CUSIP No. 296744 10 5 13D/A Page 51 of 89
EXHIBIT 13
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of October
17, 2002, by and among Essex Corporation, a Virginia corporation, with
headquarters located at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000 (the
"COMPANY") and Global Environment Strategic Technology Partners, L.P. and/or it
affiliates (the "PURCHASER OR BUYER").
WHEREAS:
A. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC"), under the Securities Act
of 1933, as amended (the "SECURITIES ACT").
A. The Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, shares of Common Stock, no par value of the Company,
and warrants to purchase additional shares of Common Stock as described below.
B. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering the Registration Rights
Agreement, dated as of the date hereof, in the form attached hereto as Exhibit A
(the "RRA") pursuant to which the Company has agreed to provide the Purchaser
with certain registration rights with respect to the Shares under the Securities
Act and the rules and regulations promulgated thereunder, and applicable state
securities laws.
NOW THEREFORE, the Company and the Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF SHARES
(a) Purchase of Shares. At the Initial Closing or a Subsequent
Closing, as defined below, Essex shall issue and sell to the Buyer and the Buyer
agrees to purchase from Essex the Common Shares and Warrants as set forth below:
(i) Initial Funding - US$250,000 - at the Initial
Closing, of which $150,000 shall be allocated to purchase shares of Common Stock
at a share price of $3.00 and $100,000 shall be considered a deposit (the
"Warrant Deposit") for exercise at the Subsequent Closings on the terms and
conditions set forth below.
(ii) Second Funding Transaction - US$1,000,000 on or
before the sixtieth (60th) calendar day from the Initial Closing date of this
Agreement. Buyer has the option but is not obligated to make this investment at
a share price of $3.25 as provided in a stock purchase warrant issued pursuant
hereto (the "60 Day Warrant"). Upon closing, fifty percent (50%) of the Warrant
Deposit shall be credited against the purchase price payable for the shares. In
the event Buyer does not exercise its rights to purchase 100% of the shares
available pursuant to the 60 Day Warrant on a timely basis, Purchaser shall be
deemed to have exercised the 60 Day Warrant to purchase shares at the $3.25
share price, as adjusted in accordance with Section 1(d) below, and 50% of the
Warrant Deposit shall be applied in full satisfaction of the purchase price
payable for such shares.
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(iii) Third Funding Transaction - US$1,000,000 on or
before the ninetieth (90th) calendar day from the execution date of this
Agreement. Buyer has the option but is not obligated to make this investment at
a share price of $3.50 as provided in a stock purchase warrant issued pursuant
hereto (the "90 Day Warrant"). Upon closing, fifty percent (50%) of the Warrant
Deposit shall be credited against the purchase price payable for the shares. In
the event Buyer does not exercise its rights to purchase 100% of the shares
available pursuant to the 90 Day Warrant on a timely basis, Purchaser shall be
deemed to have exercised the 90 Day Warrant to purchase shares at the $3.50
share price, as adjusted in accordance with Section 1(d) below, and 50% of the
Warrant Deposit shall be applied in full satisfaction of the purchase price
payable for such shares.
(iv) Additional Funding Transactions - Additional
Funding Transactions may be made upon mutual agreement of the parties.
(b) The Initial Closing. The initial closing of the
transaction contemplated hereby (the "Initial Closing") shall take place at the
offices of Essex, 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000 at 10 a.m. on
October 17, 2002 or such later date but in no event later than October 18, 2002.
At the Initial Closing, (A) the Buyer shall pay the purchase price to Essex for
the Shares to be issued and sold to the Buyer by check or wire transfer, and (B)
Essex shall arrange timely delivery to the Buyer, a stock certificate
representing the number of the Common Shares which the Buyer is then purchasing
hereunder, duly executed on behalf of Essex and registered in the name of the
Buyer or its designee. (C) Essex shall arrange timely delivery to the Buyer the
Warrants for exercise at Subsequent Closings.
(c) Subsequent Closings. Essex and the Buyer shall agree,
prior to any subsequent closings, and subject to the sole satisfaction of the
Buyer, to specific uses of proceeds to be received. It is understood by both
Parties that the intent of the Buyer is to allocate its proceeds to support
delivery of commercial or test marketing devices and systems to specific
customers as a prelude to sales of future devices in quantity to the
customer(s). Further, it is understood by both Parties that the Buyer does not
anticipate exercising its options to conclude subsequent Closings in the absence
of such specific customer mandates or in support of the general operations of
Essex.
Buyer shall reserve the right, and shall be provided all necessary
information by Essex, to monitor performance by Essex of the items set forth
above, and to determine, in its sole discretion, if sufficient progress has been
made prior to the exercise of its warrants as set forth above. Buyer shall
further reserve the right to seek further commitments from Essex prior to the
exercise of its warrants as set forth above.
At each Subsequent Closing, (A) the Buyer shall pay the purchase price
to Essex for the Shares to be issued and sold at such Closing to the Buyer by
check or wire transfer, and (B) Essex shall timely deliver to the Buyer, a
Common Stock Certificate representing the number of the Shares which the Buyer
is then purchasing.
(d) Pricing. Pricing for the Funding Transactions specified in
this Agreement shall be as set forth above. Buyer has the option but is not
obligated to accelerate its execution of Funding Transactions. For all funding
by the Buyer that is received within thirty (30) calendar days of the Initial
Closing of this Agreement, the price per share of the Initial Funding
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Transaction will be used. In the event that, on the day prior to a designated
closing date for any of the Funding Transactions specified in this Agreement,
the 15 trading day trailing weighted moving closing price average of the Essex
common stock on the OTCBB shall fall below the designated price as set forth
above, the pricing for the specified Funding Transaction shall be recalculated
as follows: a 15% discount from 15 trading day trailing weighted moving closing
price average of the Essex common stock on the OTCBB from and including the day
before the designated closing date, but not less than $3.00 per share. The
pricing of Additional Transactions will be determined by mutual agreement at the
time of the proposed Funding Transaction.
2. RESTRICTIVE LEGENDS. All certificates representing the Shares shall
have endorsed thereon legends in substantially the following forms (in addition
to any other legend which may be required by other agreements between the
parties hereto):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
Any legend required by appropriate blue sky officials.
3. PURCHASERS' REPRESENTATIONS AND WARRANTIES.
The Purchaser represents and warrants that:
(a) Investment Purpose. The Purchaser is acquiring the Shares
being purchased by it for its own account for investment only and not with a
view towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the Securities
Act; provided, however, that by making the representations herein, such
Purchaser does not agree to hold any of the Shares for any minimum or other
specific term and reserves the right to dispose of the Shares at any time,
provided further, however, that such disposition shall be in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.
(b) Accredited Investor Status. Such Purchaser is an
"accredited investor" as that term is defined in Rule 501(a)(3) of Regulation D
under the Securities Act.
(c) Reliance on Exemptions. Such Purchaser understands that
the Shares are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Shares.
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(d) Information. Such Purchaser and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Shares that have been requested by such Purchaser. Such Purchaser and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company.
(e) Residency. Such Purchaser is purchasing the Shares from
its office specified in its address below.
4. COVENANTS.
(a) Reasonable Best Efforts. Each party shall use its
reasonable best efforts to timely satisfy each of the conditions to be satisfied
by it as provided in Sections 5 and 6 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file a Form D
with respect to the Shares as required under Regulation D and to provide a copy
thereof to the Purchaser promptly after such filing. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Shares for sale to the Purchasers pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the
jurisdiction of the Purchaser set forth in Section 7(f) hereof, and shall
provide evidence of any such action so taken to the Purchaser.
(c) Use of Proceeds. Essex agrees to utilize the proceeds
received from the initial closing in the manner set forth below:
(i) Purchase of Test and Measurement Equipment (up to
$50,000).
(ii) Direct and Indirect Costs to develop and deliver
Hyperfine Devices to commercial and U.S. Government customers.
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the
Company to issue and sell the Shares to the Purchaser at each Closing is subject
to the satisfaction, at or before each Closing, of the following conditions,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing the
Purchaser with prior written notice thereof:
(a) As of the Closing, such Purchaser shall have executed this
Agreement and the RRA and delivered the same to the Company.
(b) (The representations and warranties of such Purchaser
shall be true and correct in all material respects as of the Closing and such
Purchaser shall have performed, satisfied and complied with the covenants,
agreements and conditions required to be performed, satisfied or complied with
by such Purchaser at or prior to the Closing.
6. CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligation of the
Purchaser hereunder to purchase the Shares from the Company at each Closing is
subject to the satisfaction, at or before the date of such Closing, of each of
the following conditions, provided that these conditions are for the Purchaser's
sole benefit and may be waived by such Purchaser at any time in its sole
discretion by providing the Company with prior written notice thereof:
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(a) The Company shall have executed this Agreement and the RRA
and delivered the same to such Purchaser;
(b) The provisions of Section 1(c) shall be satisfied to
Buyers sole satisfaction; and
(c) The Company shall cause its transfer agent to execute for
delivery to such Purchaser the Stock Certificates (in such denominations as such
Purchaser shall request) for the Shares being purchased by such Purchaser.
7. MISCELLANEOUS.
(a) Governing Law; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the Commonwealth of Virginia, without giving
effect to any choice of law or conflict of law provision or rule. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) 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.
(c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) 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.
(e) Entire Agreement; Amendments. This Agreement supersedes
all other prior oral or written agreements between the Purchaser, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
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 Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended or waived other than by an instrument in writing
signed by the Company and the Purchaser.
(f) Notices. Any notices, consents, waivers 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 (1) business day
CUSIP No. 296744 10 5 13D/A Page 56 of 89
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:
Essex Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, President and CEO
With a copy to:
D. Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxx & Xxxxxxx L.L.P.
0 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Purchaser:
Global Environment Strategic Technology Partners, L.P.
0000 Xxx Xxxxxx, X.X
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxx, Esq.
Facsimile: 000-000-0000
or to such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party five days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Shares. The Company shall not assign
this Agreement or any rights or obligations hereunder including by merger or
consolidation without the prior written consent of the Purchasers.
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(h) No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
(i) Survival. The representations and warranties of the
Purchaser contained in Section 3 and the agreements and covenants set forth in
Sections 4, 5 and 6 shall survive the Closing.
(j) Publicity. The Company and the Purchaser shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby, such consent
not to be unreasonably withheld.
(k) 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.
(l) Brokers; Placement Agent. The Company acknowledges that it
has not engaged a broker or placement agent in connection with the sale of the
Shares. The Company shall pay, and hold the Purchaser harmless against, any
liability, loss or expense (including, without limitation, attorney's fees and
out-of-pocket expenses) arising in connection with any such claim for brokers',
financial advisory or similar fees in connection with such transaction.
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IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
ESSEX CORPORATION
By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: CFO
PURCHASER:
GLOBAL ENVIRONMENT STRATEGIC
TECHNOLOGY PARTNERS, L.P.
By: /s/ H. Xxxxxxx Xxxxxxx
-------------------------
Name: H. Xxxxxxx Xxxxxxx
Title: CEO
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EXHIBITS
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Exhibit A Form of RRA
