaser. Such Purchaser shall have received all such
originals or certified or other copies of such documents as have been reasonably
requested by them.
(e) SUPPORTING DOCUMENTS. Such Purchaser shall have received copies of
the following supporting documents (in form and substance satisfactory to such
Purchaser):
(i) certificates of the Secretary of State of the State of
Colorado, dated as of a recent date as to the due incorporation or
organization and good standing of the Company and listing all documents
of the Company on file with said Secretary;
(ii) a certificate of the Secretary or an Assistant Secretary
of the Company in substantially the form of EXHIBIT "C", dated as of
the Closing Date, and certifying: (i) that attached thereto is a true,
correct and complete copy of each of the Certificate of Incorporation
and By-Laws as in effect on the date of such certification (each of
which shall be in form and substance satisfactory to such Purchaser);
(ii) that attached thereto is a true, correct and complete copy of all
Resolutions adopted by the Board of Directors (and any committees
thereof) of the Company authorizing the execution, delivery and
performance of the Documents and the issuance, sale, and delivery of
the Common Shares, and that all such resolutions are still in full
force and effect attached hereto as EXHIBIT "D"; (iii) that the
Certificate of Incorporation has not been amended since the date of the
last amendment referred to in the certificate delivered pursuant to
clause (i) above; and (iv) the incumbency and specimen signature of all
officers of the Company executing the Documents, the stock certificates
representing the Common Shares, and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of
the Company as to the incumbency and signature of the officer signing
the certificate referred to in this Paragraph (c);
(f) NO LITIGATION OR LEGISLATION. No legislation shall have been
enacted after the date hereof and no Proceeding shall be pending which prohibits
or seeks to prohibit, or materially restricts or delays the consummation of the
transactions contemplated by the Documents or materially restricts or impairs
the ability of the Purchasers to own Securities of the Company.
(g) REGISTRATION RIGHTS AGREEMENT. The Company and the Purchasers shall
have executed and delivered the Registration Rights Agreement, as attached as
EXHIBIT "E".
(h) APPROVAL AND ACCEPTANCE OF SCHEDULES. Purchaser shall have
received, approved and accepted in writing the exceptions to the Representations
and Warranties of the Company set forth in the Schedules prepared in accordance
with Article III of this Agreement.
6.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF COMPANY. The obligation of the
Company to deliver the Common Shares to be purchased hereunder at the Initial
Closing is subject to the satisfaction of the following conditions precedent
(unless waived by the Company). The Purchasers shall use their best efforts to
ensure that all conditions to the Initial Closing set forth in this SECTION 6.2
- 17 -
are satisfied on or prior to the Initial Closing Date, including executing and
delivering all documents required to be delivered by the Purchasers at the
Initial Closing and taking any and all actions which may be necessary on their
part to cause each other party to the Documents to so execute and deliver each
Document.
(a) CLOSING CERTIFICATE. The Purchasers shall deliver a certificate in
substantially the form of EXHIBIT "B", executed by an officer or other
authorized Person of each of the Purchasers, among other things, that (a) the
representations and warranties contained in ARTICLE IV are true, correct and
complete in all material respects on and as of the Initial Closing Date and (b)
the Purchasers have performed and complied in all material respects with all
agreements and conditions contained in the Documents required to be performed or
complied with by them prior to or at the Initial Closing.
(b) NO LITIGATION OR LEGISLATION. No legislation shall have been
enacted after the date hereof and no Proceeding shall be pending which prohibits
or seeks to prohibit, or materially restricts or delays the consummation of the
transactions contemplated by the Documents.
ARTICLE VII:
DOCUMENTS TO BE DELIVERED
7.1 DOCUMENTS TO BE DELIVERED BY THE COMPANY. At the Closing, the Company shall
deliver, or cause to be delivered, to the Purchasers the following:
(a) a certificate (or certificates) representing all of the Common
Shares;
(b) the Debt Restructuring Agreement referred to in Section 6.1(b);
(c) the certificate referred to in Section 6.1(c);
(d) the supporting documents referred to in Section 6.1(e); and
(e) the Registration Rights Agreement referred to in Section 6.1(g).
7.2 DOCUMENTS AND OTHER ITEMS TO BE DELIVERED BY PURCHASERS. At the Closing,
Purchaser shall deliver to Seller the following:
(a) payment of the Purchase Price as required by Section 2.2; and
(b) the certificate referred to in Section 6.2.
ARTICLE VIII:
CONDITIONS PRIOR TO ADDITIONAL PURCHASE OF COMMON SHARES
Prior to each of the Option Dates, the Company shall provide the
Purchasers with evidence that the Company has complied with each of the
following provisions:
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8.1 SEC FILINGS. The Company shall provide Purchasers with satisfactory evidence
that the Company has made all required filings pursuant to the Securities
Exchange Act of 1934.
8.2 CONFIRMATION REGARDING PUBLIC TRADING OF STOCK. The Company shall provide
Purchasers with confirmation that the Common Shares are listed for trading on
the NASDAQ Bulletin Board.
8.3 WAREHOUSE LINE OF CREDIT. The Company shall provide purchasers with
satisfactory evidence that the Warehouse Line of Credit with Residential Funding
is not in default.
8.4 BUSINESS PLAN. The Company shall provide the Purchasers with evidence that
the Company has effective licenses or other agreements in place with the
entities stated in its Business Plan.
8.5 UNDISCLOSED LIABILITIES. The Company shall provide evidence that there are
(a) no undisclosed liabilities, liens, encumbrances or adverse claims in
connection with the Company or its assets; and (b) no instances of unresolved
litigation outside the normal course of business (other than with Citicorp)
which would have a Material Adverse Effect on the Company or its assets.
8.6 PROVISION OF ACCURATE INFORMATION. The Company shall provide evidence that
all federal and state tax returns have been filed and paid in a timely manner
and confirmation that all information provided to Purchasers regarding the stock
issuance and other corporate matters is accurate and complete.
8.7 COMMISSION AGREEMENTS. The Company shall provide Purchasers with copies of
all commission agreements by and between the Company and any individual or
entity.
8.8 FINANCIAL STATEMENTS. The Company shall provide Financial Statements,
prepared in accordance with GAAP for the fiscal year ending June 30, 2003 and
additional statements on a monthly and quarterly basis as requested by the
Purchasers.
ARTICLE IX:
MISCELLANEOUS
9.1 FEES AND EXPENSES. Each of the company and the Purchaser(s) shall bear their
own legal fees and other expenses with respect to the Initial Closing and the
Transactions contemplated hereby, except that, upon successful completion of the
matters required for any issuance of Common Shares, the Company shall pay out of
the Purchase Price reasonable fees incurred by Xxxxxxxxx Xxxxxxx, LLP, as
counsel to the Company for preparation of the Documentation.
9.2 KEY MAN INSURANCE. At the request of the Purchasers, the Company will obtain
Key Man insurance on any officer or other member of key management as directed
by the Purchasers.
9.3 STOCK PURCHASE RIGHTS. [Right of First Refusal and Pre-emptive Rights]
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9.4 FURTHER ASSURANCES. The Company shall duly execute and deliver, or cause to
be duly executed and delivered, at its own cost and expense, such further
instruments and documents and to take all such action, in each case as may be
necessary or proper in the reasonable judgment of the Purchasers to carry out
the provisions and purposes of the Agreement and the other Documents.
9.5 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit
of the Company and the Purchasers and their respective successors, assigns,
heirs and personal representatives.
9.6 ENTIRE AGREEMENT. This Agreement is intended by the parties hereto as a
final expression of their agreement and to be a complete and exclusive statement
of their agreement and understanding in respect to the subject matter covered
herein, and supersedes all prior and contemporaneous arrangements or
understandings with respect to such subject matter.
9.7 NOTICES. All notices and other communications delivered hereunder (whether
or not required to be delivered hereunder) shall be deemed to be sufficient and
duly given if contained in a written instrument (a) personally delivered, (b)
sent by facsimile, (c) sent by nationally recognized overnight courier
guaranteeing next Business Day delivery or (d) sent by first class registered or
certified mail, postage prepaid, return receipt requested, in each case
addressed as follows:
if to the Company:
UCAP Incorporated
00000 X. Xxxxx Xxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: President
if to the Purchasers:
to the address specified on the signature page
executed by each such Purchaser,
with a copy to:
Xx. Xxxxxxx Xxxx
C'an Girasol
Xxxx xx Xxxxxx 00
00000 Xxxxxxxxxxxx
Xxxxx xx Xxxxxxxx, Xxxxx
with such additional copies as set forth on such
signature page;
or to such other address as the party to whom such notice or other communication
is to be given may have furnished to each other party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been received
(i) when delivered, if personally delivered, (ii) when sent, if sent by telecopy
on a Business Day (or, if not sent on a Business Day, on the next Business Day
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after the date sent by telecopy), (iii) on the next Business Day after dispatch,
if sent by nationally recognized, overnight courier guaranteeing next Business
Day delivery, and (iv) on the fifth Business Day following the date on which the
piece of mail containing such communication is posted, if sent by mail.
9.8 AMENDMENTS, MODIFICATIONS AND WAIVERS. The terms and provisions of this
Agreement may not be modified or amended, nor may any of the provisions hereof
be waived, temporarily or permanently, except pursuant to a written instrument
executed by the Company and the Purchasers.
9.9 TIME IS OF THE ESSENCE: DELAYS OR OMISSIONS. Time is of the essence of this
Agreement. No delay or omission to exercise any right, power or remedy accruing
to any party under this Agreement, upon any breach or default of any other party
under this Agreement, shall impair any such right, power or remedy of such
non-breaching or non-defaulting party nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
9.10 NO THIRD PARTY RELIANCE. Anything contained herein to the contrary
notwithstanding, the representations and warranties of the Company contained in
this Agreement (a) are being given by the Company as an inducement to the
Purchasers to enter into this Agreement and the other Documents (and the Company
acknowledges that the Purchasers have expressly relied thereon) and (b) are
solely for the benefit of the Purchasers. Accordingly, no third party
(including, without limitation, any holder of capital stock of the Company) or
anyone acting on behalf of any thereof other than the Purchasers, and each of
them, shall be a third party or other beneficiary of such representations and
warranties and no such third party shall have any rights of contribution against
the Purchasers or the Company with respect to such representations or warranties
or any matter subject to or resulting in indemnification under this Agreement or
otherwise.
9.11 ACKNOWLEDGEMENT BY PURCHASERS. Each Purchaser acknowledges that it is not
relying upon any person, firm or corporation, other than the Company and its
officers and directors, in making its investment or decision to invest in the
Company.
9.12 EXTENSION; WAIVER. At any time prior to the Closing, the parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement and (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party, and any such waiver shall not operate or be
construed as a waiver of any subsequent breach by the other party.
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9.13 SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
9.14 INDEPENDENCE OF AGREEMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES. All
agreements and covenants hereunder shall be given independent effect so that if
a certain action or condition constitutes a default under a certain agreement or
covenant, the fact that such action or condition is permitted by another
agreement or covenant shall not affect the occurrence of such default, unless
expressly permitted under an exception to such initial covenant. In addition,
all representations and warranties hereunder shall be given independent effect
so that if a particular representation or warranty proves to be incorrect or is
breached, the fact that another representation or warranty concerning the same
or similar subject matter is correct or is not breached will not affect the
incorrectness of or a breach of a representation and warranty hereunder. The
exhibits and schedules attached hereto are hereby made part of this Agreement in
all respects. Any disclosure made in any Schedule to this Agreement which
should, based on the substance of such disclosure, be applicable to another
Schedule to this Agreement shall be deemed to be made with respect to such other
Schedule regardless of whether or not a specific reference is made thereto;
provided, that the description of such item on a Schedule is such that the
Purchaser could reasonably be expected to ascertain that such disclosure would
relate to such other provision of this Agreement.
9.15 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement. Facsimile counterpart signatures to this Agreement shall be
acceptable and binding.
9.16 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. With respect to
each Purchaser purchasing Common Shares the representations, warranties and
agreements of such Purchasers and the Company in this Agreement shall survive
the Closing.
(Signatures contained on the following page.)
- 22 -
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the date first above written.
The Company:
UCAP INCORPORATED
By: /s/ Xxx X. Xxxxx
----------------------------------------
Xxx X. Xxxxx, President
Purchasers:
THE LOYR FOUNDATION
By: /s/ A. Beat Xxxxx
-----------------------------------------
Name: A. Beat Xxxxx
---------------------------------------
Title: Trustee
--------------------------------------
EUROPE CATALYST FUND
By: /s/ Xxxxxxx Xxxx
-----------------------------------------
Name: Xxxxxxx Xxxx
---------------------------------------
Title: Investment Manager
--------------------------------------
ABSOLUTE RETURN EUROPE FUND, LTD.
By: /s/ Xxxxxxx Xxxx
-----------------------------------------
Name: Xxxxxxx Xxxx
---------------------------------------
Title: Investment Manager
--------------------------------------
SCHEDULE I
PURCHASERS
PURCHASER NUMBER OF SHARES
--------- ----------------
The Loyr Foundation ____
Europe Catalyst Fund ____
Absolute Return Europe Fund, Ltd. ____
EXHIBIT "A"
DEBT RESTRUCTURING AGREEMENT
EXHIBIT "B"
OFFICER'S CERTIFICATE
EXHIBIT "C"
SECRETARY'S CERTIFICATE
EXHIBIT "D"
RESOLUTIONS OF THE BOARD OF DIRECTORS
EXHIBIT "E"
REGISTRATION RIGHTS AGREEMENT
