Exhibit 10.1
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (this "AGREEMENT"), dated as of November 20, 2003 by
and between Organitech USA, Inc., a Delaware corporation (the "Company"), and
Dutchess Private Equities Fund, L.P., a Delaware limited partnership (the
"Investor").
Whereas, the parties desire that, upon the terms and subject to the
conditions contained herein, the Investor shall invest up to $5,000,000 to
purchase the Company's Common Stock, .001 par value per share (the "Common
Stock");
Whereas, such investments will be made in reliance upon the provisions of
Section 4(2) under the Securities Act of 1933, as amended (the "1933 Act"), Rule
506 of Regulation D, and the rules and regulations promulgated thereunder,
and/or upon such other exemption from the registration requirements of the 1933
Act as may be available with respect to any or all of the investments in Common
Stock to be made hereunder; and
Whereas, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit A (as amended
from time to time, the "Registration Rights Agreement") pursuant to which the
Company has agreed to provide certain registration rights under the 1933 Act,
and the rules and regulations promulgated thereunder, and applicable state
securities laws.
NOW THEREFORE, in consideration of the foregoing recitals, which shall be
considered an integral part of this Agreement, the covenants and agreements set
forth hereafter, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree as follows:
Section 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings specified or indicated, and such meanings shall be equally applicable
to the singular and plural forms of the defined terms.
"1933 Act" shall have the meaning set forth in the preamble, above.
"1934 Act" shall mean the Securities Exchange Act of 1934, as it may be
amended.
"Affiliate" shall have the meaning specified in Section 5(h), below.
"Agreement" shall mean this Investment Agreement.
"Best Bid" shall mean the highest posted bid price of the Common Stock.
"Buy In" shall have the meaning specified in Section 6, below.
"Buy In Adjustment Amount" shall have the meaning specified in Section 6.
"Closing" shall have the meaning specified in Section 2(h).
"Closing Date" shall mean seven (7) Trading Days following the Put Notice
Date.
"Common Stock" shall have the meaning set forth in the preamble to this
Agreement.
"Control" or "Controls" shall have the meaning specified in Section 5(h).
Investment Agreement - 1
"Covering Shares" shall have the meaning specified in Section 6.
"Effective Date" shall mean the date the SEC declares effective under the
1933 Act the Registration Statement covering the Securities.
"Environmental Laws" shall have the meaning specified in Section 4(m),
below.
"Execution Date" shall mean the date first indicated in the preamble to
this Agreement.
"Indemnitiees" shall have the meaning specified in Section 10, below.
"Indemnified Liabilities" shall have the meaning specified in Section 10,
below.
"Ineffective Period" shall mean any period of time that the Registration
Statement or any Supplemental Registration Statement (as defined in the
Registration Rights Agreement) becomes ineffective or unavailable for use for
the sale or resale, as applicable, of any or all of the Registrable Securities
(as defined in the Registration Rights Agreement) for any reason (or in the
event the prospectus under either of the above is not current and deliverable)
during any time period required under the Registration Rights Agreement.
"Investor" shall have the meaning indicated in the preamble of this
Agreement.
"Major Transaction" shall have the meaning specified in Section 2(g),
above.
"Material Adverse Effect" shall have the meaning specified in Section
4(a).
"Maximum Common Stock Issuance" shall have the meaning specified in
Section 2(j).
"Minimum Acceptable Price" with respect to any Put Notice Date shall mean
75% of the average of the closing Best Bid prices for the ten Trading Day period
immediately preceding such Put Notice Date.
"Open Period" shall mean the period beginning on and including the Trading
Day immediately following the Effective Date and ending on the earlier to occur
of (i) the date which is 36 months from the Effective Date; and (ii) termination
of the Agreement in accordance with Section 9, below.
"Payment Amount" shall have the meaning specified in Section 2(p), below.
"Pricing Period" shall mean the period beginning on the Put Notice Date
and ending on and including the date that is five Trading Days after such Put
Notice Date.
"Principal Market" shall mean the American Stock Exchange, Inc., the
National Association of Securities Dealers, Inc. Over-the-Counter Bulletin
Board, the Nasdaq National Market System or the Nasdaq SmallCap Market,
whichever is the principal market on which the Common Stock is listed.
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"Prospectus" shall mean the prospectus, preliminary prospectus and
supplemental prospectus used in connection with the Registration Statement.
"Purchase Amount" shall mean the total amount being paid by the Investor
on a particular Closing Date to purchase the Securities.
"Purchase Price" shall mean 94% of the lowest closing Best Bid price of
the Common Stock during the Pricing Period.
"Put Amount" shall have the meaning set forth in Section 2(b) hereof.
"Put Notice" shall mean a written notice sent to the Investor by the
Company stating the Put Amount of Shares the Company intends to sell to the
Investor pursuant to the terms of the Agreement and stating the current number
of Shares issued and outstanding on such date.
"Put Notice Date" shall mean the Trading Day immediately following the day
on which the Investor receives a Put Notice, however a Put Notice shall be
deemed delivered on (x) the Trading Day it is received by facsimile or otherwise
by the Investor if such notice is received prior to 9:00 am Eastern Time, or (y)
the immediately succeeding Trading Day if it is received by facsimile or
otherwise after 9:00 am Eastern Time on a Trading Day. No Put Notice may be
deemed delivered on a day that is not a Trading Day.
"Put Restriction" shall mean the days between the end of the Pricing
Period and the date on which the Investor deems the Put closed. During this
time, the Company shall not be entitled to deliver another Put Notice.
"Registration Period" shall have the meaning specified in Section 5(c),
below.
"Registration Rights Agreement" shall have the meaning set forth in the
recitals, above.
"Registration Statement" means the registration statement of the Company
filed under the 1933 Act covering the Common Stock issuable hereunder.
"Related Party" shall have the meaning specified in Section 5(h).
"Repurchase Event" shall have the meaning specified in Section 2(m).
"Resolution" shall have the meaning specified in Section 8(e).
"SEC" shall mean the U.S. Securities & Exchange Commission.
"SEC Documents" shall have the meaning specified in Section 4(f).
"Securities" shall mean the shares of Common Stock issued pursuant to the
terms of the Agreement.
"Shares" shall mean the shares of the Company's Common Stock.
"Sold Shares" shall have the meaning specified in Section 6.
"Subsidiaries" shall have the meaning specified in Section 4(a).
"Trading Day" shall mean any day on which the Principal Market for the
Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.
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"Transaction Documents" shall mean this Agreement, the Registration Rights
Agreement, and each of the other agreements entered into by the parties hereto
in connection with this Agreement.
"Valuation Event" shall have the meaning specified in Section 2(i).
Section 2. PURCHASE AND SALE OF COMMON STOCK.
(a) Purchase and Sale of Common Stock. Subject to the terms and conditions
set forth herein, the Company shall issue and sell to the Investor, and the
Investor shall purchase from the Company, up to that number of Shares having an
aggregate Purchase Price of $5,000,000.
(b) Delivery of Put Notices.
(i) Subject to the terms and conditions of the Transaction
Documents, and from time to time during the Open Period, the Company may,
in its sole discretion, deliver a Put Notice to the Investor which states
the Put Amount (designated in shares of Common Stock) which the Company
intends to sell to the Investor on a Closing Date. The Put Notice shall be
in the form attached hereto as Exhibit B and incorporated herein by
reference. The amount that the Company shall be entitled to Put to the
Investor in any single Put Notice (the "Put Amount") shall be equal to, at
the Company's election, either: (a) 200% of the average daily volume (U.S.
market only) of the Common Stock for the 10 Trading Days prior to the
applicable Put Notice Date, multiplied by the average of the three daily
closing Best Bid prices immediately preceding the Put Date, or (b)
$10,000; provided that in no event will the Put Amount be more than
$1,000,000 with respect to any single Put. During the Open Period, the
Company shall not be entitled to submit a Put Notice until after the
previous Closing has been completed. The Purchase Price for the Common
Stock identified in the Put Notice shall be equal to 94% of the lowest
closing Best Bid price of the Common Stock during the Pricing Period.
(ii) If any closing Best Bid price during the applicable Pricing
Period with respect to that Put Notice is less than 75% of the any closing
Best Bid prices of the Common Stock for the ten Trading Days prior to the
Put Notice Date (the "Minimum Acceptable Price"), the Put Notice will
terminate at the Company's request sent in accordance with Section 9 of
this Agreement. In the event that the closing Best Bid price for the
applicable Pricing Period is less than the Minimum Acceptable Price, the
Company may elect, by sending written notice to the Investor to cancel the
Put Notice.
(iii) Within seven calendar days after the commencement of each
calendar quarter occurring subsequent to the commencement of the Open
Period, the Company shall undertake to notify Investor as to its
reasonable expectations as to the Put Amount it intends to raise during
such calendar quarter, if any, through the issuance of Put Notices. Such
notification shall constitute only the Company's good faith estimate with
respect to such calendar quarter and shall in no way obligate the Company
to raise such amount during such calendar quarter or otherwise limit its
ability to deliver Put Notices during such calendar quarter. The failure
by the Company to comply with this provision may be cured by notifying the
Investor at any time as to the Company's reasonable expectations with
respect to the current calendar quarter.
(c) Interest. It is the intention of the parties that any interest that
may be deemed to be payable under this Agreement shall not exceed the maximum
amount permitted under applicable law. If any applicable law sets the maximum
interest amount, and any payment required under this Agreement exceeds such
limit, then: (i) any such interest shall be reduced by the amount
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necessary to reduce the interest to the legally permitted limit; and (ii) any
sums already collected (if any) from a party which exceed the legally permitted
limits will be refunded to such party.
(d) Investor's Obligation to Purchase Shares. Subject to the conditions
set forth in this Agreement, following the Investor's receipt of a validly
delivered Put Notice, the Investor shall be required to purchase from the
Company during the related Pricing Period that number of Shares having an
aggregate Purchase Price equal to the lesser of (i) the Put Amount set forth in
the Put Notice, and (ii) 200% of the aggregate trading volume of the Common
Stock during the applicable Pricing Period times (x) 94% of the average of the
three (3) lowest closing Best Bid prices of the Company's Common Stock during
the specified Pricing Period, but only if said Shares bear no restrictive
legend, are not subject to stop transfer instructions and are being held in
escrow, pursuant to Section 2(h), prior to the applicable Closing Date.
(e) Limitation on Investor's Obligation to Purchase Shares. In no event
shall the Investor purchase Shares (whether from the Company or in public or
private secondary transactions) other than pursuant to this Agreement until such
date as this Agreement is terminated. The Company may, in its sole discretion,
waive this provision partially or completely by providing written notice to the
Investor.
(f) Conditions to Investor's Obligation to Purchase Shares.
Notwithstanding anything to the contrary in this Agreement, the Company shall
not be entitled to deliver a Put Notice and the Investor shall not be obligated
to purchase any Shares at a Closing (as defined in Section 2(h)) unless each of
the following conditions are satisfied:
(i) a Registration Statement shall have been declared effective and
shall remain effective and available for the resale of all the Registrable
Securities (as defined in the Registration Rights Agreement) at all times
until the Closing with respect to the subject Put Notice;
(ii) at all times during the period beginning on the related Put
Notice Date and ending on and including the related Closing Date, the
Common Stock shall have been listed on the Principal Market and shall not
have been suspended from trading thereon for a period of five consecutive
Trading Days during the Open Period and the Company shall not have been
notified of any pending or threatened proceeding or other action to
suspend the trading of the Common Stock except that the stock may be
suspended for a reasonable time, not to exceed one trading day, as a
result of a material press release of SEC filing.
(iii) the Company has complied with its obligations and is otherwise
not in breach of a material provision of, or in default under, this
Agreement, the Registration Rights Agreement or any other agreement
executed in connection herewith which has not been corrected prior to
delivery of the Put Notice Date;
(iv) no injunction shall have been issued and remain in force, or
action commenced by a governmental authority which has not been stayed or
abandoned, prohibiting the purchase or the issuance of the Securities; and
(v) the issuance of the Securities will not violate any shareholder
approval requirements of the Principal Market.
If any of the events described in clauses (i) through (v) above occurs during a
Pricing Period, then the Investor shall have no obligation to purchase the Put
Amount of Common Stock set forth in the applicable Put Notice.
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(g) Major Transaction. For purposes of this Agreement, a "Major
Transaction" shall be deemed to have occurred upon the closing of any of the
following events: (i) the consolidation, merger or other business combination of
the Company with or into another person (other than pursuant to a migratory
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or other than a transaction in which the Company is
the surviving corporation); (ii) the sale or transfer of all or substantially
all of the Company's assets; or (iii) the consummation of a purchase, tender or
exchange offer made to, and accepted by, the holders of more than 50% of the
economic interest in, or the combined voting power of all classes of voting
stock of, the Company.
(h) Mechanics of Purchase of Shares by Investor. Subject to the
satisfaction of the conditions set forth in Sections 2(f), 7 and 8, the closing
of the purchase by the Investor of Shares or the Investor deeming a Put closed
(a "Closing") shall occur on the date which is no later than seven Trading Days
following the applicable Put Notice Date or when the Investor deems a Put closed
(each a "Closing Date"). Prior to each Closing Date, (i) the Company shall
deliver to the Investor pursuant to the this Agreement, certificates
representing the Shares to be issued to the Investor on such date and registered
in the name of the Investor; and (ii) the Investor shall deliver to the Company
the Purchase Price to be paid for such Shares, determined in accordance with the
terms of this Agreement.. In lieu of delivering physical certificates
representing the Securities and provided that the Company's transfer agent then
is participating in The Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Investor, the Company
shall use its commercially reasonable efforts to cause its transfer agent to
electronically transmit the Securities by crediting the account of the
Investor's prime broker (which shall be specified by the Investor a reasonably
sufficient time in advance) with DTC through its Deposit Withdrawal Agent
Commission ("DWAC") system.
The Company understands that a delay in the issuance of Securities beyond
the Closing Date could result in economic loss to the Investor. After the
Effective Date, as compensation to the Investor for such loss, the Company
agrees to pay late payments to the Investor for late issuance of Securities
(delivery of Securities after the applicable Closing Date) in accordance with
the following schedule (where "No. of Days Late" is defined as the number of
trading days beyond the Closing Date):
Late Payment For Each
No. of Days Late $10,000 of Common Stock
---------------- -----------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
Over 10 $1,000 + $200 for each
Business Day late beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Investor's right to
pursue actual damages for the Company's failure to issue and deliver the
Securities to the Investor, except to the extent that such late payments shall
constitute payment for and offset any such actual damages alleged by the
Investor, and any Buy In Adjustment Amount.
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(i) Overall Limit on Common Stock Issuable. Notwithstanding anything
contained herein to the contrary, if during the Open Period the Company becomes
listed on an exchange that limits the number of shares of Common Stock that may
be issued without shareholder approval, then the number of Shares issuable by
the Company and purchasable by the Investor, including the shares of Common
Stock issuable to the Investors pursuant to Section 11(b), shall not exceed that
number of the shares of Common Stock that may be issuable without shareholder
approval, subject to appropriate adjustment for stock splits, stock dividends,
combinations or other similar recapitalization affecting the Common Stock (the
"Maximum Common Stock Issuance"), unless the issuance of Shares in excess of the
Maximum Common Stock Issuance shall first be approved by the Company's
shareholders in accordance with applicable law and the By-laws and Amended and
Restated Certificate of Incorporation of the Company, if such issuance of shares
of Common Stock could cause a delisting on the Principal Market. The parties
understand and agree that the Company's failure to seek or obtain such
shareholder approval shall in no way adversely affect the validity and due
authorization of the issuance and sale of Securities or the Investor's
obligation in accordance with the terms and conditions hereof to purchase a
number of Shares in the aggregate up to the Maximum Common Stock Issuance
limitation, and that such approval pertains only to the applicability of the
Maximum Common Stock Issuance limitation provided in this Section 2(j).
(j) For the purpose of this Agreement, the term "Valuation Event" means
the Company taking any of the following actions at any time during a Pricing
Period:
(i) the subdivision or combinations of the Company's Common Stock;
(ii) the payment of a dividend or any other distribution with
respect to shares of the Company's Common Stock;
(iii) the issuance of any options or other rights to subscribe for
or purchase Common Stock ("Options") or any securities convertible into or
exchangeable for Common Stock ("Convertible Securities"), the price per
share for which Common Stock is shall be less than the Best Bid price in
effect immediately prior to such issuance of such Options or Convertible
Securities;
(iv) the issuance of shares of Common Stock other than as provided
in the foregoing subsections (i) through (iii), at a price per share less,
or for other consideration lower, than the Best Bid price in effect
immediately prior to such issuance, or without consideration; or
(v) the distribution of its assets or evidences of indebtedness to
the holders of Common Stock as a dividend in liquidation or by way of
return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any
distribution to such holders made in respect of the sale of all or
substantially all of the Company's assets (other than under the
circumstances provided for in the foregoing subsections (i) through (iv)).
(k) The Company agrees that it shall not take any action that would result
in a Valuation Event occurring during a Pricing Period.
(l) Procedure if Material Facts are Reasonably Believed to be Untrue or
are Omitted. In the event after such consultation the Investor or the Investor's
counsel reasonably believes that the Registration Statement contains an untrue
statement or a material fact or omits a material fact required to be stated in
the Registration Statement or necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading,
(i) the Company shall file with the SEC an amendment to the Registration
Statement responsive to such alleged untrue statement or omission and provide
the Investor, as promptly as
Investment Agreement - 7
practicable, with copies of the Registration Statement and related Prospectus,
as so amended, or (ii) if the Company disputes the existence of any such
material misstatement or omission, and (a) in the event the dispute relates to
the adequacy of financial disclosure and the Investor shall reasonably request,
the Company's independent auditors shall provide to the Company a letter
("agreed Upon Procedures Report") outlining the performance of such "agreed upon
procedures," which shall not require any more than the SAS 71 review described
above as shall be reasonably requested by the Investor and the Company shall
provide the Investor with a copy of such letter or (b) in the event the
disclosure relates to a legal matter, the Company will provide an opinion of
consent to the Investor.
(m) Delisting; Suspension. If at any time during the Open Period or within
30 calendar days after the Open Period; (i) the Registration Statement, after it
has been declared effective, shall not remain effective and available for sale
of all the Registrable Securities for a period exceeding 10 calendar days; (ii)
the Common Stock shall not be listed on the Principal Market or shall have been
suspended from trading thereon (excluding suspensions of not more than one
trading day resulting from business announcements by the Company) or the Company
shall have been notified of pending or threatened proceeding or other action to
delist or suspend the Common Stock; (iii) there shall have occurred a Major
Transaction (as defined in Section 2(g)) or the public announcement of a pending
Major Transaction which has not been abandoned or terminated; or (iv) the
Registration Statement is no longer effective or stale for a period of more than
five Trading Days as a result of the Company's failure to timely file its
financial statements or for any other reason, the Company shall repurchase,
within 30 calendar days of the occurrence of one of the events listed in clauses
(i), (ii), (iii) or (iv) above (each a "Repurchase Event") and subject to the
limitations imposed by applicable federal and state law, all or any part of the
Securities issued to the Investor within the 40 Trading Days preceding the
occurrence of the Repurchase Event and then held by the Investor at a price per
Share equal to the highest closing bid price during the period beginning on the
date of the Repurchase Event and ending on and including the date on which the
Investor is paid by the Company for the repurchase of the Shares (the "Payment
Amount"). If the Company fails to pay to the Investor the full aggregate Payment
Amount within ten calendar days of the occurrence of a Repurchase Event, the
Company shall pay to the Investor, on the first Trading Day following such tenth
calendar day, in addition to and not in lieu of the Payment Amount payable by
the Company to the Investor. , an amount equal to 2% of the aggregate Payment
Amount then due and payable to the Investor, in cash by wire transfer, plus
compounded annual interest of 18% on such Payment Amount during the period,
beginning on the day following such tenth calendar day, during which such
Payment Amount, or any portion thereof, is outstanding.
(n) Governmental or Criminal Actions. During the Open Period, the Company
or any of its executive management or board of directors ("Insiders") shall not
be the cause for an investigation by any governmental agencies whether foreign
or domestic. All Insiders shall also not be charged with any criminal activities
whether it be foreign or domestic, securities related or non-securities related
for the Open Period.
Section 3. INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Investor represents and warrants to the Company, and covenants, that:
(a) Sophisticated Investor. The Investor has, by reason of its business
and financial experience, such knowledge, sophistication and experience in
financial and business matters and in making investment decisions of this type
that it is capable of (i) evaluating the merits and risks of an investment in
the Securities and making an informed investment decision; (ii) protecting its
own interest; and (iii) bearing the economic risk of such investment for an
indefinite period of time.
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(b) Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
(c) Section 9 of the 1934 Act. During the term of this Agreement, the
Investor will comply with the provisions of Section 9 of the 1934 Act, and the
rules promulgated thereunder, with respect to transactions involving the Common
Stock. The Investor agrees not to short, either directly or indirectly through
its affiliates, principals or advisors, the Company's common stock during the
term of this Agreement.
(d) Accredited Investor. Investor is an "Accredited Investor" as that term
is defined in Rule 501(a)(3) of Regulation D of the 1933 Act.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Investor and the consummation by the Investor of
the transactions contemplated hereby and thereby will not result in a violation
of the Partnership Agreement or other organizational documents of the Investor.
(f) Opportunity to Discuss. The Investor has received all materials
relating to the Company's business, finance and operations which it has
requested. The Investor has had an opportunity to discuss the business,
management and financial affairs of the Company with the Company's management.
(g) Investment Purposes. The Investor is purchasing the Securities for its
own account for investment purposes and not with a view towards distribution and
agrees to resell or otherwise dispose of the Securities solely in accordance
with the registration provisions of the 1933 Act (or pursuant to an exemption
from such registration provisions).
(h) No Registration as a Broker or Dealer. The Investor is not and will
not be required to be registered as a "broker" or "dealer" under the 1934 Act,
either as a result of its execution and performance of its obligations under
this Agreement or otherwise.
(i) Good Standing. The Investor is a Limited Partnership, duly organized,
validly existing and in good standing in the State of Delaware.
(j) Tax Liabilities. The Investor understands that it is liable for its
own tax liabilities.
(k) Regulation M. The Investor will comply with Regulation M under the
1934 Act, if applicable
Section 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the Schedules attached hereto, or as disclosed on
the Company's SEC Documents, the Company represents and warrants to the Investor
that:
(a) Organization and Qualification. The Company is a corporation duly
organized and validly existing in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authorization to own its
properties and to carry on its business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means any material adverse effect on the
Investment Agreement - 9
business, properties, assets, operations, results of operations, financial
condition or prospects of the Company and its Subsidiaries, if any, taken as a
whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under the Transaction
Documents (as defined in Section 1 and 4(b), below).
(b) Authorization; Enforcement; Compliance with Other Instruments.
(i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement,
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement
(collectively, the "Transaction Documents"), and to issue the Securities
in accordance with the terms hereof and thereof.
(ii) The execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby
and thereby, including without limitation the reservation for issuance and
the issuance of the Securities pursuant to this Agreement, have been duly
and validly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of
Directors, or its shareholders.
(iii) The Transaction Documents have been duly and validly executed
and delivered by the Company.
(iv) The Transaction Documents constitute the valid and binding
obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies.
(c) Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 80,000,000 shares of Common
Stock, .001 par value per share, of which as of the date hereof, 16,
048,000 shares are issued and outstanding; 10,000,000 shares of Preferred
Stock, $.10 par value per share of which no shares are issued and
outstanding; (as of November 20, 2003, 1,650,000 shares are held in escrow
for BLM NV.) Additionally, 526,905 shares of common stock are reserved for
issuance pursuant to options, warrants and other convertible securities.
All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed
in the Company's publicly available filings with Periodic Filings, (i) no
shares of the Company's capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or
permitted by the Company; (ii) there are no outstanding debt securities;
(iii) there are no outstanding shares of capital stock, options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or any
of its Subsidiaries; (iv) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement); (v) there are no outstanding securities of
the Company or any of its Subsidiaries which contain any redemption or
similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company
Investment Agreement - 10
or any of its Subsidiaries; (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by
the issuance of the Securities as described in this Agreement; (vii) the
Company does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement; and (viii) there is
no dispute as to the classification of any shares of the Company's capital
stock. The Company has furnished to the Investor, or the Investor has had
access through XXXXX to, true and correct copies of the Company's Amended
and Restated Certificate of Incorporation, as in effect on the date hereof
(the "Certificate of Incorporation"), and the Company's By-laws, as in
effect on the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights
of the holders thereof in respect thereto.
(d) Issuance of Shares. The Company has reserved __5,000,000_ Shares for
issuance pursuant to this Agreement has been duly authorized and reserved for
issuance (subject to adjustment pursuant to the Company's covenant set forth in
Section 5(f) below) pursuant to this Agreement. Upon issuance in accordance with
this Agreement, the Securities will be validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof. In the event the Company cannot register a sufficient number of
Shares for issuance pursuant to this Agreement, the Company will use its best
efforts to authorize and reserve for issuance the number of Shares required for
the Company to perform its obligations hereunder as soon as reasonably
practicable.
(e) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the
By-laws; or (ii) conflict with, or constitute a material default (or an event
which with notice or lapse of time or both would become a material default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, contract, indenture mortgage,
indebtedness or instrument to which the Company or any of its Subsidiaries is a
party, or to the Company's knowledge result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities laws and regulations and the rules and regulations of the Principal
Market or principal securities exchange or trading market on which the Common
Stock is traded or listed) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is
bound or affected. Except as disclosed in Schedule 4(e), neither the Company nor
its Subsidiaries is in violation of any term of, or in default under, the
Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the
By-laws or their organizational charter or by-laws, respectively, or any
contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the Company or
its Subsidiaries, except for possible conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations that would not
individually or in the aggregate have a Material Adverse Effect. The business of
the Company and its Subsidiaries is not being conducted, and shall not be
conducted, in violation of any law, statute, ordinance, rule, order or
regulation of any governmental authority or agency, regulatory or
self-regulatory agency, or court, except for possible violations the sanctions
for which either individually or in the aggregate would not have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as
required under the 1933 Act to the Company's knowledge, the Company is not
required to obtain any consent, authorization, permit or order of, or make any
filing or registration (except the filing of a registration statement) with, any
court, governmental authority or agency, regulatory or self-regulatory agency or
other third party in order for it to execute, deliver or perform any of its
obligations under, or contemplated by, the Transaction Documents in accordance
with the terms hereof or thereof. All consents, authorizations, permits, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof and are in full force and effect as of the date hereof. Except
Investment Agreement - 11
as disclosed in Schedule 4(e), the Company and its Subsidiaries are unaware of
any facts or circumstances which might give rise to any of the foregoing. The
Company is not, and will not be, in violation of the listing requirements of the
Principal Market as in effect on the date hereof and on each of the Closing
Dates and is not aware of any facts which would reasonably lead to suspension or
trading of the Common Stock by the Principal Market in the foreseeable future.
(f) SEC Documents; Financial Statements. Since at least August 30th, 2003,
the Company has 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 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). The Company has delivered to the Investor
or its representatives, or they have had access through XXXXX to, true and
complete copies of the SEC Documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, 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 exclude
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 its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other written information provided by or on behalf of the
Company to the Investor which is not included in the SEC Documents, including,
without limitation, information referred to in Section 4(d) of this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements therein, in the light of the circumstance
under which they are or were made, not misleading. Neither the Company nor any
of its Subsidiaries or any of their officers, directors, employees or agents
have provided the Investor with any material, nonpublic information which was
not publicly disclosed prior to the date hereof and any material, nonpublic
information provided to the Investor by the Company or its Subsidiaries or any
of their officers, directors, employees or agents prior to any Closing Date
shall be publicly disclosed by the Company prior to such Closing Date.
(g) Absence of Certain Changes. Except as set forth in the SEC Documents,
the Company does not intend to change the business operations of the Company in
any material way. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any bankruptcy law nor
does the Company or its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings.
(h) Absence of Litigation. Except as set forth in the SEC Documents, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of Company or any of its
Subsidiaries, threatened against or affecting the Company, the Common Stock or
any of the Company's Subsidiaries or any of the Company's or the Company's
Subsidiaries' officers or directors in their capacities as such, in which an
adverse decision could have a Material Adverse Effect.
(i) Acknowledgment Regarding Investor's Purchase of Shares. The Company
acknowledges and agrees that the Investor is acting solely in the capacity of
arm's length
Investment Agreement - 12
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and any advice given by the
Investor or any of its respective representatives or agents in connection with
the Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Investor's purchase of the Securities. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.
(j) No Undisclosed Events, Liabilities, Developments or Circumstances.
Except as set forth in the SEC Documents, since October 31, 2003, no event,
liability, development or circumstance has occurred or exists, or to the
Company's knowledge is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, assets, prospects,
operations or financial condition, that would be required to be disclosed by the
Company under applicable securities laws on a registration statement filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.
(k) Employee Relations. Neither the Company nor any of its Subsidiaries is
involved in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened. Neither the Company nor any
of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that relations with their employees are
good. No executive officer (as defined in Rule 501(f) of the 0000 Xxx) has
notified the Company that such officer intends to leave the Company's employ or
otherwise terminate such officer's employment with the Company.
(l) Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. Except as set forth the SEC Documents, none of the Company's
trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
government authorizations, trade secrets or other intellectual property rights
necessary to conduct its business as now or as proposed to be conducted have
expired or terminated, or are expected to expire or terminate within two years
from the date of this Agreement. The Company and its Subsidiaries do not have
any knowledge of any infringement by the Company or its Subsidiaries of
trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx registrations, trade secret
or other similar rights of others, or of any such development of similar or
identical trade secrets or technical information by others and, except as set
forth on the SEC Documents, there is no claim, action or proceeding being made
or brought against, or to the Company's knowledge, being threatened against, the
Company or its Subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
xxxx registrations, trade secret or other infringement; and the Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and its Subsidiaries have taken commercially
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties.
(m) Environmental Laws. The Company and its Subsidiaries (i) are, to the
knowledge of management of the Company, in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"); (ii)
have, to the knowledge of management of the Company, received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to
Investment Agreement - 13
conduct their respective businesses; and (iii) are in compliance, to the
knowledge of the Company, with all terms and conditions of any such permit,
license or approval where, in each of the three foregoing cases, the failure to
so comply would have, individually or in the aggregate, a Material Adverse
Effect.
(n) Title. Any real property and facilities held under lease by the
Company or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
(o) Insurance. Each of the Company's Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company reasonably believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect. The Company
does not have directors and officers insurance.
(p) Regulatory Permits. The Company and its Subsidiaries have in full
force and effect all certificates, approvals, authorizations and permits from
the appropriate federal, state, local or foreign regulatory authorities and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective properties and assets and conduct their respective businesses, and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
approval, authorization or permit, except for such certificates, approvals,
authorizations or permits which if not obtained, or such revocations or
modifications which, would not have a Material Adverse Effect.
(q) Internal Accounting Controls. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(r) No Materially Adverse Contracts, Etc. Neither the Company nor any of
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
(s) Tax Status. The Company and each of its Subsidiaries has made or filed
all United States federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
Investment Agreement - 14
(t) Certain Transactions. Except as set forth in the SEC Documents filed
at least ten days prior to the date hereof and except for arm's length
transactions pursuant to which the Company makes payments in the ordinary course
of business upon terms no less favorable than the Company could obtain from
third parties and other than the grant of stock options disclosed in the SEC
Documents, none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
(u) Dilutive Effect. The Company understands and acknowledges that the
number of Shares issuable upon purchases pursuant to this Agreement will
increase in certain circumstances including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines during the
period between the Effective Date and the end of the Open Period. The Company's
executive officers and directors have studied and fully understand the nature of
the transactions contemplated by this Agreement and recognize that they have a
potential dilutive effect. The Board of Directors of the Company has concluded,
in its good faith business judgment, that such issuance is in the best interests
of the Company. The Company specifically acknowledges that, subject to such
limitations as are expressly set forth in the Transaction Documents, its
obligation to issue shares of Common Stock upon purchases pursuant to this
Agreement is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other shareholders of the
Company.
(v) Right of First Refusal. The Company shall not, directly or indirectly,
without the prior written consent of Investor which will not be unreasonably
withheld, offer, sell, grant any option to purchase, or otherwise dispose of (or
announce any offer, sale, grant or any option to purchase or other disposition)
any of its Common Stock or securities convertible into Common Stock at a price
that is less than the market price of the Common Stock at the time of issuance
of such security or investment (a "Subsequent Financing") for a period of one
year after the Effective Date, except (i) the granting of options or warrants to
employees, officers, directors and consultants, and the issuance of shares upon
exercise of options granted, under any stock option plan heretofore or hereafter
duly adopted by the Company or for services rendered or to be rendered; (ii)
shares issued upon exercise of any currently outstanding warrants or options and
upon conversion of any currently outstanding convertible debenture or
convertible preferred stock, in each case disclosed pursuant to Section 4(c);
(iii) securities issued in connection with the capitalization or creation of a
joint venture with a strategic partner; (iv) shares issued to pay part or all of
the purchase price for the acquisition by the Company of another entity (which,
for purposes of this clause (iv), shall not include an individual or group of
individuals); (v) shares issued in a bona fide public offering by the Company of
its securities and (vi) private offerings of securities with rights to
registration under the 1933 Act, unless (A) the Company delivers to Investor a
written notice (the "Subsequent Financing Notice") of its intention to effect
such Subsequent Financing, which Subsequent Financing Notice shall describe in
reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds intended to be raised thereunder, the person with whom such Subsequent
Financing shall be effected, and attached to which shall be a term sheet or
similar document relating thereto; and (B) Investor shall not have notified the
Company by 5:00 p.m. (New York time) on the fifth Trading Day after its receipt
of the Subsequent Financing Notice of its willingness to provide, subject to
completion of mutually acceptable documentation, financing to the Company on
substantially the terms set forth in the Subsequent Financing Notice (vi) to
enter into a loan, credit or lease facility with a bank or financing
institution. If Investor shall fail to notify the Company of its intention to
enter into such negotiations within such time period, then the Company may
effect the Subsequent Financing substantially upon the terms set forth in the
Subsequent Financing Notice; provided that the
Investment Agreement - 15
Company shall provide Investor with a second Subsequent Financing Notice, and
Investor shall again have the right of first refusal set forth above in this
Section, if the Subsequent Financing subject to the initial Subsequent Financing
Notice shall not have been consummated for any reason on the terms set forth in
such Subsequent Financing Notice within thirty Trading Days after the date of
the initial Subsequent Financing Notice. The rights granted to Investor in this
Section are not subject to any prior right of first refusal given to any other
person disclosed on Schedule 4(c).
(w) Lock-up. The Company shall cause its officers, insiders and directors
to refrain from selling Common Stock during each Pricing Period.
(x) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D)
in connection with the offer or sale of the Common Stock offered hereby.
(y) No brokers, finders or financial advisory fees or commissions will be
paid by the Company to the Investor with respect to the transactions
contemplated by this Agreement. other than described in Section 12 (m) of this
Agreement.
Section 5. COVENANTS OF THE COMPANY
(a) Best Efforts. The Company shall use commercially reasonable efforts
timely to satisfy each of the conditions to be satisfied by it as provided in
Section 7 of this Agreement.
(b) Blue Sky. The Company shall, at its sole cost and expense, on or
before each of the Closing Dates, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or obtain
exemption for the Securities for, sale to the Investor at each of the Closings
pursuant to this Agreement under applicable securities or "Blue Sky" laws of
such states of the United States, as reasonably specified by Investor, and shall
provide evidence of any such action so taken to the Investor on or prior to the
Closing Date.
(c) Reporting Status. Until the earlier to occur of (i) the first date
which is after the date this Agreement is terminated pursuant to Section 9 and
on which the Investor (as that term is defined in the Registration Rights
Agreement) may sell all of the Securities without restriction pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto); and (ii) the date
on which (A) the Investor shall have sold all the Securities; and (B) this
Agreement has been terminated pursuant to Section 9 (the "Registration Period"),
the Company shall file all reports required to be filed with the SEC pursuant to
the 1934 Act, and the Company shall not terminate its status as a reporting
company under the 1934 Act.
(d) Use of Proceeds. The Company will use the proceeds from the sale of
the Shares (excluding amounts paid by the Company for fees as set forth in the
Transaction Documents) for general corporate and working capital purposes and
acquisitions of assets, businesses or operations or for other purposes that the
Board of Directors deem to be in the best interests of the Company.
(e) Financial Information. The Company agrees to make available to the
Investor via XXXXX or other electronic means the following during the
Registration Period: (i) within five Trading Days after the filing thereof with
the SEC, a copy of its Annual Reports on Form 10-KSB, its Quarterly Reports on
Form 10-QSB, any Current Reports on Form 8-K and any Registration Statements or
amendments filed pursuant to the 1933 Act; (ii) on the same day as the release
thereof, facsimile copies of all press releases issued by the Company or any of
its Subsidiaries; (iii) copies of any notices and other information made
available or given to the shareholders of
Investment Agreement - 16
the Company generally, contemporaneously with the making available or giving
thereof to the shareholders; and (iv) within two calendar days of filing or
delivery thereof, copies of all documents filed with, and all correspondence
sent to, the Principal Market, any securities exchange or market, or the
National Association of Securities Dealers, Inc., unless such information is
material nonpublic information.
(f) Reservation of Shares. Subject to the following sentence, the Company
shall take all action necessary to at all times have authorized, and reserved
for the purpose of issuance, a sufficient number of Shares of Common Stock to
provide for the issuance of the Securities hereunder. In the event that the
Company determines that it does not have a sufficient number of authorized
Shares of Common Stock to reserve and keep available for issuance as described
in this Section 5(f), the Company shall use its best efforts to increase the
number of authorized Shares of Common Stock by seeking shareholder approval for
the authorization of such additional shares.
(g) Listing. The Company shall promptly secure and maintain the listing of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon the Principal Market and each other national securities exchange
and automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain, such
listing of all Registrable Securities from time to time issuable under the terms
of the Transaction Documents. The Company shall maintain the Common Stock's
authorization for quotation on the Principal Market. Neither the Company nor any
of its Subsidiaries shall take any action which would be reasonably expected to
result in the delisting or suspension of the Common Stock on the Principal
Market (excluding suspensions of not more than one trading day resulting from
business announcements by the Company). The Company shall promptly provide to
the Investor copies of any notices it receives from the Principal Market
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section 5(g).
(h) Transactions With Affiliates. The Company shall not, and shall cause
each of its Subsidiaries not to, enter into, amend, modify or supplement, or
permit any Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors, persons who were officers or directors at any time during
the previous two years, shareholders who beneficially own 5% or more of the
Common Stock, or affiliates or with any individual related by blood, marriage or
adoption to any such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a "Related Party"),
except for (i) customary employment arrangements and benefit programs on
reasonable terms, (ii) any agreement, transaction, commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would have been
obtainable from a person other than such Related Party, or (iii) any agreement,
transaction, commitment or arrangement which is approved by a majority of the
disinterested directors of the Company. For purposes hereof, any director who is
also an officer of the Company or any Subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment or arrangement. "Affiliate" for purposes hereof means, with respect
to any person or entity, another person or entity that, directly or indirectly,
(i) has a 5% or more equity interest in that person or entity, (ii) has 5% or
more common ownership with that person or entity, (iii) controls that person or
entity, or (iv) is under common control with that person or entity. "Control" or
"Controls" for purposes hereof means that a person or entity has the power,
direct or indirect, to conduct or govern the policies of another person or
entity.
(i) Filing of Form 8-K. On or before the date which is three Trading Days
after the Execution Date, the Company shall file a Current Report on Form 8-K
with the SEC describing the terms of the transaction contemplated by the
Transaction Documents in the form required by the 1934 Act, if such filing is
required.
Investment Agreement - 17
(j) Corporate Existence. The Company shall use its best efforts to
preserve and continue the corporate existence of the Company.
(k) Notice of Certain Events Affecting Registration; Suspension of Right
to Make a Put. The Company shall promptly notify Investor upon the occurrence of
any of the following events in respect of a Registration Statement or related
prospectus in respect of an offering of the Securities: (i) receipt of any
request for additional information by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus; (ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of any
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Securities for sale
in any jurisdiction or the initiation or notice of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in such
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of a Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate, and the Company
shall promptly make available to Investor any such supplement or amendment to
the related prospectus. The Company shall not deliver to Investor any Put Notice
during the continuation of any of the foregoing events.
(j) Reserved
Section 6. Cover. If the number of Shares represented by any Put Notices become
restricted or are no longer freely trading for any reason, and after the
applicable Closing Date, the Investor purchases, in an open market transaction
or otherwise, the Company's Common Stock (the "Covering Shares") in order to
make delivery in satisfaction of a sale of Common Stock by the Investor (the
"Sold Shares"), which delivery such Investor anticipated to make using the
Shares represented by the Put Notice (a "Buy-In"), the Company shall pay to the
Investor the Buy-In Adjustment Amount (as defined below). The "Buy-In Adjustment
Amount" is the amount equal to the excess, if any, of (a) the Investor's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (b) the net proceeds (after brokerage commissions, if any) received by the
Investor from the sale of the Sold Shares. The Company shall pay the Buy-In
Adjustment Amount to the Investor in immediately available funds immediately
upon demand by the Investor. By way of illustration and not in limitation of the
foregoing, if the Investor purchases Common Stock having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect to
the Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment
Amount which the Company will be required to pay to the Investor will be $1,000.
Section 7. CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL.
The obligation hereunder of the Company to issue and sell the Securities
to the Investor is further subject to the satisfaction, at or before each
Closing Date, of each of the following conditions set forth below. These
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion.
Investment Agreement - 18
(a) The Investor shall have executed each of this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(b) The Investor shall have delivered to the Company the Purchase Price
for the Securities being purchased by the Investor at the Closing (after receipt
of confirmation of delivery of such Securities) by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.
(c) The representations and warranties of the Investor shall be true and
correct as of the date when made and as of the applicable Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and the Investor shall have performed, satisfied and complied
with the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Investor at or
prior to such Closing Date.
(d) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
(e) No Valuation Event shall have occurred since the applicable Put Notice
Date.
Section 8. FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE.
The obligation of the Investor hereunder to purchase Securities is subject
to the satisfaction, on or before each Closing Date, of each of the following
conditions set forth below.
(a) The Company shall have executed each of the Transaction Documents and
delivered the same to the Investor.
(b) The Common Stock shall be authorized for quotation on the Principal
Market and trading in the Common Stock shall not have been suspended by the
Principal Market or the SEC, at any time beginning on the date hereof and
through and including the respective Closing Date (excluding suspensions of not
more than one Trading Day resulting from business announcements by the Company,
provided that such suspensions occur prior to the Company's delivery of the Put
Notice related to such Closing).
(c) The representations and warranties of the Company shall be true and
correct as of the date when made and as of the applicable Closing Date as though
made at that time (except for (i) representations and warranties that speak as
of a specific date and (ii) with respect to the representations made in Sections
4(g), (h) and (j) and the third sentence of Section 4(k) hereof, events which
occur on or after the date of this Agreement and are disclosed in SEC filings
made by the Company at least ten Trading Days prior to the applicable Put Notice
Date) and the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company on or before such Closing
Date. The Investor may request an update as of such Closing Date regarding the
representation contained in Section 4(c) above.
(d) The Company shall have executed and delivered to the Investor the
certificates representing, or have executed electronic book-entry transfer of,
the Securities (in such denominations as such Investor shall request) being
purchased by the Investor at such Closing.
(e) The Board of Directors of the Company shall have adopted resolutions
consistent with Section 4(b)(ii) above (the "Resolutions") and such Resolutions
shall not have been amended or rescinded prior to such Closing Date.
Investment Agreement - 19
(f) reserved
(g) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
(h) The Registration Statement shall be effective on each Closing Date and
no stop order suspending the effectiveness of the Registration statement shall
be in effect or to the Company's knowledge, shall be pending or threatened.
Furthermore, on each Closing Date (i) neither the Company nor Investor shall
have received notice that the SEC has issued or intends to issue a stop order
with respect to such Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of such Registration Statement, either
temporarily or permanently, or intends or has threatened to do so (unless the
SEC's concerns have been addressed and Investor is reasonably satisfied that the
SEC no longer is considering or intends to take such action), and (ii) no other
suspension of the use or withdrawal of the effectiveness of such Registration
Statement or related prospectus shall exist.
(i) At the time of each Closing, the Registration Statement (including
information or documents incorporated by reference therein) and any amendments
or supplements thereto shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or which would require public
disclosure or an update supplement to the prospectus.
(j) There shall have been no filing of a petition in bankruptcy, either
voluntarily or involuntarily, with respect to the Company and there shall not
have been commenced any proceedings under any bankruptcy or insolvency laws, or
any laws relating to the relief of debtors, readjustment of indebtedness or
reorganization of debtors, and there shall have been no calling of a meeting of
creditors of the Company or appointment of a committee of creditors or
liquidating agents or offering of a composition or extension to creditors by,
for, with or without the consent or acquiescence of the Company.
(k) If applicable, the shareholders of the Company shall have approved the
issuance of any Shares in excess of the Maximum Common Stock Issuance in
accordance with Section 2(j).
(l) The conditions to such Closing set forth in Section 2(f) shall have
been satisfied on or before such Closing Date.
(m) The Company shall have certified to the Investor the number of shares
of Common Stock outstanding as of a date within ten Trading Days prior to such
Closing Date.
Section 9. TERMINATION. This Agreement shall terminate upon any of the following
events:
(i) when the Investor has purchased an aggregate of $5,000,000 in the
Common Stock of the Company pursuant to this Agreement; provided that the
Company's representations, warranties and covenants contained in this Agreement
insofar as applicable to the transactions consummated hereunder prior to such
termination, shall survive the termination of this Agreement for the period of
any applicable statute of limitations;
(ii) on the date which is 36 months after the Effective Date;
(iii) if the Company shall file or consent by answer or otherwise to the
entry of an order for relief or approving a petition for relief, reorganization
or arrangement or any other petition in bankruptcy for liquidation or to take
advantage of any bankruptcy or insolvency law of any
Investment Agreement - 20
jurisdiction, or shall make an assignment for the benefit of its creditors, or
shall consent to the appointment of a custodian, receiver, trustee or other
officer with similar powers of itself or of any substantial part of its
property, or shall be adjudicated a bankrupt or insolvent, or shall take
corporate action for the purpose of any of the foregoing, or if a court or
governmental authority of competent jurisdiction shall enter an order appointing
a custodian, receiver, trustee or other officer with similar powers with respect
to the Company or any substantial part of its property or an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law, or an order for the dissolution, winding up or liquidation of
the Company, or if any such petition shall be filed against the Company;
(iv) if the Company shall issue or sell any equity securities or
securities convertible into, or exchangeable for, equity securities or enter
into any other equity financing facility during the Open Period, other than in
compliance with Section 4(v);
Section 10. Suspension. This Agreement shall be suspended upon any of the
following events, and shall remain suspended until such event is rectified:
(i) the trading of the Common Stock is suspended by the SEC, the Principal
Market or the NASD for a period of five consecutive Trading Days during the Open
Period;
(ii) the Company shall not have filed with the SEC the initial
Registration Statement with respect to the resale of the Registrable Securities
in accordance with the terms of the initial Registration Rights Agreement within
60 calendar days of the date hereof or the Registration Statement has not been
declared effective within 180 calendar days of the date hereof; or
(iii) The Common Stock ceases to be registered under the 1934 Act or
listed or traded on the Principal Market. Upon the occurrence of one of the
above-described events, the Company shall send written notice of such event to
the Investor.
Section 11. INDEMNIFICATION. In consideration of the parties mutual obligations
set forth in the Transaction Documents, each of the parties (in such capacity,
an "Indemnitor") shall defend, protect, indemnify and hold harmless the other
and all of the other party's shareholders, officers, directors, employees,
counsel, and direct or indirect investors and any of the foregoing person's
agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and reasonable expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Indemnitor or any other certificate,
instrument or document contemplated hereby or thereby; (ii) any breach of any
covenant, agreement or obligation of the Indemnitor contained in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby; or (iii) any cause of action, suit or claim brought or made against
such Indemnitee by a third party and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
except insofar as any such misrepresentation, breach or any untrue statement,
alleged untrue statement, omission or alleged omission is made in reliance upon
and in conformity with information furnished to Indemnitor which is specifically
intended for use in the preparation of any such Registration Statement,
preliminary prospectus, prospectus or amendments to the prospectus. To the
extent that the foregoing undertaking by the Indenitor may be unenforceable for
any reason, the Indemnitor shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. The indemnity provisions contained herein
Investment Agreement - 21
shall be in addition to any cause of action or similar rights Indemnitor may
have, and any liabilities the Indemnitor or the Indemnitees may be subject to.
Section 12. GOVERNING LAW; MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts without regard to
the principles of conflict of laws. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
Boston, County of Suffolk, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, 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 brought
in an inconvenient forum or that the venue of 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 to such party at the address for such 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.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(b) Legal Fees; and Miscellaneous Fees. Except as otherwise set forth in
the Transaction Documents, each party shall pay the fees and expenses of its
advisers, counsel, the 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. Any attorneys' fees and
expenses incurred by either the Company or by the Investor in connection with
the preparation, negotiation, execution and delivery of any amendments to this
Agreement or relating to the enforcement of the rights of any party, after the
occurrence of any breach of the terms of this Agreement by another party or any
default by another party in respect of the transactions contemplated hereunder,
shall be paid on demand by the party which breached the Agreement and/or
defaulted, as the case may be. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of any Securities.
(c) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.
(d) Headings; Singular/Plural. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural and masculine shall include the
feminine.
(e) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(f) Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Investor, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments
Investment Agreement - 22
referenced herein (including the other Transaction Documents) contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Investor, and no provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought.
(g) Notices. Any notices or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
Organitech USA, Inc.
XX Xxx 000
Yoqneam Illit Industrial area
Yoqneam 00000, Xxxxxx
Telephone: 000-0-000-0000
Facsimile: 972-4-959-0514
With Copy to:
Xxx Xxxxxxx
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Investor:
Dutchess Private Equities fund, LP
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Each party shall provide five days' prior written notice to the other
party of any change in address or facsimile number.
(h) No Assignment. This Agreement may not be assigned.
(i) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
Investment Agreement - 23
(j) Survival. The representations and warranties of the Company and the
Investor contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4 and 5, and the indemnification provisions set forth in Section 10,
shall survive each of the Closings and the termination of this Agreement.
(k) Publicity. The Company and Investor shall consult with each other in
issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby and no party shall issue any such press
release or otherwise make any such public statement without the prior consent of
the other party, which consent shall not be unreasonably withheld or delayed,
except that no prior consent shall be required if such disclosure is required by
law, in which such case the disclosing party shall provide the other parties
with prior notice of such public statement. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of Investor without the prior
consent of such Investor, except to the extent required by law. Investor
acknowledges that this Agreement and all or part of the Transaction Documents
may be deemed to be "material contracts" as that term is defined by Item
601(b)(10) of Regulation S-B, and that the Company may therefore be required to
file such documents as exhibits to reports or registration statements filed
under the 1933 Act or the 1934 Act. Investor further agrees that the status of
such documents and materials as material contracts shall be determined solely by
the Company, in consultation with its counsel.
(l) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(m) Placement Agent. The Company agrees to pay Charleston Capital
Corperation, ("Charleston") a registered broker, financial advisor, consultant,
finder, placement agent, investment banker, bank or other person or entity, with
respect to dealer, $10,000. The $10,000 shall be payable from 1% (one percent)
of the Put Amount on each draw toward the transactions contemplated by the
Transaction Documents. Charleston will also act as an unaffiliated broker
dealer. The Investor shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of other persons or entities for fees
of a type contemplated in this Section that may be due in connection with the
transactions contemplated by the Transaction Documents. The Company shall
indemnify and hold harmless the Investor, 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 incurred in respect of any such claimed or
existing fees, as such fees and expenses are incurred.
(n) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
(o) Remedies. The Investor and each holder of the Shares shall have all
rights and remedies set forth in this Agreement and the Registration Rights
Agreement and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any default
or breach of any provision of this Agreement, including the recovery of
reasonable attorneys fees and costs, and to exercise all other rights granted by
law.
(p) Payment Set Aside. To the extent that the Company makes a payment or
payments to the Investor hereunder or the Registration Rights Agreement or the
Investor enforces or exercises its rights hereunder or thereunder, and such
payment or payments or the proceeds of
Investment Agreement - 24
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
(q) Pricing of Common Stock. For purposes of this Agreement, the Best Bid
price of the Common Stock in this Agreement shall be as reported on
Xxxxxxxxx.xxx.
Investment Agreement - 25
SIGNATURE PAGE OF INVESTMENT AGREEMENT
The signature of the authorized representative on this Signature Page evidences
the agreement to be bound by the terms and conditions of the Investment
Agreement and the Registration Rights Agreement as of the date written above.
The undersigned signatory hereby certifies that he has read and understands the
Investment Agreement, and the representations made by the undersigned in this
Investment Agreement are true and accurate, and, agrees to be bound by its
terms.
DUTCHESS PRIVATE EQUITIES FUND, L.P.
BY ITS GENERAL PARTNER,
DUTCHESS CAPITAL MANAGEMENT, LLC
By:____________________________
Xxxxxxx X. Xxxxxxxx, Managing Member
ORGANITECH USA, INC.
By__________________________________
Xxxx Xxxxxx, Chief Executive Officer
Investment Agreement - 26
LIST OF EXHIBITS
----------
EXHIBIT A Registration Rights Agreement
EXHIBIT B Broker Representation Letter
EXHIBIT C Board Resolution
EXHIBIT D Put Notice
EXHIBIT E Put Settlement Sheet
LIST OF SCHEDULES
----------
Schedule 4(a) Subsidiaries
Investment Agreement - 27
EXHIBIT A
EXHIBIT B
[BROKER'S LETTERHEAD]
Date
Via Facsimile
Attention:
----------------------
----------------------
----------------------
Re: Organitech USA, Inc.
Dear __________________:
It is our understanding that the Form______ Registration Statement bearing SEC
File Number ( ___-______) filed by Organitech USA, Inc.on Form _____ on
__________, 2003 was declared effective on _________, 2003.
This letter shall confirm that ______________ shares of the common stock of
Organitech USA, Inc.are being sold on behalf of __________________ and that we
shall comply with the prospectus delivery requirements set forth in that
Registration Statement by filing the same with the purchaser.
If you have any questions please do not hesitate to call.
Sincerely,
----------------------
cc: .
Investment Agreement - 29
EXHIBIT C
Investment Agreement - 30
EXHIBIT D
Date:
RE: Put Notice Number __
Dear Xx. Xxxxxxxx,
This is to inform you that as of today, Organitech USA, Inc., a Delaware
corporation (the "Company"), hereby elects to exercise its right pursuant to the
Investment Agreement to require Dutchess Private Equities Fund, LP. to purchase
shares of its common stock. The Company hereby certifies that:
The amount of this put is $__________.
The Pricing Period runs from ________ until _______.
The current number of shares issued and outstanding as of the Company are:
--------------------
Regards,
------------------------
Xxxx Xxxxxx CEO
Organitech USA, Inc.
Investment Agreement - 31
EXHIBIT E
PUT SETTLEMENT SHEET
Date:
Lior,
Pursuant to the Put given by Organitech USA, Inc. to Dutchess Private Equities
Fund, L.P. on _________________ 200x, we are now submitting the amount of common
shares for you to issue to Dutchess.
Please have a certificate baring no restrictive legend totaling __________
shares issued to Dutchess Private Equities Fund, LP immediately and send via
DWAC to the following account:
XXXXXX
If not DWAC eligible, please send Fedex Priority Overnight to:
XXXXXX
Once these shares are received by us, we will break have the funds wired to the
Company.
Regards,
Xxxxxxx X. Xxxxxxxx
Investment Agreement - 32
Date Price
Date of Day 1 Closing Best Bid of Day 1
Date of Day 2 Closing Best Bid of Day 2
Date of Day 3 Closing Best Bid of Day 3
Date of Day 4 Closing Best Bid of Day 4
Date of Day 5 Closing Best Bid of Day 5
Lowest 1 (one) Closing Best Bid in Pricing
Period
Put Amount
Amount Wired to Company
Purchase Price (94% (ninety-four percent))
Amount of Shares Due
The undersigned has completed this Put as of this ___th day of _________, 20xx.
Organitech USA, Inc.
--------------------------------
Xxxx Xxxxxx, CEO
Investment Agreement - 33
SCHEDULE 4(a) SUBSIDIARIES
Organitech Ltd.
Investment Agreement - 34
