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EXHIBIT 2.1
COMMON STOCK INVESTMENT AGREEMENT
COMMON STOCK INVESTMENT AGREEMENT ("AGREEMENT") dated as of
September 8, 2000 among BLUE ZONE, INC., a Nevada corporation (the "COMPANY"),
and each person or entity listed as an investor on SCHEDULE 1 attached to this
Agreement (each individually an "INVESTOR" and collectively the "INVESTORS").
W I T N E S S E T H:
WHEREAS, the Company desires to sell and issue to the Investors,
and the Investors wish to purchase from the Company, (i) an aggregate number of
shares of the Company's Common Stock, $.001 par value ("COMMON STOCK")
calculated by dividing $5,000,000 by the Share Purchase Price (as hereinafter
defined) (all of such shares of Common Stock being the "INITIAL SHARES"), (ii)
three (3) year warrants, substantially in the form attached hereto as Annex A,
to initially purchase an aggregate number of shares of Common Stock calculated
by dividing $1,000,000 by the Share Purchase Price at an initial exercise price
per share equal to 120% of the "CLOSING PRICE" (where the "Closing Price" is
equal to $6.75) (the "INITIAL WARRANTS"), and (iii) warrants, substantially in
the form attached hereto as Annex B, to purchase a number of shares of Common
Stock calculated pursuant to a formula set forth therein (the "ADJUSTMENT
WARRANTS"; together with the Initial Warrants, the "WARRANTS"), all on the terms
and conditions described below;
WHEREAS, in connection with the foregoing sale and purchase, the
Company has agreed to issue to the Investors options substantially in the form
attached hereto as Annex C (the "OPTIONS") to purchase shares of Common Stock
("OPTION SHARES") up to an aggregate purchase price of $2,000,000 and to receive
warrants in the same form and on the same terms as the Initial Warrants ("OPTION
WARRANTS"), on the term and conditions set forth therein; and
WHEREAS, the Initial Shares, the shares of Common Stock
underlying the Initial Warrants (the "WARRANT SHARES"), the shares of Common
Stock underlying the Adjustment Warrants (the "ADJUSTMENT SHARES"), the Option
Shares, and the shares of Common Stock underlying the Option Warrants (the
"OPTION WARRANT SHARES") (collectively being the "REGISTRABLE SHARES") will
carry registration rights, pursuant to the terms of that certain Registration
Rights Agreement to be entered into between the Company and the Investors
substantially in the form of Annex D hereto (the "REGISTRATION RIGHTS
AGREEMENT").
NOW, THEREFORE, in consideration of the foregoing premises and
the covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE I
PURCHASE AND SALE OF SHARES AND WARRANTS
Section 1.1 Issuance of Initial Shares and Warrants. Upon the following
terms and conditions, the Company shall issue and sell to the Investors, and the
Investors shall purchase from the Company, the number of Initial Shares,
Warrants and Options indicated next to the Investors' names on SCHEDULE 1
attached hereto, the purchase price for which shall be included in the purchase
price set forth for the Investors on SCHEDULE 1 attached hereto.
(a) Purchase Price. The aggregate purchase price for the Initial
Shares, Options and Warrants to be acquired by each Investor (the "AGGREGATE
PURCHASE PRICE") shall be the Aggregate Purchase Price set forth next to each
such Investor's name on SCHEDULE 1. The purchase price per share of Common Stock
(the "SHARE PURCHASE PRICE") shall equal $7.08750. For purposes of this
Agreement, the term "PRINCIPAL MARKET" shall mean the Nasdaq National Market
System or if the Common Stock is not quoted thereon, on such exchange or market
(which for purposes of this Agreement shall mean the New York Stock Exchange,
the American Stock Exchange or the Nasdaq Small Cap Market) upon which the
Common Stock is principally traded or quoted, and "TRADING DAY" shall mean (x)
if the Common Stock is listed on the New York Stock Exchange or the American
Stock Exchange, a day on which there is trading on such stock exchange, or (y)
if the Common Stock is not listed on either of such stock exchanges but sale
prices of the Common Stock are reported on an automated quotation system, a day
on which trading is reported on the principal automated quotation system on
which sales of the Common Stock are reported, or (z) if the foregoing provisions
are inapplicable, a day on which quotations are reported by National Quotation
Bureau Incorporated.
(b) The Closing.
(i) The closing of the purchase and sale of the Initial
Shares, Options and Warrants (the "CLOSING") shall take place at
the offices of Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C. ("KKWC"), on
the date hereof or such other date mutually agreed to by the
Company and the Investors (the "CLOSING DATE").
(ii) On the Closing Date, the Company shall deliver to
the Investors all of the Initial Shares, Warrants and Options
purchased hereunder, each registered in the name of each such
Investor or its nominee. On the Closing Date the Investors shall
deliver (on a pro-rata basis) by wire transfer, to an account
designated in writing by the Company, an aggregate of $4,000,000
on account of the Aggregate Purchase Price. The Initial Shares
shall be issued with the number and denomination of certificates
requested by the Investors. The Initial Shares, Options and
Warrants will be fully owned as of the Closing Date by the
Investors, who will pay (on a pro rata basis) the remaining
$1,000,000 on account of the Aggregate Purchase Price to the
Company on the third (3rd) Trading Day after the Investors receive
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notice that a registration statement covering all the Registrable
Shares has been declared effective by the Securities and Exchange
Commission ("SEC"). In addition, each party shall deliver all
documents, instruments and writings required to be delivered by
such party pursuant to this Agreement at or prior to the Closing.
Additionally, at the Closing the Company shall pay (or Millennium
Partners, L.P. ("MLP") shall, at its option, pay for the account
of the Company, with such payment being credited towards MLP's
payment of MLP's portion of the Aggregate Purchase Price) to KKWC
its legal fees and disbursements as set forth in Section 3.4 and
to Ladenburg, Xxxxxxxx its commissions and fees as set forth in
Sections 2.1(r) and 2.2(e). Upon the registration statement
covering the Registrable Shares being declared effective, provided
the Company's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of an Investor, the Company shall use its
best efforts to cause its transfer agent within four (4) days
following receipt of certificates representing the Initial Shares
to electronically transmit the Initial Shares to the Investor by
crediting the account of the Investor's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.
The time periods for delivery described above shall apply to the
electronic transmittals described herein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Investors as of
the date hereof, on the Closing Date, and on the date of any Option Closing (as
defined in the Options), except that with respect to any such Option Closing,
such representations and warranties shall be deemed modified such that (i) the
schedules attached hereto for such representations and warranties shall be
updated by the Company as of such Option Closing, (ii) the December 31, 1999
date specified in Sections 2.1(g), 2.1(i) and 2.1(j) shall refer to the date of
the most recently completed fiscal year end, (iii) "Pre-Closing SEC Documents"
shall refer to reports or documents filed at least 5 Trading Days prior to such
Option Closing by the Company pursuant to Section 13(a) or 15(d) of the Exchange
Act and delivered to the Investors prior to such exercise of the Options, and
(iv) the last sentence of each of Section 2.1(o) and Section 2.1(u) shall be
updated by the Company as of such Option Closing (collectively, such
modifications pursuant to the foregoing clauses (i) through (iv) shall be
referred to as the "REP MODIFICATIONS"), provided that such Rep Modifications do
not constitute a Material Adverse Change (as defined below) and are reasonably
satisfactory to the Investor exercising the Options:
(a) Organization and Qualification; Material Adverse Effect. The
Company is a corporation duly incorporated and existing in good standing under
the laws of the State of Nevada and has the requisite corporate power to own its
properties and to carry on its business as
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now being conducted. The Company does not have any direct or indirect
subsidiaries (defined as any entity of which the Company owns, directly or
indirectly, 50% or more of the equity or voting power) other than the
subsidiaries listed on SCHEDULE 2.1(a) attached hereto. Except where
specifically indicated to the contrary, all references in this Agreement to
subsidiaries shall be deemed to refer to all direct and indirect subsidiaries of
the Company. Except where specifically indicated to the contrary, all references
in this Article II to the Company shall be deemed to refer to the Company and
its consolidated subsidiaries. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary other than those in which the
failure so to qualify would not have or reasonably be expected to have a
Material Adverse Effect. "MATERIAL ADVERSE EFFECT" and "MATERIAL ADVERSE CHANGE"
means any adverse effect or change, respectively, on the business, operations,
properties or financial condition of the entity with respect to which such term
is used and which is (either alone or together with all other adverse effects)
material to such entity and other entities controlling or controlled by such
entity taken as a whole, and any material adverse effect or change,
respectively, on the transactions contemplated under this Agreement, the
Registration Rights Agreement or any other agreement or document contemplated
hereby or thereby.
(b) Authorization; Enforcement. (i) The Company has all requisite
power and authority to enter into and perform this Agreement, the Warrants, the
Options, the Option Warrants, and the Registration Rights Agreement (the
"TRANSACTION DOCUMENTS") and to issue the Initial Shares, the Adjustment Shares,
the Warrant Shares, the Option Warrant Shares, the Options, the Option Shares,
the Option Warrants and the Warrants (collectively, the "SECURITIES") in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including the issuance of the
Registrable Shares, have been duly authorized by all necessary corporate action,
and no further consent or authorization of the Company or its Board of Directors
(or any committee or subcommittee thereof) or stockholders is required, (iii)
the Transaction Documents have been duly executed and delivered by the Company
and (iv) the Transaction Documents constitute valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application and (ii) to the extent the
indemnification provisions contained in the Registration Rights Agreement may be
unenforceable as a matter of public policy.
(c) Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock; as of the Closing Date, there are 21,538,100 shares of Common Stock and
no shares of preferred stock issued and outstanding; and, except as set forth on
SCHEDULE 2.1(c), no shares of Common Stock and no shares of preferred stock were
reserved for issuance to persons other than the Investors. All of the
outstanding shares of the Company's Common Stock and preferred stock have been
validly issued and are fully paid and non-assessable. No shares of capital stock
are entitled to preemptive rights and, except as set forth on SCHEDULE 2.1(c),
there are no outstanding options and outstanding warrants for shares of Common
Stock (excluding the Warrants and Options).
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Except as set forth on SCHEDULE 2.1(c)(i), there are no other scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights exchangeable for or convertible into, any shares of capital
stock of the Company, or contracts, commitments, understandings, or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, or commitments to purchase or acquire, any shares, or securities or rights
convertible or exchangeable into shares, of capital stock of the Company. The
Company has not entered into any MFN Transaction or Variable Rate Transaction in
which securities or obligations to issue securities or potential obligations to
issue securities are still outstanding (other than as may be provided in the
Transaction Documents). The term "MFN TRANSACTION" shall mean a transaction in
which the Company issues or sells any securities in a capital raising
transaction or series of related transactions (the "MFN OFFERING") which grants
to an investor (the "MFN INVESTOR") the right to receive additional shares
(including without limitation as a result of a lower conversion, exchange or
exercise price but excluding standard stock split anti-dilution protections),
based upon subsequent transactions of the Company on terms more favorable than
those granted to such MFN Investor in such MFN Offering. The term "VARIABLE RATE
TRANSACTION" shall mean a transaction in which the Company issues or sells (a)
any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of, Common
Stock either (x) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
Common Stock at any time after the initial issuance of such debt or equity
securities, or (y) with a fixed conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
Common Stock (but excluding standard stock split anti-dilution provisions), or
(b) any securities of the Company pursuant to an "equity line" structure which
provides for the sale, from time to time, of securities of the Company which are
registered for resale pursuant to the 1933 Act. Attached hereto as EXHIBIT
2.1(c)(i) is a true and correct copy of the Company's Certificate of
Incorporation (the "CHARTER"), as in effect on the date hereof, and attached
hereto as EXHIBIT 2.1(c)(ii) is a true and correct copy of the Company's
By-Laws, as in effect on the date hereof (the "BY-LAWS").
(d) Issuance of Registrable Shares. The Registrable Shares are
duly authorized and reserved for issuance and, when issued in accordance with
this Agreement or upon exercise in accordance with the Warrants, Options or the
Option Warrants, as the case may be, the Registrable Securities, will be validly
issued, fully paid and non-assessable, free and clear of any and all liens,
claims and encumbrances, and (subject to the registration of such shares in
accordance with the applicable provisions of the Securities Act of 1933, as
amended (the "SECURITIES ACT" of the "ACT") and entitled to be traded on the
Nasdaq National Market System (or the American Stock Exchange, the New York
Stock Exchange, or the Nasdaq Small Cap Market, collectively with the Nasdaq
National Market System, the "APPROVED MARKETS"), and the holders of such
Registrable Shares shall be entitled to all rights and preferences accorded to a
holder of Common Stock. The outstanding shares of Common Stock are listed on the
Nasdaq National Market System as of the date hereof and the Closing Date, and
will be listed on an Approved Market as of any Option Closing.
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(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby and the issuance of the Securities
do not and will not (i) result in a violation of the Company's Charter or
By-Laws or (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
agreement, indenture, patent, patent license or instrument to which the Company
or any of its subsidiaries is a party (collectively, "COMPANY AGREEMENTS"), or
(iii) result in a violation of any federal, state, local or foreign law, 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 is bound
or affected, except (other than in the case of clause (i) above) where such
conflict, default, event or violation would not have or reasonably be expected
to have a Material Adverse Effect. The business of the Company and its direct
and indirect subsidiaries is being conducted in material compliance with (i) its
Charter and By-Laws, (ii) all Company Agreements and (iii) all applicable laws,
ordinances or regulations of any governmental entity, except (other than in the
case of clause (i) above) where such violation would not have or reasonably be
expected to have a Material Adverse Effect. Except for filings, consents and
approvals required under applicable state and federal securities laws or the
rules and regulations of the Approved Markets and covered by the Registration
Rights Agreement, the Company is not required under federal, state, local or
foreign 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 the
Transaction Documents, or to issue and sell the Securities, except for the
registration provisions provided in the Registration Rights Agreement.
(f) SEC Documents; No Non-Public Information; Financial
Statements. The Common Stock of the Company is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")
and the Company and its subsidiaries have filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act, including all such proxy
information, solicitation statement and registration statements, and any
amendments thereto required to have been filed (all of the foregoing including
filings incorporated by reference therein being referred to herein as the "SEC
DOCUMENTS"). The Company has not directly or indirectly provided, and will not
directly or indirectly provide, to the Investors any material non-public
information or any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder and other federal, state and
local laws, rules and regulations applicable to such SEC Documents, and none of
the SEC Documents 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 SEC Documents contain all material information
concerning the Company and its subsidiaries, and no event or circumstance has
occurred prior to the date hereof or will have occurred on the Closing Date or
the Option Closing date, as the case may be, which would require the Company to
disclose such event or circumstance in order to make the statements in the SEC
Documents not misleading but which has not, or will have not, been so disclosed.
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(g) Financial Statements. The financial statements of the Company
and its subsidiaries included in the SEC Documents comply as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with United States generally accepted accounting principles
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, may be condensed or summary statements) 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). The audited financial statements of each of the
Company and its subsidiaries for the fiscal year ending December 31, 1999 have
been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be otherwise indicated in such financial statements or the notes thereto)
and fairly present in all material respects the financial position of the
Company and its subsidiaries, as the case may be, 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, none of
which are expected to be, individually or in the aggregate, material).
(h) Principal Exchange/Market. The principal market on which the
Common Stock is traded is, as of the date hereof and the Closing Date, the
Nasdaq National Market System, and as of any Option Closing, an Approved Market.
(i) No Material Adverse Change. Since December 31, 1999, no
Material Adverse Effect has occurred or exists, and no event or circumstance has
occurred or is anticipated by the Company that with notice or the passage of
time or both is reasonably likely to result in a Material Adverse Effect with
respect to the Company or its subsidiaries.
(j) No Undisclosed Liabilities. The Company and its subsidiaries
have no liabilities or obligations not disclosed in the Pre-Closing SEC
Documents (as defined below), other than those liabilities incurred in the
ordinary course of the Company's or its subsidiaries' respective businesses
since December 31, 1999, which liabilities, individually or in the aggregate, do
not or would not have a Material Adverse Effect on the Company.
(k) No Undisclosed Events or Circumstances. To the best knowledge
of the Company, no material event or circumstance has occurred or exists with
respect to the Company or its direct or indirect subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
(l) No General Solicitation. Neither the Company, nor any of its
affiliates, or, to its knowledge, 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 Securities.
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(m) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor to its knowledge any person acting on its or their behalf, has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the Securities.
The issuance of the Securities to the Investors will not be
integrated with any other issuance of the Company's securities (past, current or
future) which requires stockholder approval under the rules of the NASDAQ
National Market System or other Approved Market.
(n) Form S-3. Although the Company is not as of the Closing Date
eligible to file the Registration Statement (as defined in the Registration
Rights Agreement) on Form S-3 under the Act and rules promulgated thereunder,
such Form S-3 would be otherwise permitted to be used for the transactions
contemplated hereby under the Act and rules promulgated thereunder if the
Company were so eligible.
(o) Intellectual Property. The Company and/or its wholly-owned
subsidiaries owns or has valid and enforceable licenses to use the patents,
copyrights and trademarks ("INTELLECTUAL PROPERTY") associated with its
business. The Company and its subsidiaries have all intellectual property rights
which are needed to conduct the business of the Company and its subsidiaries as
it is now being conducted or as proposed to be conducted as disclosed in the SEC
Documents. The Company and its subsidiaries have no reason to believe that the
material intellectual property rights which it owns are invalid or unenforceable
or that the use of such intellectual property by the Company or its subsidiaries
infringes upon or conflicts with any right of any third party, and neither the
Company nor any of its subsidiaries has received notice of any such infringement
or conflict, which individually or in the aggregate, would have or reasonably be
expected to have a Material Adverse Effect. The Company and its subsidiaries
have no knowledge of any infringement of its intellectual property by any third
party.
(p) Poison Pill Provisions. Neither Company nor its wholly-owned
subsidiaries have a stockholder rights plan. None of the acquisition of the
Securities nor the deemed beneficial ownership of shares of Common Stock prior
to, or the acquisition of such shares pursuant to the exercise of the Options,
Warrants or the Option Warrants will in any event under any circumstance trigger
the poison pill provisions of any other or subsequently adopted plan or
agreement, or a substantially similar occurrence under any successor or similar
plan.
(q) No Litigation. Except as set forth in the reports or documents
filed at least 5 Trading Days prior to the Closing Date by the Company pursuant
to Section 13(a) or 15(d) of the Exchange Act and delivered to the Investors
prior to the date hereof (the "PRE-CLOSING SEC DOCUMENTS"), no litigation or
claim (including those for unpaid taxes) against the Company or any of its
subsidiaries is pending or, to the Company's knowledge, threatened, and no other
event has occurred, which if determined adversely could have or reasonably be
expected to have a Material Adverse Effect. There is no legal proceeding
described in the Pre-Closing SEC Documents that could have or reasonably be
expected to have a Material Adverse Effect other than as disclosed therein.
(r) Brokers. The Company has taken no action which would give rise
to any claim by any person, other than Ladenburg, Thalmann, for brokerage
commissions, finder's fees
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or similar payments by the Company or any Investor relating to this Agreement or
the transactions contemplated hereby. The Company shall be responsible for any
payments to Ladenburg, Xxxxxxxx.
(s) Other Investors. Except as set forth on SCHEDULE 2.1(s)(i),
there are no outstanding securities issued by the Company that are entitled to
registration rights under the Act. Except as set forth on SCHEDULE 2.1(s)(ii),
there are no outstanding securities issued by the Company that are directly or
indirectly convertible into, exercisable into, or exchangeable for, shares of
Common Stock of the Company, or that have anti-dilution or similar rights that
would be affected by the issuance of any of the Securities.
(t) Certain Transactions. Except as disclosed in the Pre-Closing
SEC Documents, none of the officers, directors, or key employees of the Company
is presently a party to any transaction with the Company or any of its
subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(u) Permits; Compliance. The Company and each of its subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "COMPANY PERMITS"), except where
failure to possess such Company Permits would not have or reasonably be expected
to have a Material Adverse Effect and there is no action pending or, to the
knowledge of the Company, threatened regarding suspension or cancellation of any
of the Company Permits except for such Company Permits the failure of which to
possess, or the cancellation or suspension of which, would not, individually or
in the aggregate, have or reasonably be expected to have a Material Adverse
Effect. To the best of its knowledge, neither the Company nor any of its
subsidiaries is in material conflict with, or in material default or material
violation of, any of the Company Permits. Since December 31, 1999, neither the
Company nor any of its subsidiaries has received any notification with respect
to possible material conflicts, material defaults or material violations of
applicable laws.
(v) Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its direct and
indirect subsidiaries are engaged. Neither the Company nor any such subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(w) Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations,
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(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(x) Environmental Matters. Except as otherwise disclosed in the
Pre-Closing SEC Documents, the Company and each of its subsidiaries is in
compliance in all respects with all applicable state and federal environmental
laws except where any such non-compliance would not have or reasonably be
expected to have a Material Adverse Effect and no event or condition has
occurred that may interfere with the compliance by the Company or any of its
subsidiaries with any environmental law or that may give rise to any liability
under any environmental law that, individually or in the aggregate, would have
or reasonably be expected to have a Material Adverse Effect.
(y) Solvency.
(i) Based on the financial condition of the Company as
of the Closing Date or Option Closing date, as the case may be,
the Company's fair saleable value of its assets exceeds the amount
that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent
liabilities) as they mature.
(ii) Based on the financial condition of the Company as
of the Closing Date or Option Closing date, as the case may be,
the Company's assets do not constitute unreasonably small capital
to carry out its business for the year 2000 as now conducted and
as proposed to be conducted including the Company's year 2000
capital needs taking into account the particular capital
requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof.
(iii) The Company does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of
its debt). Based on the financial condition of the Company as of
the Closing Date or Option Closing date, as the case may be, the
current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when
such amounts are required to be paid.
(iv) Neither the Company nor any of its subsidiaries is
subject to any bankruptcy, insolvency or similar proceeding.
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(z) Taxes. All federal, state, city and other tax returns, reports
and declarations required to be filed or extended by or on behalf of the Company
and each of its subsidiaries have been filed or extended and all such filed
returns are complete and accurate and disclose all taxes (whether based upon
income, operations, purchases, sales, payroll, licenses, compensation, business,
capital, properties or assets or otherwise) required to be paid in the periods
covered thereby. All taxes required to be withheld by or on behalf of the
Company or any such subsidiary in connection with amounts paid or owing to any
employees, independent contractor, creditor or other party have been withheld,
and such withheld taxes have either been duly and timely paid to the proper
governmental authorities or set aside in accounts for such purposes.
(aa) Title to Properties; Encumbrances. SCHEDULE 2.1(aa) contains
a complete and accurate list of all material real property, leaseholds, or other
interests therein owned by the Company and its subsidiaries. Each of the Company
and its subsidiaries owns (with good and marketable title in the case of real
property) all the properties and assets (whether real, personal, or mixed and
whether tangible or intangible ("COMPANY PROPERTY")) that it purports to own.
All material Company Property is free and clear of all encumbrances and are not,
in the case of real property (which, for this purpose, shall not include the
Company's interest as tenant in leaseholds), subject to any rights of way,
building use restrictions, exceptions, variances, reservations or limitations of
any nature, except, with respect to all such properties and assets, (a)
mortgages, liens or security interests shown on SCHEDULE 2.1(aa) as securing
specified liabilities or obligations, with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists,
(b) liens for current taxes not yet due, and (c) with respect to real property,
(i) minor imperfections of title, if any, none of which is substantial in
amount, materially detracts from the value or impairs the use of the property
subject thereto, or impairs the operations of the Company or any of its
subsidiaries, and (ii) zoning laws and other land use restrictions (including,
but not limited to, easements of records) that do not impair the present or
anticipated use of the property subject thereto. All buildings, plans, and
structures owned by the Company or any of its subsidiaries lie wholly within the
boundaries of the real property owned by the Company or such subsidiaries, and
do not encroach upon the property of, or otherwise conflict with the property
rights of, any other person.
(bb) No Reliance on Investors. The Company acknowledges and agrees
that each Investor is acting solely in the capacity of an arm's length purchaser
with respect to the Transaction and the transactions contemplated hereby and
thereby. The Company further acknowledges that no Investor is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the performance hereunder and
thereunder and the transactions contemplated hereby and thereby. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents and the performance hereunder and thereunder has been
based solely on the independent evaluation by the Company and its
representatives.
(cc) Foreign Corrupt Practices Act. Neither the Company, nor any
director, officer, agent, employee or other person acting on behalf of the
Company or any subsidiary has, in the course of acting for, or on behalf of, the
Company, directly or indirectly used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; directly or indirectly made any direct or indirect unlawful
payment to any foreign or domestic government or party official or employee from
corporate funds;
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violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or any similar treaties of the United States;
or directly or indirectly made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government or
party official or employee.
(dd) Application of Takeover Protections. There are no
anti-takeover provisions contained in the Company's Certificate of Incorporation
or By-Laws which are or could become applicable to the Investors as a result of
the transactions contemplated by the Transaction Documents, including, without
limitation, the Company's issuance of the Securities and the Investors'
ownership of the Securities. At the request of the Investors, the Company and
its board of directors shall take such actions as may be necessary in order to
render inapplicable Sections 78.378 through 78.3793 of the Nevada Revised
Statutes.
(ee) Acknowledgement of Dilution. The number of shares of Common
Stock constituting Initial Shares, Adjustment Shares, Warrant Shares, Option
Shares or Option Warrant Shares may increase substantially in certain
circumstances. The Company acknowledges that its obligation to issue shares of
Common Stock in accordance with the Transaction Documents is absolute and
unconditional, regardless of the dilution that such issuance may have on other
shareholders of the Company.
Section 2.2 Representations and Warranties of the Investors. Each
Investor hereby makes the following representations and warranties to the
Company as of the date hereof as to itself only, severally and not jointly, on
the Closing Date and, as to the Investor exercising the Options only, on the
date of any Option Closing (as defined in the Options):
(a) Organization and Qualification. Such Investor is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such qualification necessary except where the failure to be so
qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect on such Investor.
(b) Authorization; Enforcement. (i) Such Investor has the
requisite power and authority to enter into and perform the Transaction
Documents and to purchase the Securities being sold to it hereunder, (ii) the
execution and delivery of the Transaction Documents by such Investor and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary corporate or partnership action, and (iii) the
Transaction Documents constitute valid and binding obligations of such Investor
enforceable against such Investor in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
(c) No Conflicts. The execution, delivery and performance of the
Transaction Documents and the consummation by such Investor of the transactions
contemplated thereby do not and will not (i) result in a violation of such
Investor's organizational documents, or (ii) conflict with any material
agreement, indenture or instrument to which such Investor is a party,
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or (iii) result in a material violation of any law, rule, or regulation, or any
order, judgment or decree of any court or governmental agency applicable to such
Investor. Such Investor is not required to obtain any consent or authorization
of any governmental agency in order for it to perform its obligations under the
Transaction Documents.
(d) Investment Representations.
(i) Access to Other Information. Such Investor
acknowledges that the Company has made available to such Investor
the opportunity to examine such additional documents from the
Company and to ask questions of, and receive full answers from,
the Company concerning, among other things, the Company, its
financial condition, its management, its prior activities and any
other information which such Investor considers relevant or
appropriate in connection with entering into this Agreement.
(ii) Risks of Investment. Such Investor acknowledges that
the Securities have not been registered under the Act. Such
Investor is familiar with the provisions of Rule 144 and
understands that in the event all of the applicable requirements
of Rule 144 are not satisfied, registration under the Act or some
other exemption from the registration requirements of the Act will
be required in order to dispose of the Registrable Shares, and
that such Investor may be required to hold the Registrable Shares
for a significant period of time prior to reselling them, subject
to the Company successfully registering the Registrable Shares
pursuant to the Registration Rights Agreement. Such Investor is
capable of assessing the risks of an investment in the Registrable
Shares and is fully aware of the economic risks thereof.
(iii) Investment Representation. Such Investor is
purchasing the Securities for its own account and not with a view
to distribution in violation of any securities laws. Such Investor
has no present intention to sell the Securities in violation of
federal or state securities laws. Provided, however, that by
making the representations herein, such Investor does not agree to
hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with federal and state securities laws applicable to
such disposition.
(iv) Restricted Securities. It acknowledges and
understands that the terms of issuance have not been reviewed by
the SEC or by any state securities authorities and that the
Securities have been issued in reliance on the certain exemptions
for non-public offerings under the Act, which exemptions depend
upon, among other things, the representations made and
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information furnished by such Investor, including the bona fide
nature of such Investor's investment intent as expressed above.
(v) Ability to Bear Economic Risk. It is an "accredited"
investor as defined in Rule 501 of Regulation D, as amended, under
the Act, and that it (i) is able to bear the economic risk of its
investment in the Securities, (ii) is able to hold the Securities
for an indefinite period of time, (iii) can afford a complete loss
of its investment in the Securities and (iv) has adequate means of
providing for its current needs.
(vi) No Public Solicitation. At no time was such Investor
presented with or solicited by any general mailing, leaflet,
public promotional meeting, newspaper or magazine article, radio
or television advertisement, or any other form of general
advertising or general solicitation in connection with the
issuance of the Securities.
(vii) Reliance by the Company. Such Investor understands
that the Securities are being or will be, as the case may be,
offered and sold and will be issued, in reliance on a
transactional exemptions from the registration requirements of
federal and state securities laws and that the Company is relying
upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Investor
set forth herein in order to determine the applicability of such
exemptions and the suitability of such Investor to acquire the
Securities.
(e) Brokers. Such Investor has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Company relating to the Transaction Documents or the
transactions contemplated thereby. All fees and amounts payable to Ladenburg,
Xxxxxxxx shall be solely the responsibility of the Company.
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ARTICLE III
COVENANTS
Section 3.1 Registration and Listing; Effective Registration. For so long
as the Securities are outstanding, the Company will cause the Common Stock
issuable upon the exercise of the Options, Warrants or Option Warrants, to
continue at all times to be registered under Section 12(b) or Section 12(g) of
the Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules thereunder)
to terminate or suspend such reporting and filing obligations. Until such time
as no Securities are outstanding, the Company shall continue the listing or
trading of the Common Stock on the Nasdaq National Market System or one of the
other Approved Markets and comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Approved Market on
which the Common Stock is listed. The Company shall cause the Common Stock to be
listed on the Nasdaq National Market System no later than the registration of
the Common Stock under the Act, and at all times shall continue such listing(s)
on one of the Approved Markets. As used herein and in the other Transaction
Documents, the term "EFFECTIVE REGISTRATION" shall mean: (i) the Company is in
compliance with the Transaction Documents; (ii) the resale of Registrable
Securities (as defined in the Registration Rights Agreement) is covered by an
effective registration statement and such registration statement is not subject
to any suspension or stop orders; (iii) the resale of such securities may be
effected pursuant to a current and deliverable prospectus that is not subject to
any blackout or similar circumstance; (iv) the securities are listed on an
Approved Market and are not subject to any trading suspension; (v) no
Interfering Event (as described in the Registration Rights Agreement) then
exists; and (vi) none of the Company or any direct or indirect subsidiary of the
Company is subject to any bankruptcy, insolvency or similar proceeding.
Section 3.2 Warrants on Exercise. Upon any partial exercise by an
Investor or then holder of the Options, Warrants, or Option Warrants of any of
such securities, the Company shall issue and deliver to such Investor (or
holder) within four (4) days of the date on which such Warrants or Options are
exercised, a new Warrant, Option or Option Warrant representing the number of
adjusted Option Shares, Warrant Shares and/or Option Warrant Shares, as the case
may be, in accordance with the terms of such warrants.
Section 3.3 Replacement Certificates. The certificate(s) representing the
Securities held by any Investor (or then holder) may be exchanged by the
Investor (or such holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate number of
Securities as requested by the Investor (or such holder) upon surrendering the
same. The Company will deliver such substitute certificates within five trading
days. No service charge or fee will be made or charged for such registration or
transfer or exchange.
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Section 3.4 Expenses. The Company shall pay to KKWC in immediately
available funds, at the Closing the sum of $12,500 ($25,000 less $12,500
previously paid) for the payment of expenses (including legal fees) incurred by
the Investors in connection with the transactions contemplated by this
Agreement. In lieu thereof, MLP may allocate $12,500 of its payment of its
Aggregate Purchase Price to the payment of such counsel, and such payment to
KKWC shall be credited towards the payment of the Aggregate Purchase Price due
from MLP.
Section 3.5 Securities Compliance. The Company shall notify the SEC, in
accordance with their requirements, of the transactions contemplated by
Transaction Documents, 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 Securities.
Section 3.6 Dividends or Distributions; Purchases of Equity Securities.
Except as set forth in SCHEDULE 3.6 hereof, and as provided in this Section 3.6
to the contrary, for so long as any Warrants, Options, or Option Warrants remain
outstanding, the Company agrees that it shall not (a) declare or pay any
dividends or make any distributions to any holder or holders of Common Stock
(other than dividends payable in Common Stock) in their capacity as
shareholders, or (b) purchase or otherwise acquire for value, directly or
indirectly, any shares of Common Stock or other equity security of the Company;
provided that the Company may purchase or acquire shares of Common Stock that
are hereafter issued to employees pursuant to employment, stock repurchase or
other similar agreements.
Section 3.7 Notices. The Company agrees to provide all holders of
Warrants, Options and Option Warrants with copies of all notices and
information, including without limitation notices and proxy statements in
connection with any meetings, that are provided to the holders of shares of
Common Stock, contemporaneously with the delivery of such notices or information
to such Common Stock holders.
Section 3.8 Use of Proceeds. The Company agrees that the proceeds
received by the Company from the sale of the Initial Shares, Option Shares and
Warrants shall be used for legally permissible general working capital purposes.
Section 3.9 Additional Financings; Restrictions on Filings. The Company
agrees that from the date hereof until the nine (9) month anniversary of
Effective Registration, the Investors shall have a right of first refusal with
respect to all Financing Transactions as set forth in this Section 3.9. The
Company shall give advance written notice to the Investors prior to any offer or
sale of any of its equity securities or any securities convertible into or
exchangeable or exercisable for such securities in a non-public capital raising
transaction or in any MFN Transaction or Variable Rate Transaction
(collectively, "FINANCING TRANSACTION"). It is understood and agreed that the
definition of Financing Transaction shall not include issuances of (i)
securities as consideration for a merger, consolidation or sale of assets (the
primary purpose of which is not to raise equity or debt capital) , (ii)
securities in connection with any strategic partnership or joint venture (the
primary purpose of which is not to raise equity or debt capital), (iii)
securities as consideration for the spin-off or acquisition of a business,
product or license by the Company; (iv) securities upon exercise or conversion
of the Company's options, warrants or other convertible securities outstanding
as of the date hereof or (v) additional options or warrants, or the issuance of
additional securities, under any director, officer or employee stock
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option or restricted stock plan maintained by the Company and duly adopted by a
majority of the Company's disinterested directors. The Investors shall have ten
(10) Trading Days from receipt of such notice to deliver a written notice to the
Company that one or more of such Investors elects to exercise its right of first
refusal with respect to the entire issuance. If, subsequent to the Company
giving notice to the Investors hereunder, the terms and conditions of the
proposed Financing Transaction are changed in any way, the Company shall be
required to provide a new notice to the Investors hereunder and the Investors
shall have the right of refusal again to purchase all of the securities in the
offering on such changed terms and conditions as provided hereunder. In such
event, if such other Financing Transaction provides for non-cash consideration,
in whole or in part, from such other potential investor(s), the Investors shall
still have the right to participate in the Financing Transaction as provided
herein, provided that cash or cash equivalents may be substituted by the
Investors for such non-cash consideration. This right of first refusal shall
continue even if the Investors elect not to participate in one or more Financing
Transactions. In addition, the Company agrees that from the date hereof until
the six (6) month anniversary of Effective Registration it shall not enter into
any Financing Transaction without the prior written consent of the Investors.
While there is lack of Effective Registration, the Company shall
not file or permit to be filed any registration statement (other than a
registration relating solely to the sale of securities to participants in a
Company stock or option plan on Form S-8) to register any of its securities,
except as required in the Registration Rights Agreement.
Section 3.10 Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the issuance of Option Shares,
Warrant Shares and Option Warrant Shares, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the issuance of such
Option Shares in full and the full exercise of the Warrants and Option Warrants
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the issuance of such Option Shares in full and
the full exercise of the Warrants and Option Warrants, the Company will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose, including without limitation
engaging in best efforts to obtain the requisite shareholder and any other
approval. Without in any way limiting the foregoing, the Company agrees to
reserve and at all times keep available solely for purposes of issuance of such
Option Shares and the exercise of the Warrants and Option Warrants such number
of authorized but unissued shares of Common Stock that is at least equal to 200%
of the aggregate Option Shares issuable under the Options, and 200% of the
aggregate shares issuable on exercise of the Warrants and such Option Warrants,
which aggregate number shall be appropriately adjusted for any stock split,
reverse split, stock dividend or reclassification of the Common Stock. If the
Company falls below the reserves specified in the immediately preceding sentence
and does not cure such non-compliance within 30 days of its start, then the
Investors will be entitled, in addition to their other rights and remedies
hereunder, to the compensatory payments specified in Section 2(b)(i) of the
Registration Rights Agreement. If at any time the number of authorized but
unissued shares of Common Stock is not sufficient to effect the issuance of such
Option Shares and such Warrant Shares and Adjustment Shares or the full exercise
of the Warrants and such Option Warrants, the Investors shall be entitled to,
inter alia, the premium price redemption rights provided in the Registration
Rights Agreement.
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Section 3.11 Best Efforts. The parties shall use their reasonable best
efforts to satisfy timely each of the conditions described in Article 3 of this
Agreement.
Section 3.12 Certain Transactions.
(a) Each party agrees, during each Trading Day that the closing
price of Common Stock on such day is used for determining any price under this
Agreement, not to engage in any transaction or activity which is intended to
affect the closing price of the Common Stock on the Principal Market on such
Trading Day. The parties agree that the burden of proof as to a party's intent
shall be on the party claiming a violation of this paragraph, and that there
shall be no presumption of wrongful intent based upon any particular trading
transaction (even if such transaction occurs on a Trading Day on which the
closing price of the Common Stock is below the closing price on the immediately
preceding Trading Day).
(b) In addition to its obligations under Section 3.12(a), each
Investor agrees, while it owns any Securities, not to engage in any short sale,
hedging, swap, option or derivative transaction of a kind which customarily has
an adverse effect on the market price of a security ("PROHIBITED TRANSACTIONS")
with respect to the Common Stock on the Principal Market (other than those
contemplated by the Transaction Documents), except Prohibited Transactions with
respect to not more than the maximum number of shares of Common Stock which may
be issued upon exercise of all of the Warrants, Options and Option Warrants. The
restrictions contained in this Section 3.12(b) shall not be applicable or
effective during any period of time (i) that the Company is in default of any of
its obligations under any of the Transaction Documents, or (ii) after Effective
Registration first occurs, Effective Registration is not in effect.
Section 3.13 Form D; Blue Sky Laws. If necessary, the Company agrees to
timely file a Form D with respect to the Securities, as required under
Regulation D and to provide a copy thereof to each Investor promptly after such
filing upon request. The Company shall take such action as is necessary to
qualify the applicable Securities for sale to the Investors at the Closing
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such qualification)
within the applicable time periods required by such states, and shall provide
evidence of any such action so taken to each Investor.
Section 3.14 Nasdaq Rule. The Investors shall, in the aggregate, be
entitled to exercise for Adjustment Shares and "Adjustment Shares" issuable
under the Option Adjustment Warrant ("WARRANT ADJUSTMENT SHARES") resulting in a
total number of shares of Common Stock equal to up to 19.99% of the Common Stock
issued and outstanding on the date hereof (which number shall be subject to
readjustment for any stock split, stock dividend or reclassification of the
Common Stock) (the "20% CAP"). Each Investor shall be entitled to receive
Adjustment Shares and Warrant Adjustment Shares such that it will own such total
number of such shares of Common Stock equal to such Investor's pro rata share of
the 20% Cap. Once an Investor has received its total pro rata share of
Adjustment Shares and Warrant Adjustment Shares, it may request that the Company
redeem its remaining Adjustment Shares and Warrant Adjustment Shares at the then
applicable Adjustment Share Purchase Price (as defined in the applicable
warrant). If an Investor has received its Adjustment Shares and Warrant
Adjustment Shares but has not depleted the total number of pro rata shares
allocated to it, its remaining pro rata shares
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shall be reallocated amongst the Investors still to receive Adjustment Shares
and Warrant Adjustment Shares on a pro rata basis. The restrictions and
redemption obligations set forth in this Section 3.14 shall cease to apply if
(a) the Company obtains written shareholder approval to issue Common Shares in
excess of the 20% Cap pursuant to Nasdaq Rule 4460 or (b) the Company provides
the Investors with irrevocable written notice, based upon the advice of its
counsel, that any such issuance of Common Shares is not subject to the 20% Cap
pursuant to Nasdaq Rule 4460. If necessary, the Company will use its best
efforts promptly to obtain either the shareholder approval or the irrevocable
notice described in the preceding sentence and to provide the Investors with a
copy of same.
Section 3.15 Transactions With Affiliates. The Company agrees that any
transaction or arrangement between it or any of its subsidiaries and any
affiliate or employee of the Company shall be effected on an arms' length basis
in accordance with reasonable and customary commercial practice and, except with
respect to grants of options and stock to service providers, including
employees, shall be approved by a majority of the Company's outside
disinterested directors.
Section 3.16 Press Release. Immediately following the Closing, the
Company shall issue a press release in the form set forth in SCHEDULE 3.16
hereto. Investors shall have a reasonable opportunity to review such press
release prior to its issuance. No press release shall name the Investors without
their prior written consent except as shall be required by law. If the Company
fails to issue a press release within 3 business day of the Closing, the
Investors may issue a press release covering the Closing and complying with any
legal requirement applicable to the Investors.
Section 3.17 Form 8-K. Within 15 calendar days of the Closing, the
Company shall file a Form 8-K with the SEC which discloses the transactions
contemplated hereby and by the Transaction Documents. Investors shall have a
reasonable opportunity to review such Form 8-K prior to its filing.
Section 3.18 Reporting Lack of Effective Registration. The Company shall
promptly notify each Investor in writing if there shall ever be a lack of
Effective Registration, as well as when Effective Registration is
re-established.
Section 3.19 Reports Under The 1934 Act.
With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and
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(c) furnish to each Investor so long as such Investor owns
Registrable Shares, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
Section 3.20 Form S-3. The Company shall convert the Registration
Statement (as defined in the Registration Rights Agreement) to Form S-3 under
the Act and rules promulgated thereunder promptly following the Company becoming
eligible to use such Form S-3.
ARTICLE IV
CONDITIONS TO CLOSINGS
Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell. The obligation hereunder of the Company to issue and/or sell the Initial
Shares, Options and Warrants to the Investors at the Closing and to issue and/or
sell the Option Shares and Option Warrants upon exercise of the Options is
subject to the satisfaction, at or before the applicable closing, as the case
may be, of each of the applicable conditions set forth below. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.
(a) Accuracy of the Investors' Representations and Warranties. The
representations and warranties of each Investor will be true and correct as of
the date when made and as of the Closing Date and, only with respect to an
Investor exercising an Option, as of any Option Closing (as defined in the
Options) in which such Investor participates.
(b) Performance by the Investors. Each Investor shall have
performed all agreements and satisfied all conditions required to be performed
or satisfied by the Investor at or prior to the Closing or, only with respect to
an Investor exercising an Option, any Option Closing (as defined in the Options)
in which such Investor participates, as the case may be, including payment of
the applicable purchase price.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents.
Section 4.2 Conditions Precedent to the Obligation of the Investors to
Purchase. The obligation hereunder of the Investors to acquire and pay for the
Initial Shares, Options and Warrants at the Closing and to acquire and pay for
Option Shares and Option Warrants at any Option Closing (as defined in the
Options) following exercise of the Options, is subject to the satisfaction, at
or before each applicable closing, of each of the applicable conditions set
forth below. These conditions are for the Investors' benefit and may be waived
by the Investors at any time in their sole discretion.
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(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct as of
the date when made and as of the applicable closing date as though made at that
time (except for representations and warranties expressly as of an earlier date,
which shall be true and correct as of such date).
(b) Performance by the Company. The Company shall have performed
all agreements and satisfied all conditions required to be performed or
satisfied by the Company at or prior to the applicable closing, including,
without limitation, delivery of certificates representing the applicable
Securities.
(c) Nasdaq Trading. Trading in the Company's Common Stock shall
not have been suspended by the SEC and trading in securities generally as
reported by the Principal Market (or other Approved Market) shall not have been
suspended or limited, and the Common Stock shall be listed on an Approved
Market.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by
Transaction Documents. The NASD shall not have objected or indicated that it may
object to the consummation of any of the transactions contemplated by this
Agreement or any Transaction Document.
(e) Opinion of Counsel. The Investors shall have received an
opinion of counsel to the Company in the applicable form attached hereto as
EXHIBIT 4.2(e) and such other opinions, certificates and documents as the
Investors or their counsel shall reasonably require incident to the closing.
(f) Registration Rights Agreement. The Company and the Investors
shall have executed and delivered the Registration Rights Agreement.
(g) Officer's Certificate. The Company shall have delivered to the
Investors a certificate in form and substance satisfactory to the Investors and
the Investors' counsel, executed by an officer of the Company, certifying as to
satisfaction of applicable closing conditions, incumbency of signing officers,
and the true, correct and complete nature of the Certificate of Incorporation,
By-laws, good standing and authorizing resolutions of the Company.
(h) Miscellaneous. The Company shall have delivered to the
Investors such other documents relating to the transactions contemplated by this
Agreement and the Transaction Documents as the Investors or their counsel may
reasonable request.
Section 4.3 Closing Date Deliveries.
(a) On the Closing Date, the Company shall deliver to the
Investor:
(i) Certificates representing the Initial Shares;
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(ii) Warrants and Options in the forms attached as Annex
A, Annex B, and Annex C;
(iii) The certificate referred to in Section 4.2(g) above;
(iv) The executed Registration Rights Agreement; and
(v) The opinion of counsel referred to in Section 4.2(e)
above.
(b) On the Closing Date, the Investors shall deliver to the
Company:
(i) The portion of the Purchase Price payable on the
Closing Date as set forth on SCHEDULE 1 hereto; and
(ii) The executed Registration Rights Agreement.
Section 4.4 Deliveries at Option Closings. On the date of each closing
pursuant to an exercise of the Options, as applicable:
(a) the Company shall deliver to the Investor exercising the
Options:
(i) Certificates representing the applicable Option
Shares issuable to such Investor;
(ii) The certificate referred to in Section 4.2(g) above;
(iii) The applicable Option Warrants (substantially in the
form of Annex A, adjusted as appropriate with respect to each
applicable closing);
(iv) Evidence that Effective Registration then exists
with respect to all of the Securities covered by the Registration
Rights Agreement executed on the Closing Date;
(v) The opinion of counsel referred to in Section 4.2(e)
above; and
(b) The Investor exercising the Options shall deliver to the
Company the portion of the purchase price payable at such closing.
ARTICLE V
LEGEND AND STOCK
Except as otherwise provided herein or in the Registration Rights
Agreement, each certificate representing the Common Stock issued hereunder shall
be stamped or otherwise imprinted with a legend substantially in the following
form:
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THESE SECURITIES HAVE NOT BEEN REGISTERED FOR OFFER OR SALE UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
The Company agrees to reissue within 4 Trading Days certificates
for Common Stock without the legend set forth above (and without any other
legend) at such time as such Common Stock (i) is sold to a purchaser or
purchasers who (in the opinion of counsel to the seller or such purchaser(s), in
form and substance reasonably satisfactory to the Company and its counsel) are
able to dispose of such shares publicly without registration under the Act, (ii)
is registered for resale under the 1933 Act, or (iii) may be sold pursuant to
Rule 144.
Any Common Stock issued pursuant to exercise of Warrants, Options
or Option Warrants shall bear a legend in the same form as the legend indicated
above; provided that such legend shall be removed from the Common Stock and the
Company shall issue within 4 Trading Days new certificates without such legend
(and without any other legend) if (i) such Common Stock is registered for resale
under the 1933 Act, (ii) such Common Stock may be sold under Rule 144, or (iii)
such Common Stock is sold to a purchaser or purchasers who (in the opinion of
counsel to the seller or such purchaser(s), in form and substance reasonably
satisfactory to the Company and it counsel) are able to dispose of such shares
publicly without registration under the 1933 Act. The Investors agree to sell
the Common Stock represented by the new certificates in accordance with the
applicable prospectus delivery requirements (if required by the 1933 Act and if
copies of a current prospectus are timely provided to the Investors by the
Company) or in accordance with an exemption from the registration requirements
of the 1933 Act.
Nothing in this Agreement or any other Transaction Document shall
limit the right of any holder to pledge the Securities pursuant to a bona fide
margin account or lending arrangement entered into in compliance with law,
including applicable securities laws.
ARTICLE VI
INDEMNIFICATION
In consideration of the Investors' execution and delivery of this
Agreement, the Warrants and the Registration Rights Agreement and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless the Investors and all
of their partners, officers, directors, employees, members and direct or
indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty
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made by the Company in the Transaction Documents or any other certificate or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate or document contemplated hereby or thereby, (c) any cause
of action, suit or claim brought or made against such Indemnitee by a third
party and arising out of or resulting from (i) the execution, delivery,
performance, breach by the Company or enforcement of the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby,
(ii) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (iii) the
status of any Investor or holder of any Securities as investor in the Company,
and (d) the enforcement of this Section. Notwithstanding the foregoing,
Indemnified Liabilities shall not include any liability of any Indemnitee
arising solely out of such Indemnitee's willful misconduct or fraudulent
action(s). To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Except as otherwise set forth herein, the
mechanics and procedures with respect to the rights and obligations under this
Article VI shall be the same as those set forth in Section 6 (other than Section
6(b)) of the Registration Rights Agreement, including, without limitation, those
procedures with respect to the settlement of claims and Company's right to
assume the defense of claims.
ARTICLE VII
[INTENTIONALLY LEFT BLANK]
ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS.
Section 8.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS TO BE EXECUTED AND PERFORMED EXCLUSIVELY IN NEW YORK. EACH PARTY
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE
VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH
PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING
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CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW. IF ANY PROVISION OF THIS AGREEMENT SHALL BE
INVALID OR UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY OR
UNENFORCEABILITY SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF THE
REMAINDER OF THIS AGREEMENT IN THAT JURISDICTION OR THE VALIDITY OR
ENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT IN ANY OTHER JURISDICTION.
EACH PARTY HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY.
Section 8.2 Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
Section 8.3 Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
Section 8.4 Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
Section 8.5 Entire Agreement; Amendments; Waivers.
(a) This Agreement supersedes all other prior oral or written
agreements between the Investors, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein (including the other Transaction
Documents) contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Investors make any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Investor, and no provision hereof may be waived other than
by an instrument in writing signed by the party against whom enforcement is
sought.
(b) The Investors may at any time elect, by notice to the Company,
to waive (whether permanently or temporarily, and subject to such conditions, if
any, as the Investors may specify in such notice) any of their respective rights
(but not obligations) under any of the Transaction Documents to acquire shares
of Common Stock from the Company, in which event such waiver shall be binding
against the Investors in accordance with its terms.
Section 8.6 Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing, must be delivered by (i) courier, mail or hand
delivery or (ii) facsimile, and will be deemed to have been delivered upon
receipt. The addresses and facsimile numbers for such communications shall be:
-25-
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If to the Company:
Blue Zone, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: President
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to the Investors:
To each Investor at the address and/or fax number set
forth in SCHEDULE 1 of this Agreement.
With a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-986-8866
Attention: Xxxxxxx X. Xxxxxxxxx, Esq. and
Xxxxxxx X. Xxxxxxx, Esq.
Each party shall provide five (5) days prior written notice to the
other party of any change in address, telephone number or facsimile number.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i)
or (ii) above, respectively.
Section 8.7 Successors and Assigns. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any Permitted Assignee (as
defined below). The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investors,
including by merger or consolidation. The Investors may assign some or all of
their
-26-
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rights hereunder to the other Investor, to an affiliate of either Investor or to
an entity or fund which has the same principal investment adviser as either
Investor, without the consent of the Company, and to others, with the written
consent of the Company, which consent shall not be unreasonably withheld (in
each case, a "PERMITTED ASSIGNEE"); provided, however, that any such assignment
shall not release the Investors from their obligations hereunder unless such
obligations are assumed by such assignee and the Company has so consented to
such assignment and assumption.
Section 8.8 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 8.9 Survival. The representations, warranties and agreements of
the Company and the Investors contained in the Agreement shall survive the
Closing and to the extent applicable, each Option Closing (as defined in the
Options).
Section 8.10 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
Section 8.11 Remedies. Each Investor and each Permitted Assignee shall
have all rights and remedies set forth in this Agreement, the Warrants, the
Registration Rights Agreement and the other Transaction Documents and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Each Investor and
each Permitted Assignee without prejudice may withdraw, revoke or suspend its
pursuit of any remedy at any time prior to its complete recovery as a result of
such remedy.
Section 8.12 Days. Unless the context refers to "business days" or
"trading days," all references herein to "days" shall mean calendar days.
Section 8.13 Rescission and Withdrawal Right. Notwithstanding anything to
the contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, wherever the Investors exercise 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 the Investors
may rescind or withdraw, in their 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.
Section 8.14 Obligations Absolute. The Company's obligations under the
Transaction Documents are unconditional and absolute and not subject to any
right of set off, counterclaim, delay or reduction.
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Section 8.15 Publicity. The Company agrees that it will not disclose, and
will not include in any public announcement (other than the Schedule 3.16 press
release), the name of any Investor without the express written agreement of such
Investor, unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement. The Company agrees
that it will deliver a copy of any public announcement (other than the Schedule
3.16 press release) regarding the matters covered by this Agreement or any other
Transaction Document or any agreement and document executed herewith to each
Investor and any public announcement including the name of an Investor to such
Investor, reasonably in advance of the release of such announcements.
Section 8.16 Like Treatment of Investors and Holders. Neither the Company
nor any of its affiliates shall, directly or indirectly, pay or cause to be paid
any consideration (immediate or contingent), whether by way of interest, fee,
payment for the redemption or exercise of the Securities, or otherwise, to any
Investor or holder of Securities, for or as an inducement to, or in connection
with the solicitation of, any consent, waiver or amendment of any terms or
provisions of the Transaction Documents, unless such consideration is required
to be paid to all Investors or holders of Securities bound by such consent,
waiver or amendment whether or not such Investors or holders so consent, waive
or agree to amend and whether or not such Investors or holders tender their
Securities for redemption, conversion or exercise. The Company shall not,
directly or indirectly, redeem any Securities unless such offer of redemption is
made pro rata to all Investors or holders of Securities, as the case may be, on
identical terms.
Section 8.17 Several Liability. Notwithstanding anything expressly or by
implication contained in this Agreement or in any other Transaction Document,
the obligations, responsibilities, liabilities, covenants, representations and
warranties of the Investors are several and not joint, and no Investor shall be
directly or indirectly responsible or liable in any way for the acts, omissions,
defaults or misrepresentations of any other Investor.
* * * * *
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Common
Stock Investment Agreement to be duly executed as of the date and year first
above written.
BLUE ZONE, INC.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
INVESTORS:
MILLENNIUM PARTNERS, L.P.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Administrative Officer
XXXXXXX ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
WESTGATE INTERNATIONAL, L.P.
By: Xxxxxxx International Capital Advisors,
Inc., as Attorney-in-Fact
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
Signature page to Common Stock Investment Agreement
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LIST OF SCHEDULES
-----------------
Schedule 1 List of Investors
Schedule 2.1(a) List of Subsidiaries
Schedule 2.1(c) Non-Investor Reserved Stock; Outstanding Options and Warrants for
Common Stock
Schedule 2.1(c)(i) Securities
Schedule 2.1 (s)(i) Outstanding securities entitled to registration rights
Schedule 2.1 (s)(ii) Outstanding securities affected by the issuance of Debentures, etc.
Schedule 2.1(aa) Real Property
Schedule 3.16 Press Release
LIST OF EXHIBITS
----------------
Exhibit 2.1(c)(i) Certificate of Incorporation of the Company
Exhibit 2.1(c)(ii) By-Laws of the Company
Exhibit 4.2(e) Opinion of Counsel
LIST OF ANNEXES
---------------
Annex A Initial Warrants
Annex B Adjustment Warrants
Annex C Options
Annex D Registration Rights Agreement
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SCHEDULE 1
NUMBER OF NUMBER OF AMOUNT AGGREGATE
INVESTOR ADDRESS INITIAL SHARES INITIAL WARRANTS OF OPTIONS PURCHASE PRICE
-------- ------- -------------- ---------------- ---------- --------------
Millenium Partners, L.P. 000 Xxxxx Xxxxxx 423,281 88,889 $1,200,000 $3,000,000
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxxxxx
Xxxxxxx Associates, L.P. c/o Elliott Management 141,093 29,630 $400,000 $1,000,000
Corporation
000 Xxxxx Xxxxxx, 00xx Xx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxx
Westgate International, L.P. c/o Elliott Management 141,093 29,630 $400,000 $1,000,000
Corporation
000 Xxxxx Xxxxxx, 00xx Xx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxx
-----------------------------------------------------------------------------------------------------------------------------------
TOTALS: 705,467 148,148 $2,000,000 $5,000,000
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INDEX OF DEFINED TERMS
As Defined on Page:
"20% CAP"...................................................................................19
"ACT"........................................................................................6
"ADJUSTMENT SHARES"..........................................................................1
"ADJUSTMENT WARRANTS"........................................................................1
"AGGREGATE PURCHASE PRICE"...................................................................2
"AGREEMENT"..................................................................................1
"APPROVED MARKETS"...........................................................................6
"BY-LAWS"....................................................................................5
"CHARTER"....................................................................................5
"CLOSING DATE"...............................................................................2
"CLOSING PRICE"..............................................................................1
"CLOSING"....................................................................................2
"COMMON STOCK"...............................................................................1
"COMPANY AGREEMENTS".........................................................................6
"COMPANY PERMITS"............................................................................9
"COMPANY PROPERTY"..........................................................................11
"COMPANY"....................................................................................1
"DAYS"......................................................................................28
"DTC"........................................................................................3
"DWAC".......................................................................................3
"EFFECTIVE REGISTRATION"....................................................................15
"EXCHANGE ACT"...............................................................................6
"FAST".......................................................................................3
"FINANCING TRANSACTION".....................................................................16
"INDEMNIFIED LIABILITIES"...................................................................24
"INDEMNITEES"...............................................................................24
"INITIAL SHARES".............................................................................1
"INITIAL WARRANTS"...........................................................................1
"INTELLECTUAL PROPERTY"......................................................................8
"INVESTOR"...................................................................................1
"INVESTORS"..................................................................................1
"KKWC".......................................................................................2
"MATERIAL ADVERSE EFFECT"....................................................................4
"MFN INVESTOR"...............................................................................5
"MFN OFFERING"...............................................................................5
"MFN TRANSACTION"............................................................................5
"PERMITTED ASSIGNEE"........................................................................27
"PRE-AGREEMENT SEC DOCUMENTS"................................................................9
"PRINCIPAL MARKET"...........................................................................2
"PROHIBITED TRANSACTIONS"...................................................................18
"REGISTRABLE SHARES".........................................................................1
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"REGISTRATION RIGHTS AGREEMENT"..............................................................1
"RULE 144"..................................................................................20
"SEC DOCUMENTS"..............................................................................7
"SEC"........................................................................................3
"SECURITIES ACT".............................................................................6
"SECURITIES".................................................................................4
"SHARE PURCHASE PRICE".......................................................................2
"TRADING DAY"................................................................................2
"TRANSACTION DOCUMENTS"......................................................................4
"VARIABLE RATE TRANSACTION"..................................................................5
"WARRANT ADJUSTMENT SHARES".................................................................18
"WARRANT SHARES".............................................................................1
"WARRANTS"...................................................................................1
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