Exhibit 99.1
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is dated as of
May 26, 2010, by and between Alanco Technologies, Inc., an Arizona corporation
(the "Company"), and Seaside 88, LP, a Florida limited partnership (such
investor, including its successors and assigns, "Seaside").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to Seaside, and Seaside desires
to purchase from the Company, up to 1,800,000 shares of Common Stock (as the
same may be proportionately adjusted in respect of any stock split, stock
dividend, combination, recapitalization or the like) on the Closing Dates;
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and Seaside agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in
this Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"3-Day VWAP" means the volume weighted average of actual
trading prices measured in hundredths of cents of the Common Stock of the
Company on the Trading Market for the three consecutive Trading Days immediately
prior to a Subsequent Closing Date.
"Affiliate" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person as such terms are used in and construed under Rule
144.
"Closing" means the Initial Closing and each Subsequent
Closing.
"Closing Dates" means the Initial Closing Date and each
Subsequent Closing Date.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A common stock of the Company
and any securities into which such common stock may hereafter be reclassified.
"Common Stock Equivalents" means any securities of the Company
or the Subsidiaries which would entitle the holder thereof to acquire at any
time Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.
"Company Counsel" means Xxxxxx X. Xxxx, Esq., or other counsel
(including in-house counsel) reasonably acceptable to Seaside.
"DTC" means the Depository Trust Company.
"DWAC" means DTC's Deposit Withdrawal Agent Commission system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Floor" shall mean $0.25 (as the same may be proportionately
adjusted in respect of any stock split, stock dividend, combination,
recapitalization or the like with respect to the Common Stock).
"GAAP" shall have the meaning ascribed to such term in
Section 3.1(h).
"Initial Closing" means the closing of the purchase and sale
of the Common Stock pursuant to Section 2.1.
"Initial Closing Date" means May 27, 2010 or such later date
when all of the Transaction Documents have been executed and delivered by the
applicable parties thereto, and all conditions precedent to Seaside's
obligations to purchase the Shares, and the Company's obligations to issue and
deliver the Shares, have been satisfied or waived.
"Intellectual Property" shall have the meaning ascribed to
such term in Section 3.1(q).
"Lien" means a lien, charge, security interest, encumbrance,
right of first refusal, preemptive right or other restriction.
"Material Adverse Effect" means any condition, event, change
or effect that could reasonably be expected to have a material adverse effect on
(i) the legality, validity or enforceability of any Transaction Document, (ii)
the results of operations, assets, business, prospects or financial condition of
the Company and its Subsidiaries, taken as a whole, or (iii) the Company's
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document, but shall not mean or include any condition,
event or change which (1) is or results from events or occurrences relating to
the economy in general (including arising from terrorist attacks, acts of war or
civil unrest) or the Company's industry in general and not specifically
relating to the Company or having a disproportionate impact on the Company, or
(2) results from the announcement of this Agreement or the transactions
contemplated hereby or by the other Transaction Documents.
"Per Share Purchase Price" shall be the lower of an amount
equal to (a) the volume weighted average of actual trading prices measured in
hundredths of cents of the Common Stock of the Company on the Trading Market for
the ten consecutive Trading Days immediately prior to a Closing Date multiplied
by 0.87 and (b) the volume weighted average of actual trading prices measured in
hundredths of cents of the Common Stock of the Company on the Trading Market for
the Trading Day immediately prior to a Closing Date multiplied by 0.90.
"Permits" shall have the meaning ascribed to such term in
Section 3.1(r).
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"Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus Supplement" means the supplement or supplements to
the base prospectus contained in the Registration Statement to be filed in
connection with the sale to Seaside, or the resale by Seaside, of the Shares.
"Registration Statement" means the registration statement of
the Company, Commission File No. 333-163288, as the same may amended from time
to time, covering the sale to Seaside, or the resale by Seaside, of the Shares.
"Required Approvals" shall have the meaning ascribed to such
term in Section 3.1(e).
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Seaside Party" shall have the meaning ascribed to such term
in Section 4.6.
"SEC Reports" shall have the meaning ascribed to such term in
Section 3.1(h).
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued or issuable
to Seaside pursuant to this Agreement.
"Short Sales" shall include, without limitation, all "short
sales" as defined in Rule 200 of Regulation SHO of the Exchange Act.
"Subsequent Closing" means each closing of the purchase and
sale of the Common Stock pursuant to Section 2.2.
"Subsequent Closing Date" means the day two weeks subsequent
to the prior Closing Date (or, if such day is not a Trading Day, then the first
day thereafter that is a Trading Day) commencing two weeks following the Initial
Closing Date and ending on or about the date that is 10 weeks subsequent to the
Initial Closing, or such later dates when all conditions precedent to Seaside's
obligations to purchase the Shares, and the Company's obligations to issue and
deliver the Shares, have been satisfied or waived, in each event with respect to
such Subsequent Closing.
"Subsidiary" shall have the meaning ascribed to such term in
Section 3.1(a).
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"Trading Day" means a day on which the Common Stock is traded
on a Trading Market.
"Trading Market" means whichever of the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the New York Stock Exchange, the NYSE Alternext Exchange, the NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market or the OTC Bulletin Board.
"Transaction Documents" means this Agreement and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
ARTICLE II
PURCHASE AND SALE
2.1 Initial Closing. On the Initial Closing Date, Seaside shall
purchase from the Company, and the Company shall issue and sell to Seaside,
300,000 Shares at the Per Share Purchase Price. Upon satisfaction or waiver of
the conditions set forth in Sections 2.3, 2.4, 2.5 and 2.6, the Initial Closing
shall occur at the offices of White White & Van Etten PC, 00 Xxxxxxxxx Xxxxxxx,
Xxxxxxxxx, XX 00000, or such other location as the parties shall mutually agree.
2.2 Subsequent Closings. On each Subsequent Closing Date, subject
to Section 2.6, Seaside shall purchase from the Company, and the Company shall
issue and sell to Seaside, 300,000 Shares (as the same may be proportionately
adjusted in respect of any stock split, stock dividend, combination,
recapitalization or the like) at the Per Share Purchase Price. Upon satisfaction
or waiver of the conditions set forth in Sections 2.3, 2.4, 2.5 and 2.6, each
Subsequent Closing shall occur at the offices of White White & Van Etten PC, 00
Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, XX 00000, or such other location as the parties
shall mutually agree. Not more than 1,800,000 shares of Common Stock shall be
sold by the Company to Seaside hereunder.
2.3 Deliveries by the Company. The Company shall deliver or cause
to be delivered to Seaside the following:
(a) on each Closing Date, 300,000 Shares (as the same may be
proportionately adjusted in respect of any stock split, stock dividend,
combination, recapitalization or the like), registered in the name of Seaside,
via the DTC DWAC system, as specified on the signature pages hereto;
(b) on each Closing Date, an officer's certificate of the
Company's Chief Executive Officer or Chief Financial Officer in the form of
Exhibit A attached hereto; and
(c) solely on the Initial Closing Date, a legal opinion of
Company Counsel, in the form of Exhibit B attached hereto.
2.4 Deliveries by Seaside. On each Closing Date, Seaside shall
deliver or cause to be delivered to the Company an amount equal to the Per Share
Purchase Price for each such Closing multiplied by the number of Shares
purchased at such Closing, in each case by wire transfer to the account as
specified in writing by the Company, and in each case less the amount due
Seaside for reimbursement of its expenses pursuant to Section 5.2 hereof.
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2.5 Closing Conditions.
(a) The obligations of the Company hereunder in connection
with each Closing are subject to the satisfaction by Seaside, or waiver by the
Company, of the following conditions:
(i) the accuracy on the Closing Date of the
representations and warranties of Seaside contained herein;
(ii) all obligations, covenants and agreements of
Seaside required to be performed at or prior to the Closing Date shall have been
performed;
(iii) the delivery by Seaside of the items set forth
in Section 2.4 of this Agreement; and
(iv) with respect to any Subsequent Closing, the 3-Day
VWAP shall equal or exceed the Floor as set forth in Section 2.6 of this
Agreement.
(b) The obligations of Seaside hereunder in connection
with each Closing are subject to the satisfaction by the Company, or waiver by
Seaside, of the following conditions:
(i) the accuracy on the Closing Date of the
representations and warranties of the Company contained herein;
(ii) all obligations, covenants and agreements of the
Company required to be performed at or prior to the Closing Date shall have been
performed, and all Required Approvals shall have been obtained;
(iii) the delivery by the Company of the items set
forth in Section 2.3 of this Agreement;
(iv) with respect to any Subsequent Closing, the 3-Day
VWAP shall equal or exceed the Floor as set forth in Section 2.6 of this
Agreement;
(v) there shall have been no Material Adverse Effect
with respect to the Company since the date hereof that has not been cured by the
Company;
(vi) the Registration Statement shall be in full force
and effect;
(vii) the purchase of Shares at a Subsequent Closing
from the Company shall not cause Seaside's beneficial ownership of the Company's
Common Stock, calculated in accordance with Rule 13d-3 promulgated by the
Commission, to exceed 10%; and
(viii) from the date hereof to each Closing Date,
trading in the Common Stock shall not have been suspended by the Commission and
trading in securities generally as reported by Bloomberg Financial Markets shall
not have been suspended or limited, or minimum prices shall not have been
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established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of Seaside, makes it impracticable or inadvisable to purchase the
Shares at the Closing.
2.6 The Floor. In the event that the 3-Day VWAP does not equal or
exceed the Floor as calculated with respect to any such Subsequent Closing Date,
then such Subsequent Closing will not occur. In each such event, there will be
one fewer Subsequent Closing pursuant to this Agreement and the aggregate number
of Shares to be purchased hereunder shall be reduced by 300,000 Shares (as the
same may be proportionately adjusted in respect of any stock split, stock
dividend, combination, recapitalization or the like) for each such Subsequent
Closing that does not occur because the Floor has not been reached.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
hereby makes the representations and warranties set forth below to Seaside as of
the date hereof and as of each Closing Date:
(a) Subsidiaries. All of the direct and indirect
subsidiaries of the Company are listed in the Company's most recent Annual
Report on Form 10-K as modified by any subsequent SEC Reports filed with the SEC
(each a "Subsidiary"). The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and clear of any
Liens, and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities. If the
Company has no subsidiaries, then references in the Transaction Documents to the
Subsidiaries will be disregarded.
(b) Organization and Qualification. The Company and each
of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not reasonably be expected to result in a
Material Adverse Effect and, to the knowledge of the Company, no Proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.
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(c) Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and its stockholders, and no further action is
required by the Company or its stockholders in connection therewith other than
in connection with the Required Approvals. Each Transaction Document has been
(or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
(d) No Conflicts. The execution, delivery and performance
of the Transaction Documents by the Company, the issuance and sale of the Shares
at each Closing and the consummation by the Company of the other transactions
contemplated thereby do not and will not (i) conflict with or violate any
provision of the Company's or any Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, violate or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any
Subsidiary pursuant to, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement (written or oral), credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected, except in the case of each of
clauses (ii) and (iii), such as could not reasonably be expected to result in a
Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority, the Trading Market or other Person
in connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing of the Prospectus Supplement
and (ii) any notice filings or SEC Reports as are required to be made following
each Closing Date under applicable federal and state securities laws or under
applicable rules and regulations of the Trading Market (collectively, the
"Required Approvals").
(f) Issuance of the Shares. The Shares are duly authorized
and, when issued and paid for in accordance with the Transaction Documents, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable pursuant to this Agreement.
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The issuance by the Company to Seaside, or the resale by Seaside, of the Shares
has been registered under the Securities Act and all of the Shares when
delivered will be freely transferable and tradable on the Trading Market by
Seaside without restriction (other than any restrictions arising solely from an
act or omission of Seaside). The Registration Statement is effective and
available for the issuance and sale or resale of the Shares thereunder and the
Company has not received any notice that the Commission has issued or intends to
issue a stop-order with respect to the Registration Statement or that the
Commission otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has
threatened in writing to do so. The "Plan of Distribution" section under the
Registration Statement as supplemented by the Prospectus Supplement permits the
issuance and sale or resale of the Shares hereunder.
(g) Capitalization. The capitalization of the Company is
as set forth in the SEC Reports. The Company has not issued any capital stock
since its most recently filed periodic report under the Exchange Act, other than
pursuant to the exercise of employee stock options under the Company's stock
option plans, the issuance of shares of Common Stock to employees pursuant to
the Company's employee stock purchase plan and pursuant to the conversion or
exercise of outstanding Common Stock Equivalents. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as disclosed in the SEC Reports, there are no outstanding options,
warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents. Except as
disclosed in the SEC Reports, the issue and sale of the Shares will not obligate
the Company to issue shares of Common Stock or other securities to any Person
(other than Seaside) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities. All of the outstanding shares of capital stock of the Company
are validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws and requirements of the Trading
Market, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities. No
further approval or authorization of any stockholder or the Board of Directors
of the Company is required for the issuance and sale of the Shares, other than
the Required Approvals. There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company's capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company's stockholders.
(h) SEC Reports; Financial Statements. The Company has
filed or furnished all reports, schedules, forms, statements and other documents
required to be filed or furnished by it under the Securities Act and the
Exchange Act (including all required exhibits thereto), including pursuant to
Section 13(a) or 15(d) thereof, for the 12 months preceding the date hereof (or
such shorter period as the Company was required by law to file such material)
(the foregoing materials, as the same may be amended, and including the exhibits
thereto and documents incorporated by reference therein, being collectively
referred to herein as the "SEC Reports") and any notices, reports or other
filings pursuant to applicable requirements of the Trading Market on a timely
basis or has received a valid extension of such time of filing, and has filed
any such SEC Reports and notices, reports or other filings pursuant to
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applicable requirements of the Trading Market prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements (i) have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and (ii) fairly
present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, year-end audit adjustments.
(i) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, except as has been reasonably cured by the Company,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting except as otherwise pursuant to
GAAP, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders, other than in the ordinary course as
required by outstanding preferred stock, or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option and incentive plans.
(j) Litigation. Except as disclosed in the SEC Reports,
there is no Proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign) which
(i) adversely affects or challenges the legality, validity or enforceability of
any of the Transaction Documents or the Shares or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of
the Company, any director or officer thereof (in his or her capacity as such),
is or has been the subject of any Proceeding involving a claim or violation of
or liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been and, to the knowledge of the Company, there
is not currently pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the
Company (in his or her capacity as such). The Commission has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act and, to the Company's knowledge, no proceeding for such purpose is pending
before or threatened by the Commission.
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(k) Compliance. Neither the Company nor any Subsidiary
(i) is in default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, could reasonably be
expected to result in a default by the Company or any Subsidiary under), nor has
the Company or any Subsidiary received notice of a claim that it is in default
under or that it is in violation of, any indenture, loan or credit agreement or
any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or regulation
of any governmental authority or the Trading Market, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in each case as would not have a Material Adverse Effect.
(l) Listing and Maintenance Requirements. The Company's
Common Stock is registered pursuant to Section 12(g) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge is likely
to have the effect of, terminating the registration of the Common Stock under
the Exchange Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration. Except as disclosed
in the SEC Reports, the Company has not, in the 12 months preceding the date
hereof or any Closing Date, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted (as applicable) to the effect that
the Company is not in compliance with the listing or quotation (as applicable)
and maintenance requirements of such Trading Market. The Company is, and
immediately after the consummation of the transactions contemplated hereby will
be, in compliance with all such listing or quotation (as applicable) and
maintenance requirements, other than the requirement to maintain a minimum bid
price for its Common Stock of at least $1.00.
(m) Intentionally Omitted.
(n) Effective Registration Statement. The Registration
Statement has been declared effective by the Commission and remains effective as
of the date hereof and the Company knows of no reason why the Registration
Statement will not continue to remain effective for the foreseeable future. The
Company is eligible to use Form S-3 registration statements for the issuance of
securities.
(o) Acknowledgment Regarding Seaside's Purchase of Shares.
The Company acknowledges and agrees that Seaside is acting solely in the
capacity of an arm's length purchaser with respect to this Agreement and the
other Transaction Documents and the transactions contemplated hereby and
thereby. The Company further acknowledges that Seaside is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement or the other Transaction Documents and the
transactions contemplated hereby and thereby and any advice given by Seaside or
any of its representatives or agents in connection with this Agreement and the
other Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to Seaside's purchase of the Shares. The Company further
represents to Seaside that the Company's decision to enter into this Agreement
and the other Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated thereby by the Company and its
representatives.
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(p) Approvals. The issuance and listing or quotation (as
applicable) on the Trading Market of the Shares requires no further approvals,
including but not limited to, the approval of stockholders.
(q) Intellectual Property. The Company possesses such
right, title and interest in and to, or possesses legal rights to use, all
patents, patent rights, trade secrets, inventions, know-how, trademarks, trade
names, copyrights, service marks and other proprietary rights ("Intellectual
Property") material to the conduct of the Company's business except Intellectual
Property the failure of which to possess would not have a Material Adverse
Effect. Except as disclosed in the SEC Reports, the Company has not received any
notice of infringement, misappropriation or conflict from any third party as to
Intellectual Property owned by or exclusively licensed to the Company that has
not been resolved or disposed of, which infringement, misappropriation or
conflict would if adversely decided have a Material Adverse Effect. To the
Company's knowledge, it has not infringed, misappropriated, or otherwise
conflicted with the Intellectual Property of any third parties, which
infringement, misappropriation or conflict would if adversely decided have a
Material Adverse Effect.
(r) Permits. The Company has made all filings,
applications and submissions required by, and possesses all approvals, licenses,
certificates, certifications, clearances, consents, exemptions, marks,
notifications, orders, permits and other authorizations issued by, the
appropriate federal, state or foreign regulatory authorities necessary to own or
lease its properties and to conduct its businesses (collectively, "Permits"),
except for such Permits the failure of which to possess or obtain would not
reasonably be expected to have a Material Adverse Effect. The Company has not
received any written notice of proceedings relating to the limitation,
revocation, cancellation, suspension, modification or non-renewal of any such
Permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect, and has no
reason to believe that any such Permit will not be renewed in the ordinary
course.
(s) Disclosure. The Company confirms that neither the
Company nor any officer, director or employee of the Company acting on its
behalf (as such term is used in Regulation FD) has provided Seaside or its
agents or counsel with any information that constitutes or might reasonably be
expected to constitute material, non-public information except insofar as the
existence and terms of the proposed transactions hereunder may constitute such
information. The Company understands and confirms that Seaside will rely on the
foregoing representations and covenants in effecting transactions in securities
of the Company. None of the representations and warranties of the Company
contained herein, nor any statement made by the Company in any disclosure,
schedule, exhibit, certificate or other document furnished or to be furnished to
Seaside in connection herewith, contains or will contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
3.2 Representations and Warranties of Seaside. Seaside hereby
makes the representations and warranties set forth below to the Company:
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(a) Organization; Authority. Seaside is a limited
partnership duly organized, validly existing and in good standing under the laws
of the state of Florida, with full right, power and authority to own and use its
properties and assets and to carry on its business as currently conducted and to
enter into and to consummate the transactions contemplated by this Agreement and
the other Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution, delivery and performance by Seaside of
the transactions contemplated by this Agreement and each other Transaction
Document have been duly authorized by all necessary action on the part of
Seaside and no such further action is required. Each Transaction Document to
which Seaside is a party has been (or upon delivery will have been) duly
executed by Seaside, and, when delivered by Seaside in accordance with the terms
thereof, will constitute the valid and legally binding obligation of Seaside,
enforceable against it in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) Experience of Seaside. Seaside, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment. Seaside is able to bear the
economic risk of an investment in the Shares and, at the present time, is able
to afford a complete loss of such investment.
(c) Short Sales. Seaside has not directly or indirectly
executed any Short Sales or other hedging transactions in the securities of the
Company through the date hereof.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 No Transfer Restrictions. Certificates evidencing the Shares
shall not contain any legend restricting their transferability by Seaside. The
Company shall cause its counsel to issue a legal opinion to the Company's
transfer agent if required by the Company's transfer agent to effect a transfer
of any of the Shares; such opinion shall be provided by the Company's counsel at
no expense to Seaside.
4.2 Furnishing of Information. As long as Seaside owns Shares, the
Company covenants to use its best efforts to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as Seaside owns Shares that are "restricted securities" as
that term is defined in Rule 144 that it has owned for less than one year in
accordance with Rule 144(d), if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to Seaside and make
publicly available in accordance with Rule 144(c) such information as is
required for Seaside to sell the Shares under Rule 144.
4.3 Securities Laws Disclosure; Publicity. The Company shall, by
9:00 a.m. Eastern time on the Trading Day following the date hereof, file a
Current Report on Form 8-K which attaches as exhibits all agreements relating to
this transaction, in each case reasonably acceptable to Seaside and its counsel,
disclosing the material terms of the transactions contemplated hereby.
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4.4 Investment Company Act of 1940. The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act of 1940, as amended.
4.5 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide Seaside or its
agents or counsel with any information that the Company believes constitutes
material non-public information. The Company understands and confirms that
Seaside shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
4.6 Indemnification of Seaside. Subject to the provisions of this
Section 4.6, the Company will indemnify and hold Seaside, Seaside's Affiliates
and their respective directors, officers, stockholders, partners, members,
employees and agents (each, a "Seaside Party") harmless from any and all losses,
liabilities, obligations, claims, demands, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation reasonably incurred in
connection with defending or investigating any suit or action in respect thereof
to which any Seaside Party is or may become a party under the Securities Act,
the Exchange Act or any other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, liabilities, obligations,
claims, demands, contingencies, damages, costs and expenses arise out of or are
based on (a) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any Prospectus Supplement, or (b) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided that the Company will not be liable in any such case to the extent that
any such liability, obligation, claim, demand, contingency, damage, cost or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by and regarding
Seaside expressly for inclusion therein. If any action shall be brought against
any Seaside Party in respect of which indemnity may be sought pursuant to this
Agreement, such Seaside Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with counsel of
its own choosing. Any Seaside Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Seaside Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Seaside Party. The Company will not be liable to any
Seaside Party under this Agreement (x) for any settlement by a Seaside Party
effected without the Company's prior written consent, which consent shall not be
unreasonably withheld or delayed; or (y) to the extent, but only to the extent,
that a loss, liability, obligation, claim, demand, damage, cost or expense is
attributable to any Seaside Party's breach of any of the representations,
warranties, covenants or agreements made by Seaside in this Agreement or in the
other Transaction Documents.
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4.7 Listing or Quotation of Common Stock. The Company hereby
agrees to use its best efforts to maintain the listing or quotation (as
applicable) of the Common Stock on its current Trading Market. The Company
further agrees that, if the Company applies to have the Common Stock traded on
any other Trading Market, it will include in such application all of the Shares
and will take such other action as is necessary to cause all of the Shares to be
listed on such other Trading Market as promptly as possible. The Company will
take all action reasonably necessary to continue the listing or quotation (as
applicable) and trading of its Common Stock on each Trading Market on which the
Common Stock is listed or quoted (as applicable) and will comply in all respects
with the Company's reporting, filing and other obligations under the bylaws or
rules of such Trading Market(s).
4.8 Stockholder Approval. The Company shall not issue shares of
Common Stock or Common Stock Equivalents, if such issuance would require
stockholder approval pursuant to applicable rules of the Trading Market, unless
and until such stockholder approval is obtained.
4.9 Short Sales. Seaside covenants that neither it nor any
Affiliates acting on its behalf or pursuant to any understanding with it will
execute any Short Sales in the securities of the Company from the date hereof
until the final Subsequent Closing contemplated hereby.
4.10 Prospectus Supplement. The Company will use its best efforts
to file the Prospectus Supplement in accordance with the requirements of Rule
424 promulgated under the Securities Act on or before the Initial Closing Date
and, if required, before each Subsequent Closing Date.
ARTICLE V
MISCELLANEOUS
5.1 Termination; Liquidated Damages. This Agreement may be
terminated:
(a) by Seaside, by written notice to the Company, if the
Initial Closing has not been consummated on or before May 31, 2010,
(b) by Seaside, immediately upon written notice to the
Company, if at any time prior to the final Subsequent Closing Date the Company
consummates a financing to which Seaside is not a party, and
(c) by the Company, upon at least 3 days' prior written
notice to Seaside,
provided, however, that no such termination pursuant to this Section 5.1 will
affect the right of any party to xxx for any breach by the other party (or
parties) and provided, further, that in the event the Company exercises its
termination right pursuant to subsection (c) of this Section 5.1 and within six
months of such termination initiates another financing having committed funding
dates scheduled at pre-determined intervals of between one week and two months
then the Company shall be obligated to pay to Seaside liquidated damages in the
amount of $500,000 immediately upon the first closing of any such subsequent
financing.
5.2 Fees and Expenses. Except as otherwise set forth in this
Agreement and as set forth in this Section 5.2 below, each party shall pay the
fees and expenses of its own advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the
14
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all stamp and other taxes and duties levied in connection
with the delivery of the Shares. Notwithstanding the foregoing, at the Initial
Closing the Company shall reimburse Seaside for the fees and expenses of its
counsel, White White & Van Etten PC, in an amount equal to $5,000 and at each
Subsequent Closing the Company shall reimburse Seaside for the fees and expenses
of its counsel, White White & Van Etten PC, in an amount equal to $2,500. Such
legal fees may be withheld by Seaside from the amount to be paid for the Shares
purchased at the Initial Closing and any Subsequent Closing.
5.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via electronic mail
or facsimile at the facsimile number set forth on the signature pages attached
hereto prior to 5:30 p.m. (Eastern time) on a Trading Day, (b) the next Trading
Day after the date of transmission, if such notice or communication is delivered
via electronic mail or facsimile at the facsimile number set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (Eastern time) on any Trading Day, (c) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages attached hereto.
5.5 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and Seaside or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
5.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 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.
5.7 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Seaside. Seaside may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company.
15
5.8 No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.6.
5.9 Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. The parties hereby waive all rights to a trial by jury. If either
party shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its attorneys' fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
5.10 Survival. The representations and warranties herein shall
survive the Closings and delivery of the Shares.
5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile or email transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
email signature page were an original thereof.
5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to
the contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever Seaside exercises a right, election, demand or
option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then Seaside may
rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.
5.14 Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, Seaside
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of the obligations
set forth herein and hereby agree to waive in any such action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
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5.15 Payment Set Aside. To the extent that either party hereto
makes a payment or payments to the other party hereto pursuant to any
Transaction Document or enforces or exercises its rights thereunder, and such
payment or payments or the proceeds of 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 other party, 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.
5.16 Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
(Signature Pages Follow)
17
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Alanco Technologies, Inc. Address for Notice:
-------------------
By:_____________________________________ 00000 Xxxxx 00xx Xxx
Name: Xxxxxx X. Xxxxxxxx Suite 3
Title: Chief Executive Officer Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax: 000-000-0000
With a copy (which shall not constitute
notice) to: 0000 X. Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
Fax: 000-000-0000
Seaside 88, LP Address for Notice:
-------------------
By: Seaside 88 Advisors, LLC
000 Xxxxx Xxxxxx Xxx
Xxxxx 000
By:_____________________________________ North Xxxx Xxxxx, XX 00000
Name: Xxxxxxx X. Xxxxxx Attention: Xxxxxxx X. Xxxxxx and
Title:Manager Xxxxx X. X'Xxxxxxx, M.D.
Fax: 000-000-0000
With a copy (which shall not constitute
notice) to: White White & Van Etten PC
00 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
DWAC Instructions for Common Stock:
DTC # - 0571 -
Account number - G53-0000000
Exhibit A
---------
Officer's Certificate
In connection with a Closing on the date set forth below pursuant to
that certain Common Stock Purchase Agreement dated as of May __, 2010 (the
"Agreement") by and between Alanco Technologies, Inc., an Arizona corporation
(the "Company") and Seaside 88, LP, a Florida limited partnership ("Seaside"),
the undersigned, the duly elected and qualified ________________ of the Company,
does hereby certify to the Company as follows:
(i) all representations and warranties of the Company contained in
the Agreement are true and correct in all material respects
(without giving effect to any limitation as to "materiality"
or "knowledge" set forth therein) on and as of the date hereof
as if made on and as of the date hereof (provided that
representations and warranties that speak as of a specific
date shall continue to be true and correct as of the Closing
with respect to such date);
(ii) the Company has performed or complied with all of its
covenants and agreements contained in the Agreement and
required to be performed or complied with by the Company on or
before the date hereof; and
(iii) the Registration Statement has been declared effective by the
Commission and remains effective on and as of the date hereof.
Capitalized terms used but not defined herein shall have the meanings
given to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Officer's
Certificate to be executed this _____ day of _____________, 2010.
Alanco Technologies, Inc.
By:__________________________
Name:
Title:
Exhibit B
1. The Company is a corporation duly organized under the General
Corporation Law of the State of Arizona with corporate power and authority to
enter into the Agreement and perform its obligations thereunder. The Company is
validly existing and in good standing under the laws of the State of Arizona,
the only state where the failure to be so qualified and in good standing could
have a Material Adverse Effect.
2. The execution and delivery of the Agreement and the issuance
and sale of the Shares thereunder have been duly authorized by all necessary
corporate action of the Company, no further action is required by the Company or
its stockholders in connection therewith and the Agreement has been duly
executed and delivered by the Company and is enforceable against the Company in
accordance with its terms.
3. We have been advised by the staff of the Commission that the
Registration Statement became effective under the Act on December 30, 2009. With
your consent, based solely on a telephonic confirmation by a member of the staff
of the Commission on ____________, 2010, we confirm that no stop order
suspending the effectiveness of the Registration Statement has been issued under
the Act and no proceedings therefor have been initiated by the Commission.
4. The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of the Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares will not be
subject to any preemptive or similar rights set forth in the Company's Articles
of Incorporation or Bylaws or any agreement known to us or filed as an exhibit
to any SEC Report.
5. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Agreement (including
the issuance and sale of the Shares) will not contravene any provision of any
statute, law, rule or regulation applicable to the Company, any agreement filed
as an exhibit to any SEC Report, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company that is
applicable to the Company or its properties.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental body,
regulatory authority or Trading Market is required for the execution, delivery
and performance by the Company of its obligations under the Agreement, other
than the filing of the Prospectus Supplement and any notice filings as are
required to be made following the Closing Date under applicable federal and
state securities laws or rules of the Trading Market.
7. The Company is not, and will not be after consummation of the
Agreement, the sale of the Shares to Seaside and the application of the proceeds
thereof, an "investment company" as defined in the Investment Company Act of
1940, as amended.
