EXHIBIT 10.1
EXHIBIT 10.1 Stock Purchase Agreement dated as of March 15, 2000, between the
Company and Xxxxxx Xxxxxxxxx
STOCK PURCHASE AGREEMENT Dated as of March 15, 2000 by and between XXXXXX
XXXXXXXXX (the "Purchaser") and MC LAREN AUTOMOTIVE GROUP, INC.
(the "Company")
ARTICLE I Purchase and Sale of Common Stock and Warrant 1
Section 1.1 Sale and Purchase 1
Section 1.2 Purchase Price 1
Section 1.3 The Closing 1
Section 1.3.1 Time and Place 1
Section 1.3.2 Actions to be taken by the Company 1
Section 1.3.3 Actions to be taken by the Purchaser 2
ARTICLE II Representations and Warranties 2
Section 2.1 Representation and Warranties of the Company 2
(a) Representation and Warranties of the Company 2
(b) Authorization; Enforcement 2
(c) Capitalization 3
(d) Issuance of Shares 3
(e) No Conflicts 3
(f) Commission Documents, Financial Statements 4
(g) Subsidiaries 5
(h) [Omitted] 5
(i) No Undisclosed Liabilities 5
(j) No Undisclosed Events or Circumstances 5
(k) Indebtedness 5
(l) Title to Assets 6
(m) Actions Pending 6
(n) Compliance with Law 6
(o) Taxes 6
(p) Certain Fees 7
(q) Disclosure 7
(r) Intellectual Property; Operation of Business 7
(s) Books and Records 7
(t) Material Agreements 7
(u) Transactions with Affiliates 7
(v) Securities Act of 1933 8
(w) Governmental Approvals 8
(x) Employees 8
(y) Absence of Certain Developments 8
(z) Use of Proceeds 8
(aa) Public Utility Holding Company Act and Investment Company Act Status 9
(bb) [Omitted] 9
(cc) Acknowledgment Regarding Purchaser's Purchase of Shares. 9
(dd) Commitments. 9
(ee) "Material Adverse Effect" 9
Section 2.2 Representations and Warranties of the Purchaser 9
(a) Acquisition for Investment 9
(b) Accredited Purchaser 10
ARTICLE III Covenants 10
Section 3.1 Securities Compliance. 10
Section 3.2 Registration and Listing 10
Section 3.3 Registration Statement 11
Section 3.4 Compliance with Laws 11
Section 3.5 Keeping of Records and Books of Account 11
Section 3.6 Reporting Requirements 11
ARTICLE IV Indemnification 11
Section 4.1 General Indemnity 11
Section 4.2 Indemnification Procedure 12
ARTICLE V Miscellaneous 13
Section 5.1 Fees and Expenses 13
Section 5.2 Specific Enforcement, Consent to Jurisdiction 13
Section 5.3 Entire Agreement; Amendment 13
Section 5.4 Notices 14
Section 5.5 Waivers 14
Section 5.6 Headings 15
Section 5.7 Successors and Assigns 15
Section 5.8 No Third Party Beneficiaries 15
Section 5.9 Governing Law 15
Section 5.10 Survival 15
Section 5.11 Counterparts 15
Section 5.12 Publicity 15
Section 5.13 Severability 15
Section 5.14 Further Assurances 16
TABLE OF SCHEDULES
Schedule
Topic
2.1(c)
Capitalization
2.1(g)
Subsidiaries
2.1(i)
Undisclosed Liabilities
2.1(j)
Undisclosed Events or Circumstances
2.1(k)
Indebtedness
2.1(l)
Title to Assets
2.1(m)
Actions Pending
2.1(o)
Taxes
2.1(r)
Intellectual Property
2.1(x)
Employees
2.1(y)
Absence of Certain Developments
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of March 15, 2000
by and between McLAREN AUTOMOTIVE GROUP, INC., a Delaware corporation (the
"Company"), and XXXXXX XXXXXXXXX, an individual with an office at 0000 00xx
Xxxxxx, 0xx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Purchaser").
For good and valid consideration, the sufficiency of which is acknowledged by
the parties, the parties hereto agree as follows:
ARTICLE I
Purchase And Sale Of Common Stock And Warrant
Section 1.1 -Sale and Purchase. Subject to the terms and conditions of this
Agreement, the Company, on the Closing Date (as defined herein), is selling and
issuing to the Purchaser and the Purchaser is purchasing from the Company, in
reliance upon the representations, warranties and other terms and conditions of
this Agreement, 400,000 shares of Common Stock, par value $0.00001 per share
(the "Common Stock") of the Company (the "Shares"). The Company, for no
additional consideration, shall issue to the Purchaser a warrant to purchase an
additional 200,000 shares of Common Stock in the form attached hereto as Exhibit
A (the "Warrant").
Section 1.2 -Purchase Price. The purchase price for the Shares is eight hundred
thousand ($800,000) Dollars (the "Purchase Price"), and shall be paid by wire
transfer to an account designated by the Company in writing at the Closing.
Section 1.3 -The Closing.
Section 1.3.1 -Time and Place. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Xxxxxx Xxxxxx LLP at
10:00 a.m. New York City time on March 15, 2000, or at such other time or on
such other date on location as the parties shall mutually select (the "Closing
Date").
Section 1.3.2 -Actions to be taken by the Company. Subject to the
representations and warranties of the Purchaser being true and correct in all
material respects and the satisfaction of all actions taken by the Purchaser, on
or before the Closing Date, the Company shall deliver to the Purchaser the
following:
(a) stock certificates representing the Shares;
(b) the Warrant;
(c) a duly executed registration rights agreement in the form annexed hereto as
Exhibit B (the "Registration Rights Agreement");
(d) the opinion of Xxxxx Xxxx PLC, attorneys for the Company, dated as of the
date hereof substantially in the form of Exhibit C attached hereto;
(e) the Certificate of Incorporation of the Company (the "Certificate") and
By-laws of the Company (the "By-laws") as in effect on the date hereof and the
resolutions of the Board of Directors of the Company, certified by the Secretary
of the Company, authorizing the execution, delivery and performance of this
Agreement, the issuance of the Shares and the Warrant, and each of the other
documents and instruments being executed and delivered by the Company herewith;
and
(f) a certificate duly executed by an executive officer of the Company
certifying that the representations and warranties made as of the date hereof
are true and correct in all material respects as of the Closing Date. Section
1.4 -Actions to be taken by the Purchaser.
Subject to the representations and warranties of the Company being true and
correct in all material respects and the satisfaction of all actions to be taken
by the Company under Section 1.3.2, on the Closing Date, the Purchaser shall pay
to the Company the Purchase Price.
ARTICLE II
Representations And Warranties
Section 2.1 -Representation and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchaser:
(a) -Organization, Good Standing and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted.
The Company and each such subsidiary is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary except for any jurisdiction in which the failure to be so qualified
will not have a material adverse effect on the Company's financial condition.
(b) -Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and perform this Agreement and to issue and sell the
Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the Company.
This Agreement constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.
(c) -Capitalization. The authorized capital stock of the Company is 20,000,000
shares of Common Stock of which there are 9,088,517 shares currently issued and
outstanding and 10,000,000 shares of Preferred Stock par value $0.001, per share
of which there are no shares currently issued and outstanding. All of the
outstanding shares of the Company's Common Stock have been duly and validly
authorized. No shares of Common Stock are entitled to preemptive rights or
registration rights and except as set forth on Schedule 2.1(c) there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement and as set forth on Schedule 2.1(c), there
are no contracts, commitments, understandings, or arrangements by which the
Company is bound to issue additional shares of the capital stock of the Company
or options, securities or rights convertible into shares of capital stock of the
Company. Except for customary transfer restrictions contained in agreements
entered into by the Company in order to sell restricted securities or Schedule
2.1(c) hereto, the Company is not a party to any agreement granting registration
rights to any person with respect to any of its equity or debt securities. The
Company is not a party to any, and to the Knowledge of the Company there is no,
agreement restricting the voting or transfer of any shares of the capital stock
of the Company. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing complied
with all applicable Federal and all applicable state securities laws and no
stockholder has a right of rescission or damages against the Company with
respect thereto. The Company has furnished or made available to the Purchaser
true and correct copies of the Certificate as in effect on the date hereof, and
the By-laws as in effect on the date hereof.
(d) -Issuance of Shares. The Shares to be issued under this Agreement, the
Warrant and the shares of Common Stock to be issued upon exercise of the Warrant
(the "Warrant Shares") have been duly authorized by all necessary corporate
action and, when paid for or issued in accordance with the terms hereof, the
Shares shall be validly issued and outstanding, fully paid and nonassessable,
and with respect to the Shares and, upon exercise of the Warrant, the Warrant
Shares the Purchaser shall be entitled to all rights accorded to a holder of
Common Stock subject to the restrictions contained herein.
(e) -No Conflicts. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
therein do not (i) violate any provision of the Company's Certificate or
By-laws, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party, (iii)
create or impose a lien, charge or encumbrance on any material property of the
Company under any agreement or any commitment to which the Company is a party or
by which the Company is bound or by which any of its respective material
properties or assets are bound, or (iv) result in a violation of any federal,
state, local or foreign statute, rule, regulation, order, judgment or decree
(including Federal and state securities laws and regulations) applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries are bound or affected, the violation of which
would have a Material Adverse Effect (as defined below). Excluding the Company's
obligation to register the Shares and the Warrant Shares pursuant to the
Registration Rights Agreement, the Company is not required under Federal, state
or local law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement, or issue and sell the Shares or the Warrant Shares in
accordance with the terms hereof.
(f) -Commission Documents, Financial Statements. The Common Stock of the Company
is registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the Securities and Exchange Commission (the "Commission") pursuant to
the reporting requirements of the Exchange Act, including material filed
pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the foregoing,
including filings incorporated by reference therein, being referred to herein as
the "Commission Documents"). As a result the Company is eligible to file a
registration statement on Form S-3 with the Commission. The Company has
delivered or made available to the Purchaser true and complete copies of the
Commission Documents filed with the Commission since September 30, 1998. As of
their respective dates, the Forms 10-KSB for the years ended September 30, 1998,
September 30, 1999, the Form 8-K filed on January 21, 1999, the Form 8-K/A filed
on February 12, 1999, and the Forms 10-QSB for the fiscal quarters ended
December 31, 1998, March 31, 1999, and June 30, 1999 complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission promulgated thereunder and other Federal, state and local
laws, rules and regulations applicable to such documents, and, as of their
respective dates, none of the Form 00-XXX, Xxxx 0-X, Xxxx 0-X/X and the Forms
10-QSB referred to above 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 Commission Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission or other applicable rules and regulations with respect thereto.
Such financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed)
and fairly present in all material respects the financial position of the
Company and its subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(g) -Subsidiaries. Schedule 2.1(g) hereto sets forth each subsidiary of the
Company, showing the jurisdiction of its incorporation or organization and
showing the percentage of each person's ownership of the outstanding stock or
other interests of such subsidiary. For the purposes of this Agreement,
"subsidiary" shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries. All of the
outstanding shares of capital stock of each subsidiary have been duly authorized
and validly issued, and are fully paid and nonassessable. There are no
outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon any subsidiary for the purchase
or acquisition of any shares of capital stock of any subsidiary or any other
securities convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock. Neither the Company nor any
subsidiary is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of the capital stock of any subsidiary
or any convertible securities, rights, warrants or options of the type described
in the preceding sentence. Neither the Company nor any subsidiary is party to
any, and to the Knowledge of the Company there is no, agreement restricting the
voting or transfer of any shares of the capital stock of any subsidiary.
(h) [Omitted].
(i) -No Undisclosed Liabilities. Except as disclosed in the Commission Documents
or on Schedule 2.1(i) hereto, to the Knowledge of the Company, neither the
Company nor any of its subsidiaries has incurred since September 30, 1999, any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) that would
have a Material Adverse Effect.
(j) -No Undisclosed Events or Circumstances. Except as disclosed in the
Commission Documents or on Schedule 2.1(j) hereto, to the Knowledge of the
Company, since September 30, 1999, no event or circumstance has occurred or
exists with respect to the Company or its subsidiaries or their respective
businesses, properties, prospects, operations or financial condition, which, is
reasonably likely to have a Material Adverse Effect.
(k) -Indebtedness. All outstanding secured and unsecured Indebtedness of the
Company or any subsidiary, or for which the Company or any subsidiary has
commitments is reflected in the financial statements filed with the Commission
Documents. For the purposes of this Agreement, "Indebtedness" shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $10,000 (other than
trade accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company's balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $10,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any subsidiary is
in default with respect to any Indebtedness.
(l) -Title to Assets. Each of the Company and the subsidiaries has good and
marketable title to all of its real and personal property having a value in
excess of $10,000 and reflected in the Commission Documents free of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated on Schedule 2.1(l) hereto or such that do not result
in a Material Adverse Effect. All leases which require payments of at least
$10,000 per year of the Company and each of its subsidiaries are valid and
subsisting and in full force and effect.
(m) -Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the Knowledge of the Company, threatened against the
Company or any subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. Except as disclosed in the Commission Documents or on
Schedule 2.1(m) hereto, there is no action, suit, claim, investigation or
proceeding pending or, to the Knowledge of the Company, threatened, against or
involving the Company, any subsidiary of the Company or any of their respective
properties or assets. There are no outstanding orders, judgments, injunctions,
awards or decrees of any court, arbitrator or governmental or regulatory body
against the Company or any subsidiary.
(n) -Compliance with Law. The business of the Company and the subsidiaries has
been and is presently being conducted in accordance with all applicable Federal,
state and local governmental laws, rules, regulations and ordinances, domestic
and foreign, except where the conduct of the business of the Company in
violation of any of such laws, rules, regulations and ordinances could not
reasonably result in a Material Adverse Effect. The Company and each of its
subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(o) -Taxes. The Company and each of the subsidiaries has accurately prepared and
filed all Federal, state and other tax returns required by law, domestic and
foreign, to be filed by it, has paid or made provisions for the payment of all
taxes shown to be due and all additional assessments, and adequate provisions
have been and are reflected in the financial statements of the Company and the
subsidiaries of the Company for all current taxes and other charges to which the
Company or any subsidiary of the Company is subject and which are not currently
due and payable except where the failure to prepare and file such tax returns or
the failure to pay or make provision for the payment of all such taxes could not
reasonably result in a Material Adverse Effect. Except as disclosed on Schedule
2.1(o) hereto, none of the Federal income tax returns of the Company or any
subsidiary of the Company for the years subsequent to December 31, 1995 have
been audited by the Internal Revenue Service or other foreign governmental tax
agency. To the Knowledge of the Company there are no additional assessments,
adjustments or contingent tax liability (whether federal or state) pending or
threatened against the Company or any subsidiary of the Company for any period
that would have a Material Adverse Effect, nor of any basis for any such
assessment, adjustment or contingency.
(p) -Certain Fees. No brokers, finders or financial advisory fees or commissions
will be payable by the Company or any subsidiary of the Company with respect to
the transactions contemplated by this Agreement.
(q) -Disclosure. To the Knowledge of the Company, neither this Agreement nor the
Schedules hereto nor any of the Commission Documents furnished to the Purchaser
by or on behalf of the Company or any subsidiary of the Company in connection
with the transactions contemplated by this Agreement contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made herein or therein, in the light of the
circumstances under and at the time at which they were made herein or therein,
not misleading.
(r) -Intellectual Property; Operation of Business. The Company or a subsidiary
of the Company owns, or licenses from third parties, all patents and know how
("Intellectual Property"), free and clear of all liens, charges or encumbrances,
that are necessary in the conduct of its business as now conducted. Neither the
Company, nor its subsidiaries has received a notice of a claim of infringement
relating to the Intellectual Property, except as set forth on Schedule 2.1(r),
and to the Knowledge of the Company there is no reasonable basis for a claim
that such an infringement or violation exists.
(s) -Books and Records. The records and documents of the Company and its
subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and its subsidiaries, the location of
their assets, and the nature of all transactions giving rise to the obligations
or accounts receivable of the Company or any subsidiary of the Company.
(t) -Material Agreements. There is no agreement that has not been filed with the
Commission as an exhibit to a registration statement or other applicable form
the omission of which could cause a Material Adverse Effect.
(u) -Transactions with Affiliates. Except for employment agreements and
consulting agreements or other Agreements disclosed in Commission Documents,
there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions exceeding
$60,000 between (a) the Company, any subsidiary of the Company or any of their
respective customers or suppliers on the one hand, and (b) on the other hand,
any officer or director of the Company, or any of its subsidiaries, or any
person owning any capital stock of the Company or any subsidiary of the Company
or any member of the immediate family of such officer, director or stockholder
or any corporation or other entity controlled by such officer, director or
stockholder, or a member of the immediate family of such officer, director or
stockholder.
(v) -Securities Act of 1933. The Company has complied and will comply with all
applicable Federal and state securities laws in connection with the offer,
issuance and sale of the Shares hereunder in order that the issuance and sale of
the Shares will not be subject to the registration provisions of the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws. Neither the Company nor any of its affiliates, nor any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Shares.
(w) -Governmental Approvals. Except for the filing of any notice prior or
subsequent to the Closing that may be required under applicable state and/or
Federal securities laws and/or other applicable laws of territories in which the
Company conducts business (which if required, shall be filed on a timely basis),
including the filing of a registration statement or statements pursuant to this
Agreement, no authorization, consent, approval, license, exemption of, filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the delivery of the Shares, the Warrant and the
Warrant Shares or for the performance by the Company of its obligations under
this Agreement.
(x) -Employees. Neither the Company nor any subsidiary of the Company has any
collective bargaining arrangements or agreements covering any of its employees,
except as set forth on Schedule 2.1(x) hereto. Since December 31, 1998, no
officer, consultant or key employee of the Company or any subsidiary of the
Company whose termination, either individually or in the aggregate, could have a
Material Adverse Effect, has terminated or, to the Knowledge of the Company, has
any present intention of terminating his or her employment or engagement with
the Company or any subsidiary of the Company.
(y) -Absence of Certain Developments. Except as set forth in the Commission
Documents or on Schedule 2.1(y) hereto, since December 31, 1998, neither the
Company nor any subsidiary has:
(i) sold, assigned or transferred any tangible assets, or canceled any debts or
claims, except in the ordinary course of business;
(ii) suffered any substantial losses or waived any rights of material value,
whether or not in the ordinary course of business; or
(iii) experienced any material problems with labor or management in connection
with the terms and conditions of their employment.
(z) -Use of Proceeds. The proceeds from the sale of the Shares and the Warrant
Shares will be used by the Company and its subsidiaries for paydown of existing
bank debt, payment of litigation expenses and general corporate purposes.
(aa) Public Utility Holding Company Act and Investment Company Act Status. The
Company is not a "holding company" or a "public utility company" as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended. The
Company is not, and as a result of and immediately upon Closing will not be, an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
(bb) [Omitted].
(cc) Acknowledgment Regarding Purchaser's Purchase of Shares. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of
arm's length purchaser with respect to this Agreement and the transactions
contemplated hereunder. The Company further acknowledges that the Purchaser is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereunder and any advice given by the Purchaser or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereunder is merely incidental to the Purchaser's purchase of the Shares. The
Company further represents to the Purchaser that the Company's decision to enter
into this Agreement has been based solely on the independent evaluation by the
Company and its representatives.
(dd) Commitments. The Company does not have any existing commitments for future
capital expenditures in excess of $100,000.
(ee) "Material Adverse Effect" shall mean any effect on the business,
operations, properties or financial condition of the Company that is material
and adverse to the Company and its subsidiaries and affiliates, taken as a whole
and/or any condition, circumstance, or situation that would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement or the Registration Rights Agreement
in any material respect.
(ff) "Knowledge of the Company" shall mean the actual knowledge of the current
executive officers of the Company.
Section 2.2 -Representations and Warranties of the Purchaser. The Purchaser
hereby makes the following representations and warranties to the Company:
(a) Acquisition for Investment. Such Purchaser is purchasing the Shares, Warrant
and Warrant Shares solely for its own account for the purpose of investment and
not with a view to or for sale in connection with distribution. The Purchaser
does not have a present intention to sell the Shares, nor a present arrangement
(whether or not legally binding) or intention to effect any distribution of the
Shares, Warrant or Warrant Shares to or through any person or entity; provided,
however, that by making the representations herein, the Purchaser reserves the
right, to dispose of the Shares, Warrant and Warrant Shares at any time in
accordance with Federal securities laws applicable to such disposition. The
Purchaser acknowledges that it is able to bear the financial risks associated
with an investment in the Shares and that it has been given full access to such
records of the Company and the subsidiaries of the Company and to the officers
of the Company and the subsidiaries of the Company as it has deemed necessary or
appropriate to conduct its due diligence investigation. The Purchaser is capable
of evaluating the risks and merits of an investment in the Shares by virtue of
its experience as an investor and its knowledge, experience, and sophistication
in financial and business matters and the Purchaser is capable of bearing the
entire loss of its investment in the Shares.
(b) Accredited Purchaser. The Purchaser is an "accredited investor" as defined
in Regulation D promulgated under the Securities Act.
(c) The Purchaser acknowledges that neither the Shares nor the Warrant Shares
have been registered under the Securities Act, and may not be offered or sold
except pursuant to registration under the Securities Act or an available
exemption therefrom.
ARTICLE III
Covenants
The Company covenants with the Purchaser as follows, which covenants are for the
benefit of the Purchaser and its permitted assignees (as defined herein).
Section 3.1 -Securities Compliance.
(a) The Company shall notify the Commission and the NASD, if applicable, in
accordance with their rules and regulations, of the transactions contemplated by
this Agreement, and shall take all other necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation, for the legal
and valid issuance of the Shares, the Warrant and the Warrant Shares to the
Purchaser or subsequent holders.
(b) The Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the applicability of Federal and state
securities laws exemptions and the suitability of the Purchaser to acquire the
Shares and the Warrant.
Section 3.2 -Registration and Listing. The Company will cause its Common Stock
to continue to be registered under Sections 12(b) or 12(g) of the Exchange Act,
will comply in all respects with its reporting and filing obligations under the
Exchange Act, will comply with all requirements related to any registration
statement filed pursuant to this Agreement, and will not take any action or file
any document (whether or not permitted by the Securities Act or the rules
promulgated thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the NASDAQ
system, if applicable, and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the NASD
and NASDAQ system.
Section 3.3 -Registration Statement. The Company shall cause to be filed a
registration statement under the Securities Act ("Registration Statement") in
accordance with the Registration Rights Agreement, which Registration Statement
shall provide for the resale of the Shares and the Warrant Shares, if
applicable, purchased by and issued to the Purchaser.
Section 3.4 -Compliance with Laws. The Company shall comply, and cause each
subsidiary of the Company to comply, with all applicable laws, rules,
regulations and orders, noncompliance with which could have a Material Adverse
Effect.
Section 3.5 -Keeping of Records and Books of Account. The Company shall keep and
cause each subsidiary of the Company to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
its subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
Section 3.6 -Reporting Requirements. The Company shall furnish the following to
the Purchaser so long as such Purchaser shall beneficially own any Shares or
Warrant Shares:
(a) Quarterly Reports filed with the Commission on Form 10-QSB as soon as
available, and in any event within 45 days after the end of each of the first
three fiscal quarters of the Company;
(b) Annual Reports filed with the Commission on Form 10-KSB as soon as
available, and in any event within 90 days after the end of each fiscal year of
the Company; and
(c) Any other filings made with the Commission, any press releases issued or any
communications sent to stockholders.
ARTICLE IV
Indemnification
Section 4.1 -General Indemnity. The Company agrees to indemnify and hold
harmless the Purchaser (and its affiliates, agents, successors and assigns) from
and against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorney's fees, charges and
disbursements) incurred by the Purchaser as a result or arising out of the
negotiation, execution or performance of this Agreement (including but not
limited to those arising from any claims or actions challenging the transaction,
no matter how meritless the claim may be) or any material inaccuracy in or
material breach of the representations, warranties or covenants made by the
Company herein. The Purchaser agrees to indemnify and hold harmless the Company
and its directors, officers, affiliates, agents, successors and assigns from and
against any and all
losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys fees, charges and disbursements)
incurred by the Company as result of any material inaccuracy in or material
breach of the representations, warranties or covenants made by the Purchaser
herein. Notwithstanding the foregoing, in no event shall either party's
liability pursuant to this Article IV or otherwise exceed the sum of the
Purchase Price and, if the Warrant is exercised, the Purchase Price and the
exercise price of the Warrant.
Section 4.2 -Indemnification Procedure. Any party entitled to indemnification
under this Article IV (the "indemnified party") will give prompt written notice
(the "Notice") to the other party (the "indemnifying party") of any matters
giving rise to a claim for indemnification; provided, that the failure of
indemnified party to indemnification hereunder to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this Article
IV except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any action, proceeding or claim is asserted
against the indemnified party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to participate in and to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises the
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of the Notice to notify,
in writing, the indemnified party of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice. The indemnifying party shall not be liable for any settlement of
any action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article IV to the contrary, the indemnifying
party shall not, without the indemnified party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim. The indemnification required by this Article IV for an action or
claim brought by a third party shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received for expenses related to the legal defense or investigation, so long as
the indemnified party irrevocably agrees to refund such moneys if it is
ultimately determined by a court of competent jurisdiction that such party was
not entitled to indemnification. The indemnity agreements contained herein shall
be in addition to (a) any cause of action or similar rights of the indemnified
party against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject pursuant to the law.
ARTICLE V
Miscellaneous
Section 5.1 -Fees and Expenses. The Company and the Purchaser shall each pay all
fees and expenses which it incurs related to the transactions contemplated by
this Agreement; provided, that, the Company is paying at the Closing, attorneys
fees and expenses incurred by the Purchaser of $15,000 in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
transactions contemplated hereunder. The Company shall pay all stamp or other
similar taxes and duties levied in connection with issuance of the Shares
pursuant hereto.
Section 5.2 -Specific Enforcement; Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity.
(b) Each of the Company and the Purchaser (i) hereby irrevocably submits to the
jurisdiction of the United States District Court and other courts of the United
States sitting in the Southern District of New York for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Purchaser consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section shall affect or limit any right to serve process in any other manner
permitted by law.
Section 5.3 -Entire Agreement; Amendment. This Agreement contains the entire
understanding of the parties with respect to the matters covered hereby and,
except as specifically set forth herein, neither the Company nor the Purchaser
makes any representations, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
Section 5.4 -Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: McLaren Automotive Group, Inc.
00000 Xxxx Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxx X. Xxxxx, CFO
Fax: (000) 000-0000
with copies to: Xxxxx Hill PLC
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxx, Xx., Esq.
Fax: (000) 000-0000
If to the Purchaser: Xxxxxx Xxxxxxxxx
0000 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
with copies to: Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Any party hereto may from time to time change its address for notices by giving
at least ten (10) days written notice of such changed address to the other party
hereto.
Section 5.5 -Waivers. No waiver by either party 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 other provisions, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
Section 5.6 -Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 5.7 -Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns; provided,
however, that the Company may not assign any rights or obligations hereunder
without the prior written consent of the Purchaser.
Section 5.8 -No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Section 5.9 -Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the choice of law provisions.
Section 5.10 -Survival. Except as otherwise provided herein, the
representations, warranties and the agreements of the Company and the Purchaser
contained in Articles I, II, IV and V shall survive the execution and delivery
hereof, and the agreements and covenants set forth in Articles III of this
Agreement shall survive the execution and delivery hereof until the Purchaser no
longer owns any Shares or Warrant Shares.
Section 5.11 -Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.
Section 5.12 -Publicity. The Company agrees that it will not disclose, and will
not include in any public announcement, the name of the Purchaser, unless and
until such disclosure is required by law or applicable regulation, and then only
to the extent of such requirement. Any press release regarding this Agreement
shall be agreed to by the parties hereto in advance
Section 5.13 -Severability. The provisions of this Agreement are severable and,
in the event that any court of competent jurisdiction shall determine that any
one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement shall be reformed
and construed as if such invalid or illegal or unenforceable provision, or part
of such provision, had never been contained herein, so that such provisions
would be valid, legal and enforceable to the maximum extent possible.
Section 5.14 -Further Assurances. From and after the date of this Agreement,
upon the request of the Purchaser or the Company, each of the Company and the
Purchaser shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement and the
Shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer as of the date first above
written.
McLAREN AUTOMOTIVE GROUP, INC.
By:/s/ Wiley X. XxXxx
Name: Wiley X. XxXxx
Title: President
/s/ Xxxxxx Xxxxxxxxx
XXXXXX XXXXXXXXX
Schedule 2.1(c)
Capitalization
The Company's 1994 Stock Option Plan is described in certain Commission
Documents.
Schedule 2.1(g)
Subsidiaries
The owns 100% of the capital stock of McLaren Engines, Inc., a Michigan
corporation.
Schedule 2.1(i)
Undisclosed Liabilities
None.
Schedule 2.1(j)
Undisclosed Events or Circumstances
None.
Schedule 2.1(l)
Title to Assets
None.
Schedule 2.1(m)
Actions Pending
None.
Schedule 2.1(o)
Taxes
None.
Schedule 2.1(r)
Intellectual Property
The Company entered into a License Agreement in 1994 with Xxxx
Corporation. On July 21, 1998, Xxxx terminated the License Agreement. On
September 9, 1998, the Company filed an action alleging that Xxxx breached the
License Agreement. On April 6, 1999, the Company filed a patent infringement
action against Xxxx. In its complaint, the Company alleged that Xxxx infringed
upon its patented Gerodisc system, United States Patent No. 5,888,163 (the "`163
patent"), and the Company is seeking damages and declaratory and injunctive
relief. In response to the patent infringement action, Xxxx filed a counterclaim
in which it alleged that the `163 patent is invalid, unenforceable, and not
infringed upon by Xxxx. Dana's counterclaim is a declaratory judgment action in
which no money damages are sought. The patent infringement action and the breach
of contract action have been consolidated for purposes of discovery and trial.
Discovery is now being undertaken in the consolidated action. The case is
pending in the U.S. District Court for the Eastern District of Michigan.
On December 30, 1999, Xxxxx Xxxxxxxx, a former employee of the Company,
filed an action against the Company. In his complaint, Xx. Xxxxxxxx alleges that
pursuant to his March 1, 1991, employment agreement with the Company, he is
entitled to damages in excess of $5,000,000 based on the Company's improper
commercialization of ideas he allegedly originated. The Company denies that it
has any obligations to Xx. Xxxxxxxx arising out of his employment agreement or
otherwise, and the Company intends to vigorously defend itself against Xx.
Xxxxxxxx'x allegations. The case is pending in the Superior Court of Santa
Barbara, California.
Schedule 2.1(x)
Employees
None.
Schedule 2.1(y)
Absence of Certain Developments
None.
