Exhibit 1
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PREFERRED STOCK SUBSCRIPTION AGREEMENT
Dated as of July 21 , 2001
By and Among
THE INVESTOR LISTED ON EXHIBIT A HERETO
and
INTERNATIONAL DISPENSING CORPORATION
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PREFERRED STOCK SUBSCRIPTION AGREEMENT
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PREFERRED STOCK SUBSCRIPTION AGREEMENT (this "Agreement") dated as of July
21, 2001, by and among the Investor listed on Exhibit A hereto (the "Investor"),
and INTERNATIONAL DISPENSING CORPORATION, a Delaware corporation (the
"Company").
W I T N E S S E T H :
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WHEREAS, the Investor desires to subscribe for, and the Company desires to
issue up to an aggregate of 1,500 shares of the Company's Series D Redeemable
Convertible Preferred Stock, par value $.001 per share (the "Preferred Stock")
for the per share purchase price of $2,000 on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
ISSUANCE OF STOCK AND PAYMENT OF SUBSCRIPTION PRICE; CLOSING
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1.1 ISSUANCE OF STOCK . Subject to the terms and conditions set
forth in this Agreement, the Company agrees to sell to the Investor, and the
Investor subscribes for and agrees to purchase for $2,000 per Share, 1,500
shares of Preferred Stock (the "Shares").
1.2 CLOSING DATES.
(a) The purchase and sale of the Shares shall occur at a
closing (the "Closing") at such time as shall be determined by the Company,
subject to the conditions set forth in this Agreement. The Closing shall occur
within three business days after the execution of this Agreement by the Company
and the Investor. The date of the Closing is hereinafter referred to as the
"Closing Date." On the Closing Date the Investor shall purchase One Thousand
Five Hundred (1,500) Shares and shall pay to the Company by certified check or
wire transfer of immediately available funds, THREE MILLION DOLLARS
($3,000,000).
1.3 LEGENDS. From and after the date hereof, all share
certificates representing Shares, or shares of the Common Stock into which the
Shares are convertible ("Conversion Shares"), shall bear a legend which shall
state as follows:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
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SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
ARTICLE II
REPRESENTATIONS AND COVENANTS OF THE COMPANY
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2. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company
hereby represents, warrants and agrees as follows:
2.1 EXISTENCE AND GOOD STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has the requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted. The Company is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the character or location of the
properties owned, leased or operated by the Company or the nature of the
business conducted by the Company makes such qualification or license necessary,
except where the failure to be so duly qualified or licensed would not have a
material adverse effect on the business, operations, financial condition or
results of operations of the Company (a "Material Adverse Effect").
2.2 CAPITAL STOCK. The Company has an authorized capitalization
consisting of 40,000,000 shares of common stock, par value $.001 per share (the
"Common Stock") and 2,000,000 shares of Preferred Stock, par value $.001 per
share. Of the Common Stock, 9,728,396 shares are issued and outstanding. Of the
Preferred Stock, 560 shares of Series A Preferred Stock, 440 shares of Series B
Preferred Stock and 675 shares of Series C Preferred Stock are issued and
outstanding. On the Closing Date, after giving effect to the transactions
contemplated by this Agreement, the Investor will receive good and marketable
title to the Shares he acquires from the Company, free and clear of all liens,
claims and other encumbrances. All outstanding shares of capital stock of the
Company have been, and will on the Closing Date be, duly authorized and validly
issued and fully paid and nonassessable. Other than as set forth on SCHEDULE 2.2
and as set forth in this Agreement, there will be on the Closing Date no
outstanding subscriptions, options, registration rights, warrants, rights,
calls, commitments, conversion rights, rights of exchange, preemptive rights,
rights of first refusal, rights of first offer, plans or other agreements of any
character providing for the purchase, registration, issuance or sale of any
shares of the capital stock of the Company.
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2.3 AUTHORIZATION AND VALIDITY OF THIS AGREEMENT. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company and the performance of its
obligations hereunder have been duly authorized and approved by its Board of
Directors and no other corporate action on the part of the Company is necessary
to authorize the execution, delivery and performance of this Agreement by the
Company. This Agreement has been duly executed and delivered by the Company and,
assuming due execution of this Agreement by the Investors, is a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
2.4 SEC DOCUMENTS; NO MATERIAL CHANGES. (a) The Company has
furnished to the Investors true, correct and complete copies of its Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2000 and its
Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001. Such
periodic reports constitute all the documents that the Company was required to
file with the Securities and Exchange Commission (the "SEC") from January 1,
2001 to the Closing Date. Each of the periodic reports filed by the Company with
the SEC since January 1, 2001 ("SEC Documents") has been timely and duly filed
and when filed was in compliance in all material respects with the requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations of the SEC thereunder applicable to such SEC Document.
Each of the SEC Documents (including the financial statements included therein)
was complete and correct in all material respects as of its date and, as of its
date, did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The financial statements included within the SEC Documents
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
present fairly or will present fairly (subject, in the case of the unaudited
statements, to normal year-end audit adjustments) the consolidated financial
position of the Company as at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended.
(b) Since March 31, 2001, there has been no (i) material
adverse change in the business, operations, financial condition, results of
operations or prospects of the Company or (ii) material damage, destruction or
loss to any asset or property, tangible or intangible, of the Company which
materially affects the ability of the Company to conduct its business.
Notwithstanding the foregoing, the Investors acknowledge that the Company is in
the development stage, has incurred significant losses since inception and will
continue to incur significant losses.
2.5 CONSENTS AND APPROVALS: NO VIOLATIONS. The execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby (a) will not violate or contravene
any provision of the Certificate of Incorporation or By- laws of the Company, or
any statute, rule, regulation, order or decree of any public body or authority
by which the Company is or any of its properties are bound, (b) will not require
any filing with, or consent of, or the giving of any notice to, any governmental
or regulatory body, agency or authority,
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or any other person, except the filing of a Certificate of Designation of the
Series D Preferred Stock and (c) will not result in a violation or breach of,
conflict with, constitute a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
encumbrance upon any of the properties or assets of the Company under, any of
the terms, conditions or provisions of any agreement, instrument or obligation
to which the Company is a party, or by which any of its properties or assets may
be bound or under which it may have any rights, excluding from the foregoing
clauses (b) and (c) filings, notices, permits, consents and approvals, the
absence of which, and violations, breaches, defaults, conflicts and encumbrances
of which, in the aggregate, would not have a Material Adverse Effect.
2.6 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of the Company, is, or will be, entitled to any commission or
broker's or finder's fees from the Company, or from any person or entity
controlling, controlled by or under common control with the Company, in
connection with any of the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that the Board of Directors of the Company retained Xxxxxx,
Xxxxxxxx & Company, Inc. ("BHC") to render an opinion concerning the fairness of
the transactions contemplated by this Agreement to the holders of Common Stock
of the Company and BHC will be paid a fee by the Company in connection
therewith.
ARTICLE III
REPRESENTATIONS OF THE INVESTOR
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3. REPRESENTATIONS OF THE INVESTOR. The Investor represents,
warrants and agrees as follows:
3.1 EXISTENCE AND GOOD STANDING; POWER AND AUTHORITY. Such
Investor, if it is a corporation, a limited liability company or a limited
partnership, is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Such Investor has the legal power
and authority to enter into, execute and deliver this Agreement and perform its
obligations hereunder and thereunder. This Agreement has been duly authorized
and approved by such Investor and is a valid and binding obligation of such
Investor enforceable against such Investor in accordance with its terms, except
to the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws effecting the
enforcement of creditors' rights generally and by general equitable principles.
3.2 RESTRICTIVE DOCUMENTS. Such Investor is not subject to any
mortgage, lien, lease, agreement, instrument, order, law, rule, regulation,
judgment or decree, or any other restriction of any kind or character, which
would prevent consummation by such Investor of the transactions contemplated by
this Agreement.
3.3 PURCHASE FOR INVESTMENT. Such Investor will acquire the
Shares for its own account for investment and not with a view toward any resale
or distribution thereof; PROVIDED,
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HOWEVER, that the disposition of each such Investor's property shall at all
times remain within the sole control of the Investor.
3.4 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of such Investor is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated by this
Agreement.
3.5 EXEMPTION FROM REGISTRATION. Such Investor acknowledges
that the offering and sale of the Shares is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by virtue of Section 4(2) of the Securities Act and Regulation D
promulgated thereunder.
3.6 ABILITY TO BEAR ECONOMIC RISK. Such Investor has determined
that the Shares are a suitable investment for the Investor, that the Investor
has the financial ability to bear the economic risk of its investment in the
Company, has adequate means of providing for its current needs and personal
contingencies and has no need for liquidity with respect to investment in the
Company.
3.7 NO LIQUIDITY. Such Investor will not sell or otherwise
transfer the Shares without registration under the Act or an exemption
therefrom, and fully understands and agrees that the Investor must bear the
economic risk of its investment for an indefinite period of time because, among
other reasons, the Shares have not been registered under the Act or under the
securities laws of any state and, therefore, cannot be resold, pledged, assigned
or otherwise disposed of unless they are subsequently registered under the Act
and under applicable state securities laws or an exemption from such
registration is available. Such Investor also understands that sales or
transfers of the Shares are further restricted by the provisions of state
securities laws.
3.8 SUITABILITY AND ACCREDITED STATUS. Such Investor represents
and warrants that such Investor is an accredited investor and that all
information provided by such Investor in the Purchaser Questionnaire executed
simultaneous herewith is true and correct as of the Initial Closing Date.
3.9 ACCESS TO INFORMATION. Such Investor acknowledges that the
Company has made available to him the opportunity to ask questions of, and
receive answers from, the management of the Company concerning the terms and
conditions of this Agreement and the business, financial condition and prospects
of the Company and to obtain additional information to the extent the Company
possesses such information or can acquire it without unreasonable effort or
expense, necessary to verify the accuracy of the information given to the
Investor in the SEC Documents or otherwise to make an informed investment
decision and acknowledges that all material documents, records and books
pertaining to the investment have, on request, been made available to any
advisors designated by the Investor to receive such information.
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ARTICLE IV
COVENANTS
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4.1 SEC REPORTS. So long as any Shares are outstanding the
Company shall (a) within 15 days of each required filing date (i.e., the date on
which the reports or other documents are required to be filed with the SEC
pursuant to Sections 13(a) and 15(d), (b) transmit by mail to all holders of
Shares, as their names and addresses appear in the corporate books and records
maintained by the Company, without cost to such holders, copies of the annual
reports, quarterly reports and other documents which the Company is required to
file with the SEC pursuant to Sections 13(a) and 15(d) of the Exchange Act, and
(c) transmit to all holders any and all documents or materials distributed to
all of the holders of the Common Stock simultaneously with the distribution to
the holders of Common Stock.
ARTICLE V
REGISTRATION RIGHTS
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5.1 CERTAIN DEFINITIONS. As used in this Article V, the
following terms shall have the following respective meanings:
"Holders" shall mean the holders of Registrable Securities.
"Initiating Holders" shall mean any persons who in the aggregate
are Holders of at least a majority of the voting power held by all outstanding
Registrable Securities.
"Registrable Securities" shall mean (i) the Conversion Shares
and (ii) any Common Stock issued in respect thereof upon any stock split, stock
dividend, recapitalization or similar event.
"Requesting Stockholders" shall mean holders of securities of
the Company entitled to have securities included in any registration pursuant to
Section 5.2 and who shall request such inclusion.
The terms "register," "registered" and "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in compliance with Sections 5.2 and 5.3 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, reasonable
fees and disbursements of one counsel for all the selling Holders for a "due
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diligence" examination of the Company, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company).
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for any Holder, except as otherwise provided
herein.
"Underwritten Offering" shall mean the offering and sale of
Registrable Securities in a registration pursuant to a firm commitment
underwriting to an underwriter at a fixed price for reoffering or pursuant to
agency or best efforts arrangements with a placement agent or underwriter.
5.2 DEMAND REGISTRATION.
(a) REQUESTS FOR REGISTRATION. At any time after one hundred
twenty (120) days from the date of this Agreement the Initiating Holders may
request registration under the Securities Act of all or part of their
Registrable Securities. Within ten (10) days after receipt of any such request,
the Company will give written notice of such requested registration to all other
Holders of Registrable Securities and any other stockholder having registration
rights which entitle it to participate in such registration. The Company will
include in such registration all Registrable Securities with respect to which it
has received written requests for inclusion therein within fifteen (15) days
after receipt of the Company's notice. The Company shall cause its management to
cooperate fully and to use its best efforts to support the registration of the
Registrable Securities and the sale of the Registrable Securities pursuant to
such registration as promptly as is practicable. Such cooperation shall include,
but not be limited to, management's attendance and reasonable presentations in
respect of the Company at road shows with respect to the offering of Registrable
Securities. All registrations requested under this Section 5.2(a) are referred
to herein as "Demand Registrations." The Holders of Registrable Securities will
be entitled to request one Demand Registration hereunder. A registration will
not count as a Demand Registration until it has become effective. Should the
Demand Registration not be filed by the Company within sixty (60) days of the
date of the Company's written notice to the Holders of Registrable Securities,
then the Company shall pay to all the Holders of Registrable Securities, on a
pro rata basis, as liquidated damages, the sum of TWO HUNDRED THIRTY-THREE
DOLLARS ($233) per day for each day beyond the sixty (60) day period that the
Demand Registration has not been filed; provided, however, that the maximum
amount of liquidated damages payable to the Holders hereunder shall be $100,000.
(b) DEMAND REGISTRATION EXPENSES. The Company will pay up to an
aggregate of TWENTY THOUSAND DOLLARS ($20,000) of Registration Expenses in
connection with a Demand Registration hereunder. The Requesting Stockholders
shall be obligated to pay their pro rata share (based on the number of their
Registrable Securities included in the registration statement) of any
Registration Expenses in connection with a Demand Registration which exceed
TWENTY THOUSAND DOLLARS ($20,000) in the aggregate. The Requesting Stockholders
shall also pay all Selling Expenses attributable to the sale of their securities
pursuant to any Demand Registration, including their pro rata share of all fees
and disbursements of counsel for the Holders in connection with such Demand
Registration.
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(c) PRIORITY ON DEMAND REGISTRATIONS. If a Demand Registration
is an Underwritten Offering, and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities requested to
be included exceeds the number which can be sold in such offering, the Company
will include in such registration such number of shares, which in the opinion of
such underwriters, may be sold, allocated among the Holders electing to
participate and all other persons entitled to and electing to participate pro
rata in accordance with the amounts of securities requested to be so included by
the respective Holders and other persons.
(d) RESTRICTIONS ON DEMAND REGISTRATION. The Company will not
be obligated to effect any Demand Registration within six (6) months after the
effective date of a previous registration in which the Holders of Registrable
Securities were given piggyback rights pursuant to Section 5.3 other than a
registration of Registrable Securities intended to be offered on a continuous or
delayed basis under Rule 415 or any successor rule under the Securities Act.
5.3 PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to
register any of its securities under the Securities Act (other than pursuant to
a Demand Registration) and the registration form to be used may be used for the
registration and contemplated disposition of Registrable Securities (a
"Piggyback Registration"), the Company will give prompt written notice to all
Holders of Registrable Securities of its intention to effect such a registration
so that such notice is received by each Holder at least twenty (20) days before
the anticipated filing date. The Company will include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within ten (10) days after the receipt of the
Company's notice.
(b) PIGGYBACK EXPENSES. In connection with each Piggyback
Registration, all of the Registration Expenses of the Holders of Registrable
Securities will be paid by the Company and such Holders shall pay all of the
Selling Expenses attributable to the sale of their securities pursuant to the
Piggyback Registration, including their pro rata share of all fees and
disbursements of counsel for the Holders in connection with such Piggyback
Registration.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the distribution of the Registrable Securities to be included
concurrently with the securities being registered on behalf of the Company would
materially adversely affect the distribution of such securities by the Company,
the Company will include in such registration (i) first, the securities the
Company proposes to sell, (ii) second, the Registrable Securities and securities
of the Company with respect to which similar registration rights have heretofore
been granted and requested to be included in such registration, pro rata in
accordance with the amounts of Registrable Securities and such securities
requested to be so included by the respective Holders and holders of such
securities of the Company; and (iii) third, any other securities requested to be
included in such registration.
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(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the distribution of the Registrable Securities to
be included concurrently with the securities being registered on behalf of the
Company would materially adversely affect the distribution of such securities by
the Company, the Company will include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration, (ii) second, the Registrable Securities and securities of the
Company with respect to which similar registration rights have heretofore been
granted and requested to be included in such registration, pro rata in
accordance with the amounts of Registrable Securities and such securities
requested to be so included by the respective Holders and holders of such
securities of the Company, and (iii) third, other securities requested to be
included in such registration.
5.4 HOLDBACK AGREEMENTS.
(a) Each Holder of Registrable Securities which is a party to
this Agreement agrees not to effect any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven (7) days prior to and the
90-day period beginning on the effective date of any underwritten Demand
Registration in which the Holder participates or any underwritten Piggyback
Registration in which the Holder participates (except as part of such
underwritten registration or with the consent of the managing underwriter).
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days prior
to and the 90-day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration (except (A) as
part of such underwritten registration, (B) with the consent of the managing
underwriter or (C) pursuant to registrations on Form S-8 or any other similar
form for employee benefit plans), and (ii) to use its reasonable best efforts to
cause each holder of its equity securities, or any securities convertible into
or exchangeable or exercisable for such securities, purchased from the Company
at any time after the date of this Agreement (other than in a registered public
offering) to agree not to effect any public sale or distribution of any such
securities during such period (except as part of such underwritten registration,
if otherwise permitted or with the consent of the managing underwriter).
5.5 REGISTRATION PROCEDURES. Whenever the Holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Article V, the Company will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities, which registration
statement will state that the Holders of Registrable Securities covered thereby
may sell such Registrable Securities either under such registration
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statement or, at any Holder's proper request, pursuant to Rule 144 (or any
similar rule then in effect), and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by the Holders of a majority of
the Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed, which documents will be subject to the
review and approval of such counsel);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period set forth in Section 5.5(k) hereof and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(c) furnish to each Holder of Registrable Securities covered by
such registration such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities;
(d) use its best efforts to register or qualify such
Registrable Securities covered by such registration under such other securities
or blue sky laws of such jurisdictions as any Holder reasonably requests and do
any and all other acts and things which may be reasonably necessary or advisable
to enable the Holders thereof to consummate the disposition in such
jurisdictions of the Registrable Securities as requested by such Holders
(provided that the Company will not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subsection, subject itself to taxation in any such jurisdiction, or
consent to general service of process in any such jurisdiction);
(e) notify each Holder of Registrable Securities covered by
such registration, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any fact necessary to make
the statements therein not misleading, and, the Company will prepare a
supplement or amendment to such prospectus so that, such prospectus (or any
document incorporated therein by reference) will not contain an untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange or automated quotation system on which similar securities
issued by the Company are then listed or quoted;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
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(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions as the
Holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation, using
its best efforts to effect a stock split or a combination of shares);
(i) make available for inspection by any Holder of Registrable
Securities covered by such registration, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders, earnings statements satisfying the provisions of Section 11(a)
of the Securities Act, no later than 45 days after the end of any 12-month
period (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold and (ii) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the registration
statement, which statements shall cover said 12-month periods; and
(k) keep each registration statement effective for a period of
one year after the effective date of such registration statement, except in the
case of a Form S-3 Registration Statement which shall continue to remain
effective.
5.6 INDEMNIFICATION. In the event of any registration under the
provisions of this Article V, the Company, to the extent permitted by law, will
indemnify any Holder participating in such registration, its respective officers
and directors, if any, and each person, if any, who controls such Holder within
the meaning of Section 15 of the Securities Act, against all losses, claims,
damages and liabilities caused by any untrue statement of a material fact
contained in the registration statement or prospectus (and as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading and
will reimburse such Holder its officers and directors and any person, if any,
who controls such Holder within the meaning of Section 15 of the Securities Act,
against any legal or other expenses reasonably incurred by such Holder, officer,
director or person in connection with investigating or defending any such
losses, claims, damages and liabilities, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission contained
in information furnished in writing to the Company by such Holder participating
in such registration or by underwriters expressly for use therein. The
obligation of the Company under this Article V to register securities for any of
the Holders shall be subject to the condition that each such Holder and the
underwriters involved in the offering shall furnish to the Company in writing
such information
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as shall be reasonably requested by the Company for use in connection with the
preparation of any such registration statement or prospectus and, to the extent
permitted by law, shall indemnify the Company, its directors and officers, any
other underwriter, the other Holders participating in such registration and each
person, if any, who controls the Company, any other underwriter or such other
Holders, within the meaning of Section 15 of the Securities Act, against all
losses, claims, damages and liabilities caused by any untrue statement or
omission contained in information so furnished in writing to the Company by such
Holder or such underwriter expressly for use therein.
5.7 CONTRIBUTION. If the indemnification provided for in this
Article V from the indemnifying party is unavailable as a matter of law or
public policy to any indemnified party hereunder in respect of any losses,
claims, damages or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages or liabilities,
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party under this Article V as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5.7 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to herein.
5.8 TERMINATION. The registration rights provided in this
Article V shall terminate as to any Investor which can immediately sell all of
the shares of Common Stock issued or issuable to such Investor upon conversion
of the Shares in a single sale pursuant to Rule 144 under the Securities Act.
ARTICLE VI
INDEMNITIES
6.1 INDEMNITY OF INVESTORS. Each Investor, severally, agrees to
indemnify and hold harmless the Company and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act, against any
and all loss, liability, claim, damage and expense whatsoever (including, but
not limited to, any and all expenses reasonably incurred in investigating,
preparing or defending against any litigation commenced or threatened or any
claim whatsoever) arising out of or based upon any false representation or
warranty or breach or failure by such Investor to comply with any covenant or
agreement made by such
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Investor herein or in any other document furnished by the Investor to any of the
foregoing in connection with this transaction. The Company hereby acknowledges
that no Investor shall have any liability for a breach by any other Investor of
any representation, warranty or agreement hereunder.
6.2 INDEMNITY OF COMPANY. The Company agrees to indemnify and
hold harmless the Investors, against any and all loss, liability, claim, damage
and expense whatsoever (including, but not limited to, any and all expenses
reasonably incurred in investigating, preparing or defending against any
litigation commenced or threatened or any claim whatsoever) arising out of or
based upon any false representation or warranty or breach or failure by the
Company to comply with any covenant or agreement made by the Company herein or
in any other document furnished by the Company to any of the foregoing in
connection with this transaction.
6.3 NOTICE TO INDEMNIFYING PARTY. Each party entitled to
indemnification under this Article VI (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided, that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at such party's expense, and
PROVIDED, FURTHER, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Article VI unless such failure has had a material adverse effect on
the defense against such claim. The parties to this Agreement reserve any rights
to claim under this Agreement for damages actually incurred by reason of any
failure of the Indemnified Party to give prompt notice of a claim. To the extent
counsel for the Indemnifying Party shall in such counsel's reasonable judgment,
have a conflict in representing an Indemnified Party in conjunction with the
Indemnifying Party or other Indemnified Parties, such Indemnified Party shall be
entitled to separate counsel at the expense of the Indemnifying Party subject to
the approval of such counsel by the Indemnified Party (whose approval shall not
be unreasonably withheld). No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and any litigation resulting therefrom.
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ARTICLE VII
SURVIVAL OF REPRESENTATIONS
---------------------------
7. SURVIVAL OF REPRESENTATIONS. The respective representations and
warranties of the Company and the Investor contained in this Agreement shall
survive the Closing for a period of two years.
ARTICLE VIII
MISCELLANEOUS
8.1 KNOWLEDGE OF THE COMPANY. Where any representation or
warranty made by the Company contained in this Agreement is expressly qualified
by reference to its knowledge, such knowledge shall be deemed to exist if the
matter is within the knowledge of the executive officers of the Company.
8.2 EXPENSES . The parties hereto shall pay their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and financial
advisers.
8.3 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York applicable to agreements executed and to be performed solely
within such State.
8.4 CAPTIONS. The Article and Section captions used herein are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
8.5 NOTICES. Any notice or other communication required or
permitted under this Agreement shall be sufficiently given if delivered in
person or sent by telecopy or by registered or certified mail, postage prepaid,
addressed as follows: if to the Investor, to the address set forth on Exhibit A
attached hereto set forth below such Investor's name; and if to the Company, to
it at I-97 Business Park, 0000 Xxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxx
00000 (Facsimile No. 000- 000-0000) Attention: Xxxx Xxxxxxxx, President and
Chief Executive Officer, with a copy to its counsel, Wolf, Block, Xxxxxx and
Xxxxx-Xxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Facsimile Number
212-986-0604) Attention: Xxxxxx X. Bring, Esq., or such other address or number
as shall be furnished in writing by any such party, and such notice or
communication shall be deemed to have been given upon automatic confirmation of
receipt by the receiving machine if sent by telecopier, upon delivery if
delivered in person, and upon mailing if mailed.
8.6 PARTIES IN INTEREST. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be
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binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
8.8 ENTIRE AGREEMENT. This Agreement, including the exhibits,
schedules, and other documents referred to herein and therein which form a part
hereof and thereof, contain the entire understanding of the parties hereto with
respect to the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
8.9 AMENDMENTS. This Agreement may not be changed orally, but
only by an agreement in writing signed by the Investor and the Company.
8.10 SEVERABILITY. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
8.11 THIRD PARTY BENEFICIARIES. Each party hereto intends that
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
8.12 JURISDICTION. Any judicial proceeding brought against any
of the parties to this Agreement or any dispute arising out of this Agreement or
any matter related hereto shall be brought in the courts of the State of New
York, or in the United States District Court for the Southern District of New
York, and, by execution and delivery of this Agreement, each of the parties to
this Agreement accepts the jurisdiction of such courts. The foregoing consent to
jurisdiction shall not be deemed to confer rights on any Person other than the
respective parties to this Agreement.
8.13 AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled, either before or after any Closing, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties hereby
consent to the issuance of such injunction and to the ordering of specific
performance.
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IN WITNESS WHEREOF, the Investors have signed this Agreement and the
Company has caused its corporate name to be hereunto subscribed by its officers
thereunto duly authorized, all as of the day and year first above written.
INTERNATIONAL DISPENSING CORPORATION
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
Title: President
INVESTOR:
/s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxxxx
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EXHIBIT A
---------
INVESTOR
Name Address
---- -------
Xxxxxxx Xxxxxxxxx Xxxxxxxxx & Company Inc.
000 X. Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
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