EXHIBIT 10.6.3
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of December 4, 2000, is
entered into by and between STRATUS SERVICES GROUP, INC., a Delaware
corporation, with headquarters located at 000 Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx
(the "Company"), and the purchasers who are or become a party hereto by
executing a signature page prior to the Closing, as defined herein ("Buyer
Signature Page") in the form of Exhibit A hereto (individually the "Buyer" and
collectively, the "Buyers").
W I T N E S S E T H:
WHEREAS, the Company and the Buyers are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, INTER ALIA, by Rule 506 under Regulation D ("Regulation
D" as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and
WHEREAS, the Buyers wish to purchase, upon the terms and subject to the
conditions of this Agreement, 6% Convertible Debentures, due December 1, 2005
(the "Debentures"), of the Company which will be convertible into shares of
Common Stock, $0.01 par value per share of the Company (the "Common Stock"),
upon the terms and subject to the conditions of such Debentures, and, in the
case of a certain Buyer, certain Common Stock purchase warrants (further
described herein) (the "Warrants") (the Common Stock, the Debentures and the
Warrants sometimes referred to herein as the "Securities"), and subject to
acceptance of this Agreement by the Company;
WHEREAS, the Debentures being subscribed for pursuant to this Agreement
comprise part of a duly authorized issue of up to $2,000,000 of the Debentures;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
(a) PURCHASE. Each Buyer hereby subscribes to purchase from the
Company, the Debentures, in the principal amount set forth below
the name of the Buyer on the Buyer Signature Page hereto, out of
a total offering of up to $3,000,000 aggregate principal amount
of Debentures, and having the terms and conditions and being in
the form attached hereto as Annex I. The purchase price for the
Debentures shall
be equal to the principal amount of the Debentures as set forth on
the Buyer Signature Page and shall be payable in United States
Dollars.
(b) FORM OF PAYMENT. Each Buyer shall pay the purchase price for the
Debentures by delivering immediately available good funds in
United States Dollars to the Company in an amount equal to the
principal amount of Debentures being so purchased. Concurrently
with the payment by the Buyer to the Company of the purchase
price of the Debentures and the acceptance of the Buyer's
subscription by the Company, the Company shall deliver the
Debentures duly executed on behalf of the Company to the Buyer.
(c) CLOSING. The closing of the purchase and sale of the Debentures
shall take place at the offices of the Company or such other
place as the Company and the applicable Buyer shall agree on the
date that the Company accepts this subscription (the "Closing
Date"), which in no event shall be later than December 8, 2000.
No closing shall occur unless irrevocable subscriptions for
$2,000,000 aggregate principal amount of Debentures are received
and accepted. The Company reserves the right to reject this
subscription for any reason whatsoever.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.
Each Buyer severally represents and warrants to, and covenants and agrees
with, the Company as follows:
(a) Without limiting such Buyer's right to sell the Common Stock
pursuant to the Registration Statement (as defined below), the Buyer
is purchasing the Debentures and will be acquiring the shares of
Common Stock issuable upon conversion of the Debentures for its own
account for investment only and not with a view towards the public
sale or distribution thereof and not with a view to or for sale in
connection with any distribution thereof;
(b) Such Buyer is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under
the 1933 Act, and (ii) experienced in making investments of the
kind described in this Agreement and the related documents, (iii)
able, by reason of the business and financial experience of its
officers (if an entity) and professional advisors (who are not
affiliated with or compensated in any way by the Company or any
of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this
Agreement, and the related documents, and (iv) able to afford the
entire loss of its investment in the Securities;
(c) All subsequent offers and sales of the Debentures and the shares of
Common Stock issuable upon conversion of, or issued as dividends on,
the Debentures (the
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"Shares" or "Common Stock") by the Buyer shall be made pursuant to
registration of the Shares under the 1933 Act or pursuant to an
exemption from registration;
(d) Such Buyer understands that the Debentures are being offered and
sold, and the Shares are being offered, to it in reliance on
specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and such Buyer's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings set forth herein in order to
determine the availability of such exemptions and the eligibility
of such Buyer to acquire the Debentures and to receive an offer
of the Shares;
(e) Such Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the
Debenture and the offer of the Shares which have been requested
by the Buyer. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have
received complete and satisfactory answers to any such
inquiries. Without limiting the generality of the foregoing, the
Buyer has also had the opportunity to obtain and to review the
Company's (1) Prospectus dated April 26, 2000, (2) Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2000,
(3) the Company's Report on Form 8-K filed with the SEC on June
30, 2000 and (4) the Company's Report on Form 8-K/A filed with
the SEC on August 30, 2000 (the "Company's SEC Documents"). No
such investigation shall impair such Buyer's ability to rely upon
the Company's representations and warranties herein.
(f) The Buyer understands that its investment in the Securities
involves a high degree of risk;
(g) The Buyer understands that no United States federal or state agency
or any other government or governmental agency has passed on or made
any recommendation or endorsement of the Securities;
(h) This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding
agreement of the Buyer enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally.
(i) Neither such Buyer, nor any affiliate of such Buyer, will enter
into, any put option, short position, or other similar position with
respect to the Debentures or the Shares.
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3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyers that:
(a) REPORTING COMPANY STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware, and has the requisite corporate power
to own its properties and to carry on its business as now being
conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary other
than those jurisdictions in which the failure to so qualify would
not have a material and adverse effect on the business,
operations, properties, prospects or condition (financial or
otherwise) of the Company. The Company has registered its Common
Stock pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the Common Stock is
listed and traded on the Nasdaq Stock Market/SmallCap Market. The
Company shall promptly provide to Buyer copies of any notices it
receives regarding the continued eligibility of the Common Stock
for listing on the Nasdaq Stock Market/SmallCap Market.
(b) CAPITALIZATION. The number of authorized, issued and outstanding
shares of capital stock of the Company is set forth in SCHEDULE 3
(b). The Company does not have any Subsidiaries. No shares of Common
Stock are entitled to preemptive or similar rights, nor is any
holder of the securities of the Company or any Subsidiary entitled
to preemptive or similar rights arising out of any agreement or
understanding with the Company by virtue of the Agreement, the
Registration Rights Agreement, the Debentures and the Warrant (the
"Transaction Documents"). Except as a result of the purchase and
sale of the Debentures and the Warrants and except as disclosed in
SCHEDULE 3 (b), there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings, or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the
Debentures, Warrants or Underlying Shares (as hereinafter defined)
will not obligate the Company to issue shares of Common Stock or
other securities to any Person other than the Buyers and will not
result in a right of any holder of Company securities to adjust the
exercise or conversion or reset price under such securities.
(c) AUTHORIZED SHARES. The Company has sufficient authorized and
unissued Shares as may be reasonably necessary to effect the
conversion of the Debentures. The
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Shares have been duly authorized and, when issued upon conversion
of, or as interest on, the Debentures, will be duly and validly
issued, fully paid and non-assessable and will not subject the
holder thereof to personal liability by reason of being such holder.
(d) SECURITIES PURCHASE AGREEMENT; REGISTRATION RIGHTS AGREEMENT AND
STOCK. This Agreement and each of the Registration Rights
Agreement, the form of which is attached hereto as Annex II (the
"Registration Rights Agreement"), the Debentures and the Warrants
and the transactions contemplated thereby, have been duly and
validly authorized by the Company, this Agreement has been duly
executed and delivered by the Company and this Agreement is, and
each of the Registration Rights Agreement, the Debentures and the
Warrants, when executed and delivered by the Company, will be,
valid and binding agreements and obligations of the Company
enforceable in accordance with their respective terms, subject as
to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws
affecting the enforcement of creditors' rights generally;.
(e) NON-CONTRAVENTION. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company, the
issuance of the Securities, and the consummation by the Company
of the other transactions contemplated by the Transaction
Documents do not and will not conflict with or result in a breach
by the Company of any of the terms or provisions of, or
constitute a default under (i) the articles of incorporation or
by-laws of the Company, (ii) any indenture, mortgage, deed of
trust, or other agreement or instrument to which the Company is a
party or by which it or any of its properties or assets are
bound, including any listing agreement for the Common Stock
except as herein set forth, (iii) any existing applicable law,
rule, or regulation or any applicable decree, judgment, or (iv)
order of any court, United States federal or state regulatory
body, administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets,
except such conflict, breach or default which would not have a
material adverse effect on the transactions contemplated herein
or impair the ability of the Company to timely comply with its
obligations under the Transaction Documents. The Company is not
in violation of any laws, governmental orders, rules, regulations
or ordinances to which its property, real, personal, mixed,
tangible or intangible, or its businesses related to such
properties, are subject.
(f) APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization,
or stock exchange or market is required to be obtained by the
Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations,
approvals and consents that have been obtained.
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(g) SEC DOCUMENTS, FINANCIAL STATEMENTS. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Exchange
Act and the Company has, except as set forth in Schedule 3(g),
timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Exchange Act, including material
filed pursuant to Section 13(a) or 15(d), in addition to one or
more registration statements and amendments thereto heretofore
filed by the Company with the SEC under the Act (all of the
foregoing including filings incorporated by reference therein
being referred to herein as the "SEC Documents"). The Company,
through its agent, has delivered to the Buyer true and complete
copies of the SEC Documents (except for exhibits and incorporated
documents). The Company has not provided to the Buyer any
information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company
but which has not been so disclosed, other than with respect to
the transactions contemplated by this Agreement.
As of their respective dates, the SEC Documents complied in all
material respects with the requirements or the Exchange Act and the
rules and regulations of the SEC promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to
such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company
included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the
dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).
(h) ABSENCE OF CERTAIN CHANGES. Since June 30, 2000, there has been no
material adverse change and no material adverse development in the
business, properties, operations, financial condition, or results of
operations of the Company other than as may have been disclosed in
the SEC Documents.
(i) FULL DISCLOSURE. There is no fact known to the Company (other
than general economic conditions known to the public generally)
or as disclosed in the documents referred to in Section 2(e),
that has not been disclosed in writing to the
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Buyer that (i) would reasonably be expected to have a material
adverse effect on the business or financial condition of the Company
or (ii) would reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations
pursuant to this Agreement.
(j) ABSENCE OF LITIGATION. Except as disclosed in the SEC Documents
referred to in Section 2(e), which the Buyer has reviewed and,
except as set forth in SCHEDULE 3(j), there is no action, suit,
proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company,
threatened against or affecting the Company, wherein an
unfavorable decision, ruling or finding would have a material
adverse effect on the business or financial condition of the
Company or the transactions contemplated by this Agreement or any
of the documents contemplated hereby or which would adversely
affect the validity or enforceability of, or the authority or
ability of the Company to perform its obligations under, this
Agreement or any of such other documents.
(k) ABSENCE OF EVENTS OF DEFAULT. The Company is not in default in any
material respect under its Certificate of Incorporation, Bylaws or
any indenture, mortgage, note or other agreement, which would have a
material adverse effect on the Company's financial condition or
results of operations.
(l) ISSUANCE OF THE DEBENTURES AND THE WARRANTS. The Company will have
(and will, at all times while the Debentures and the Warrants are
outstanding, maintain) an adequate reserve of duly authorized shares
of Common Stock, reserved for issuance to the holders of such
Debentures and Warrants, to enable it to perform its conversion,
exercise and other obligations under this Agreement, the Debentures
and the Warrants. Such number of reserved and available shares of
Common Stock shall not be less than the sum of 200% of the number of
shares of Common Stock which would be issuable upon: (i) conversion
in full of the Debentures assuming such conversion occurred on the
Original Issue Date of the Debentures remain outstanding for three
years and all interest is paid in shares of Common Stock and (ii)
exercise in full of the Warrants (collectively, the "INITIAL
MINIMUM"). All such authorized shares of Common Stock shall be duly
reserved for issuance to the holders of the Debentures and the
Warrants. The shares of Common Stock issuable upon conversion of the
Debentures and upon exercise of the Warrants are collectively
referred to herein as the "UNDERLYING SHARES." The Debentures, the
Warrants and the Underlying Shares are collectively referred to
herein as, the "SECURITIES." When issued in accordance with the
Debentures and the Warrants, the Underlying Shares will be duly
authorized, validly issued, fully paid and nonassessable, free and
clear of all liens, encumbrances and rights of first refusal of any
kind (collectively, "LIENS").
(m) LISTING AND MAINTENANCE REQUIREMENTS. The Company has not, in
the two years preceding the date hereof, received notice
(written or oral) from the Nasdaq
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Smallcap Market or any stock exchange, market or trading facility on
which the Common Stock is or has been listed (or on which it has
been quoted) to the effect that the Company is not in compliance
with the listing or maintenance requirements of such exchange,
market or trading facility. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be,
in compliance with all such listing and maintenance requirements.
(n) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as set forth
in Schedule 3(n), the Company has not granted or agreed to grant
to any Person any rights (including "piggy-back" registration
rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been
satisfied. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to
participate in the transactions contemplated by this Agreement.
(o) SOLVENCY. Based on the financial condition of the Company as of
the Closing Date, (i) the Company's fair saleable value of its
assets exceeds the amount that will be required to be paid on or
in respect of the Company's existing debts and other liabilities
(including known contingent liabilities) as they mature; (ii) the
Company's assets do not constitute unreasonably small capital to
carry on its business for the current fiscal year as now
conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of
the business conducted by the Company, and project capital
requirements and capital availability thereof; and (iii) the
current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not
intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash
to be payable on or in respect of its debt).
(p) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its Board
of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under
the Company's Certificate of Incorporation (or similar charter
documents) or the laws of its state of incorporation that is or
could become applicable to the Buyers as a result of the Buyers
and the Company fulfilling their obligations or exercising their
rights under this Agreement, including without limitation the
Company's issuance of the Securities and the Buyers' ownership of
the Securities.
(m) CERTAIN FEES. Other than fees payable to May Xxxxx Group, Inc. and
Hornblower & Weeks, Inc. by the Company, no fees or commissions will
be payable by the Company to any broker, financial advisor or
consultant, finder, placement
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agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement. The Buyers shall have
no obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall
indemnify and hold harmless the Buyers, their employees, officers,
directors, agents, and partners, and their respective Affiliates,
from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses suffered in
respect of any such claimed or existing fees, as such fees and
expenses are incurred.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) TRANSFER RESTRICTIONS. Each Buyer acknowledges that (1) the
Debentures and the Warrants have not been and are not being
registered under the provisions of the 1933 Act and, except as
provided in the Registration Rights Agreement, the Shares have
not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder
or (B) the Buyer shall have delivered to the Company an opinion
of counsel, reasonably satisfactory in form, scope and substance
to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption
from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made
only in accordance with the terms of said Rule; and (3) neither
the Company nor any other person is under any obligation to
register the resale of the Debentures, the Warrants and the
Securities under the 1933 Act.
(b) RESTRICTIVE LEGEND. Each Buyer acknowledges and agrees that the
Debentures, and, until such time as the Common Stock has been
registered under the 1933 Act as contemplated by the Registration
Rights Agreement and sold in accordance with an effective
registration statement ("Registration Statement"), the Shares
issued to the Holder upon conversion of the Debentures shall bear
a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
Debentures and such Shares):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
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Underlying Shares shall not contain the legend set forth above nor
any other legend if the conversion of the Debentures and exercise of
the Warrants or other issuances of Underlying Shares as contemplated
hereby, by the Debentures or the Warrants occurs at any time while
an Underlying Shares Registration Statement is effective under the
1933 Act or the holder of any such security is relying on Rule
144(k) promulgated under the 1933 Act ("RULE 144(K)") in connection
with the resale of such Underlying Shares or in the event there is
not an effective Underlying Shares Registration Statement at such
time and Rule 144(k) is not then available if, in the opinion of
counsel to the Company, such legend is not required under applicable
requirements of the 1933 Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company
shall cause its counsel to issue the legal opinion included in the
Transfer Agent Instructions to the Company's transfer agent on the
day that the Underlying Shares Registration Statement is declared
effective by the Commission (the "EFFECTIVE DATE"). The Company
agrees that in the event any Underlying Shares are issued with a
legend in accordance with this Section 4(b), it will, within three
(3) Trading Days after request therefor by a Purchaser, provide such
Purchaser with a certificate or certificates representing such
Underlying Shares, free from such legend at such time as such legend
would not have been required under this Section 4(b) had such
issuance occurred on the date of such request. The Company may not
make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of
transfer set forth in this Section.
(c) FILINGS. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Debentures to the Buyers
under any United States laws and regulations, or by any domestic
securities exchange or trading market, and to provide a copy thereof
to each Buyer upon request.
(d) REPORTING STATUS. So long as the Buyers beneficially own any of the
Debentures, the Company shall file all reports required to be filed
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act,
and the Company shall not terminate its status as an issuer required
to file reports under the Exchange Act even if the Exchange Act or
the rules and regulations thereunder would permit such termination.
(e) AVAILABLE SHARES. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, shares of Common
Stock sufficient to yield the number of shares of Common Stock
issuable at conversion as may be required to satisfy the conversion
rights of the Buyers pursuant to the terms and conditions of the
Debentures.
(f) INCREASE IN AUTHORIZED SHARES. If on any date the Company would
be, if a notice of conversion or exercise (as the case may be)
were to be delivered on such date, precluded from issuing (a)
200% of the number of Underlying Shares as would
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then be issuable upon a conversion in full of the Debentures and (b)
the number of Underlying Shares issuable upon exercise in full of
the Warrants (the "CURRENT REQUIRED MINIMUM"), in either case, due
to the unavailability of a sufficient number of authorized but
unissued or reserved shares of Common Stock, then the Board of
Directors of the Company shall promptly prepare and mail to the
stockholders of the Company proxy materials requesting authorization
to amend the Company's certificate or articles of incorporation to
increase the number of shares of Common Stock which the Company is
authorized to issue to at least such number of shares as reasonably
requested by the Buyers in order to provide for such number of
authorized and unissued shares of Common Stock to enable the Company
to comply with its issuance, conversion exercise and reservation of
shares obligations as set forth in this Agreement, the Debentures
and the Warrants (the sum of (x) the number of shares of Common
Stock then outstanding plus all shares of Common Stock issuable upon
exercise of all outstanding options, warrants and convertible
instruments, and (y) the Current Required Minimum, shall be a
reasonable number). In connection therewith, the Board of Directors
shall (a) adopt proper resolutions authorizing such increase, (b)
recommend to and otherwise use its best efforts to promptly and duly
obtain stockholder approval to carry out such resolutions (and hold
a special meeting of the stockholders no later than the earlier to
occur of the sixtieth (60th) day after delivery of the proxy
materials relating to such meeting and the ninetieth (90th) day
after request by a holder of Securities to issue the number of
Underlying Shares in accordance with the terms hereof) and (c)
within five (5) Business Days of obtaining such stockholder
authorization, file an appropriate amendment to the Company's
certificate or articles of incorporation to evidence such increase.
(g) NON-PUBLIC INFORMATION. The Company shall in no event disclose
non-public information to the Buyers, advisors to or
representatives of the Buyer unless prior to disclosure of such
information the Company marks such information as "Non-Public
Information - Confidential," and then only in accordance with
Regulation FD promulgated under the Exchange Act, provides the
Buyers, such advisors and representatives with a reasonable
opportunity to accept or refuse to accept such non-public
information for review.
(h) LIMITATION ON REGISTRATIONS.
(1) Except for (x) Registrable Securities (as defined in the
Registration Rights Agreement), (y) securities of the Company
permitted pursuant to Section 4(i) to be registered in the
Registration Statement, and (z) Common Stock permitted to be issued
pursuant to Section 4(h)(4), the Company may not until the 90th day
after the Effective Date file a registration statement to register
any of its securities other than a registration on Form S-4 or Form
S-8, each as promulgated under the 1933 Act. The restriction shall
terminate at such time as the Registrable
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Securities cease to be Registrable Securities under the terms of the
Registration Rights Agreement.
(2) The restrictive period set forth in Section 4(h)(1) shall be
extended for the number of Trading Days during such period (A) in
which trading in the Common Stock is suspended by any securities
exchange or market or quotation system on which the Common Stock is
then listed, or (B) that the Registration Statement is not effective
following the Effective Date, or (C) that the prospectus included in
the Registration Statement may not be used by the holders thereof
for the resale of Registrable Securities following the Effective
Date.
(i) NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent specified
in SCHEDULE 4(i) hereto and except as otherwise will be disclosed
prior to the initial filing, in writing, to the Buyers, PROVIDED,
that all such security holders included prior to the initial filing
shall (as a condition to such inclusion) be subject to an
enforceable lock-up agreement, under which such security holders
shall not sell or otherwise dispose of any of their securities
requested to be so registered prior to 120th following the Effective
Date, neither the Company nor any of its security holders (other
than the Buyers in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than
the Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right to any of its
security holders.
(j) PIGGY-BACK REGISTRATIONS. If at any time after the earlier to occur
of the Effective Date and the Required Effective Date (as defined in
the Registration Rights Agreement) there is not an effective
Registration Statement covering all of the Registrable Securities
and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its
own account or the account of others under the 1933 Act of any of
its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the 0000 Xxx) or their then equivalents relating
to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable
in connection with stock option or other employee benefit plans,
then the Company shall send to each Buyer written notice of such
determination and, if within fifteen days after receipt of such
notice, any such Holder shall request in writing the inclusion in
such registration statement all or any portion of their Registrable
Securities, then the Company shall include in such registration
statement such Registrable Securities such holder requested to be
registered therein.
6. EXECUTION. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall
constitute one and the same agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid
and binding obligation of the party executing (or on whose
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behalf such signature is executed) the same with the same force and effect
as if such facsimile signature page were an original thereof.
7. GOVERNING LAW; MISCELLANEOUS. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement 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 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. 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
manner permitted by law. Each party irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in
any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action
or proceeding to enforce any provisions of a Transaction Document, 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.
8. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed
effectively given, (i) on the date delivered, (a) by personal delivery,
or (b) if advance copy is given by fax, (ii) three business days after
deposit in the United States Postal Service by regular or certified
mail, or (iii) one business day mailing by international express
courier, with postage and fees prepaid, addressed to each of the other
parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days advance written notice
to each of the other parties hereto.
COMPANY: STRATUS SERVICES GROUP, INC.
000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, President
With a copy to: XXXXXXXX, XXXXXXXX & XXXXXX, P.C.
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000 Xxxx Xxxx Xxxx, X.X. Xxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
BUYER: At the address set forth on the signature page of
this Agreement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Company's representations and
warranties shall survive the execution and delivery hereof of this
Agreement and the delivery of the Debentures and conversions and the
Purchase Price, and shall inure to the benefit of their respective
successors and assigns.
10. FEES AND EXPENSES. At the Closing, the Company shall reimburse the
Buyers for their legal fees and expenses incurred in connection with
the preparation and negotiation of this Agreement by paying to Xxxxxxxx
Xxxxxxxxx $15,000 for the preparation and negotiation of this
Agreement. The amount contemplated by the immediately preceding
sentence shall be retained by the Buyers and shall not be delivered to
the Company at the Closing. Other than the amount contemplated herein,
and except as otherwise set forth in the Registration Rights Agreement,
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. The Company shall pay all
stamp and other taxes and duties levied in connection with the issuance
of the Securities
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and permitted assigns.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Company
and the Buyers as of the date first above written.
STRATUS SERVICES GROUP, INC.
By:
-----------------------------------------
Xxxxxx X. Xxxxxxx, Chairman & CEO
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EXHIBIT A
BUYER SIGNATURE PAGE
This Signature Page constitutes (i) a signature page to, and part of, that
certain Securities Purchase Agreement, dated and effective as of December 1,
2000 (the "Securities Purchase Agreement"), by and among Stratus Services Group,
Inc. and the purchasers who are or become party thereto by executing a signature
page substantially in the form of Exhibit A thereto and prior to the Closing
(ii) the agreement of the undersigned to become a party to, and be bound by the
terms and provisions of, the Securities Purchase Agreement.
BUYER: Name:
---------------------------------------
(Please Print)
By:
----------------------------------------
(Sign above)
Name:
--------------------------------------
(For Buyers that are entities)
Title:
(For Buyers that are entities)
Principal Amount of Debentures: $
Address:
Facsimile:
Telephone:
The Buyer has represented Stratus Services Group, Inc. that it is an "accredited
investor" within the meaning of Rule 501 of the Securities Act of 1933 (the
"Act"). Please indicate by checking the applicable box(es) set forth below, the
basis by which Buyer has concluded that Buyer is an accredited investor.
Buyer is:
|_| A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds
$1,000,000;
|_| a natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that
person's spouse in excess of
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$300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
|_| a director or executive officer of Stratus Services Group, Inc.;
|_| a bank as defined in section 3(a)(2) of the Act or a savings and
loan association or other institution as defined in section
3(a)(5)(A) of the Act; a broker or dealer registered pursuant to
section 15 of the Exchange Act; an insurance company as defined
in section 2(13) of the Act; an investment company registered
under the Investment Company Act of 1940 or a business
development company as defined in section 2(a)(45) of that act; a
Small Business Investment Company licensed by the U.S. Small
Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, for the
benefit of its employees, that has total assets in excess of
$5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 whose investment
decisions are made by a plan fiduciary, as defined in section
3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser,
or if the employee benefit plan has total assets in excess of
$5,000,000 or if a self-directed plan, whose investment decisions
are made solely by persons that are accredited investors;
|_| a private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
|_| an organization described in section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
|_| a trust, with total assets in excess of $5,000,000 not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii); and
|_| an entity in which all of the equity owners are accredited
investors.
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