SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is dated
as of April 23, 1999, among ThermoView Industries, Inc., a Delaware
corporation (the "COMPANY"), and the various purchasers identified and listed
on Schedule I hereto (each referred to herein as a "PURCHASER" and,
collectively, the "PURCHASERS.")
WHEREAS, the Company and the Purchasers are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D as promulgated by the
United States Securities and Exchange Commission (the "COMMISSION") under
Section 4(2) of the Securities Act of 1933, as amended (the "SECURITIES ACT")
or other applicable exemptions under federal and state securities laws;
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, 6,000 shares of the Company's
Series C Convertible Preferred Stock, par value $.001 per share, liquidation
value $1,000.00 per share (the "Securities"), and warrants (the "WARRANTS")
to purchase up to $6,000,000 of the Company's common stock, par value $.001
per share (the "COMMON STOCK"); and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT") pursuant
to which the Company has agreed to provide certain registration rights under
the Securities Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.
NOW THEREFORE, in consideration of the promises and mutual
covenants and agreements hereinafter, the Company and the Purchasers hereby
agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE SECURITIES AND WARRANTS
1.1 PURCHASE AND SALE. Subject to the terms and conditions set
forth herein, the Company shall issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, shall purchase from the Company on the
Closing Date (as defined below), the Securities and Warrants as set forth for
such Purchaser on SCHEDULE I. The Securities shall have the respective
rights, preferences and privileges set forth in the Certificate of
Designation (the "CERTIFICATE OF DESIGNATION"), the form of which is attached
hereto as EXHIBIT A, which shall be approved by the Purchasers and the
Company's Board of Directors and filed on or prior to the Closing by the
Company with the Secretary of State of Delaware.
1.2 CLOSING. The closing of the purchase and sale of the
Securities and the issuance of the Warrants (the "CLOSING") shall take place
at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or by transmission by
facsimile and overnight courier, immediately following the execution hereof
or such later date or different location as the parties shall agree, but not
prior to the date that the conditions set forth in Section 4.1 have been
satisfied or waived by the appropriate party (the "CLOSING DATE"). At the
Closing:
(i) Each Purchaser shall deliver, as directed by the Company,
its portion of the purchase price as set forth next to its name on
SCHEDULE I in United States dollars in immediately available funds to an
account or accounts designated in writing by the Company;
(ii) The Company shall deliver to each Purchaser the
certificates representing the number of Securities purchased by such
Purchaser as set forth on SCHEDULE I hereto;
(iii) The Company shall deliver to each Purchaser a Warrant, in
the form of EXHIBIT B hereto, representing the right to acquire the
number of shares of Common Stock purchased by such Purchaser as set forth
on SCHEDULE I hereto;
(iv) The Company shall pay to Xxxxx Xxxxxxx Asset Management,
LLC ("XXXXX XXXXXXX") a commitment fee of $50,000 in United States
dollars in immediately available funds to an account designated in
writing by Xxxxx Xxxxxxx, of which $15,000 has been delivered to Xxxxx
Xxxxxxx upon the signing of the term sheet and $35,000 of which shall be
delivered at the Closing; and
(v) The parties shall execute and deliver each of the documents
referred to in Section 4.1 hereof.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to each of the
Purchasers:
a. ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its
business as currently conducted. Except as set forth on SCHEDULE 2.1(a),
the Company has no subsidiaries (collectively, the "SUBSIDIARIES"). Each of
the Subsidiaries (which for purposes of this Agreement means any entity in
which the Company, directly or indirectly, owns the majority of such entity's
capital stock or holds an equivalent equity or similar interest) is a
corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the full corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Each of the Company and the Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would
not,
2
individually or in the aggregate, (x) adversely affect the legality, validity
or enforceability of any of this Agreement or the Transaction Documents (as
defined in Section 2.1(b)) or any of the transactions contemplated hereby or
thereby, (y) have or result in a material adverse effect on the results of
operations, assets, prospects, or financial condition of the Company and its
Subsidiaries, taken as a whole or (z) impair the Company's ability to perform
fully on a timely basis its obligations under any Transaction Document (any
of (x), (y) or (z), being a "MATERIAL ADVERSE EFFECT").
b. AUTHORIZATION; ENFORCEMENT. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and the Certificate of
Designation, the Warrants and the Registration Rights Agreement
(collectively, the "TRANSACTION DOCUMENTS"), and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of
this Agreement and the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action and no further action
is required by the Company, its Board of Directors or its stockholders. Each
of this Agreement and the Transaction Documents has been duly executed by the
Company and when delivered in accordance with the terms hereof will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except 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. Neither the Company nor
any Subsidiary is in any material violation of any of the provisions of its
respective articles or certificates of incorporation, bylaws or other charter
documents such that any right of a holder of the Securities would be
affected. Prior to the Closing Date the Certificate of Designation has been
filed with the Secretary of State of Delaware and will be in full force and
effect, enforceable against the Company in accordance with the terms thereof,
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. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company is as set forth in SCHEDULE 2.1(c). All of such
outstanding shares of capital stock have been, or upon issuance will be,
validly authorized and issued, fully paid and nonassessable and were issued
in accordance with the registration or qualification provisions of the
Securities Act, or pursuant to valid exemptions therefrom. Except as
disclosed in SCHEDULE 2.1(c), (i) no shares of the Company's capital stock
are subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company, nor is any holder of the
Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company by virtue of any Transaction
Document, (ii) there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, or giving any
Person (as defined below) any right to subscribe for or acquire, any shares
of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of
its Subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its Subsidiaries or options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible
3
into, any shares of capital stock of the Company or any of its Subsidiaries,
(iii) there are no outstanding debt securities, (iv) there are no agreements
or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the
Securities Act (except the Registration Rights Agreement), (v) there are no
outstanding securities of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of
its Subsidiaries is or may become bound to redeem a security of the Company
or any of its Subsidiaries, (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the shares of Common Stock as described in this Agreement, (vii)
the Company does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement and (viii) no Person (as
defined below) or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) or has the right to acquire by agreement
with or by obligation binding upon the Company beneficial ownership of in
excess of 5% of the Common Stock. "PERSON" means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or
an agency or subdivision thereof) or other entity of any kind.
d. AUTHORIZATION AND VALIDITY; ISSUANCE OF SHARES. The
shares of Common Stock issuable upon conversion of the Securities and
exercise of the Warrants (collectively, the "UNDERLYING SHARES") are and will
continue until issuance to be duly authorized and reserved for issuance and
the shares of Common Stock issued upon conversion of the Securities (the
"CONVERSION SHARES") and exercise of the Warrants (the "WARRANT SHARES") will
be validly issued, fully paid and non-assessable, free and clear of all
liens, encumbrances and Company rights of first refusal, other than liens and
encumbrances created by the Purchasers (collectively, "LIENS") and will not
be subject to any preemptive or similar rights.
e. NO CONFLICTS. The execution, delivery and performance
of this Agreement and each of the Transaction Documents by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby (including the issuance of the Underlying Shares) do not and will not
(i) conflict with or violate any provision of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), and the Company's Bylaws, as in effect on
the date hereof (the "BYLAWS") or other organizational documents of the
Company or any of the Subsidiaries, (ii) subject to obtaining the consents
referred to in Section 2.1(f), conflict in any material way with, or
constitute a material 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 (evidencing a Company or
Subsidiary debt or otherwise) to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) result in a material violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or any Subsidiary is
subject (including Federal and state securities laws and regulations)
applicable to the Company or any of its Subsidiaries, or by which any
material property or asset of the Company or any Subsidiary is bound or
affected.
4
f. CONSENTS AND APPROVALS. Except as specifically set
forth on SCHEDULE 2.1(f), neither the Company nor any Subsidiary is required
to obtain any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other federal, state,
local or other governmental authority, regulatory or self regulatory agency,
or other Person in connection with the execution, delivery and performance by
the Company of this Agreement or the Transaction Documents, other than (i)
the filing of a registration statement with the Commission, which shall be
filed in accordance with and in the time periods set forth in the
Registration Rights Agreement, (ii) any filings, notices or registrations
under applicable federal and state securities laws (including Form D's and
Form U-2's) and (iii) the approval of the Company's Board of Directors and
the filings of the Certificate of Designation with the Secretary of State of
Delaware, which filing and approval shall be effected on or prior to the
Closing Date (together with the consents, waivers, authorizations, orders,
notices and filings referred to on SCHEDULE 2.1(f), the "REQUIRED
APPROVALS").
g. LITIGATION; PROCEEDINGS. Except as specifically set
forth on SCHEDULE 2.1(g), there is no action, suit, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any
of their respective properties before or by any court, governmental or
administrative agency or regulatory authority (federal, state, county, local
or foreign) which (i) adversely affects or challenges the legality, validity
or enforceability of any of this Agreement or the Transaction Documents or
(ii) could reasonably be expected to, individually or in the aggregate, have
a Material Adverse Effect.
h. NO DEFAULT OR VIOLATION. Neither the Company nor any
Subsidiary (i) is in default under or in violation of any indenture, loan or
other credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound, (ii) is in violation
of any order of any court, arbitrator or governmental body applicable to it
or (iii) is in violation of any statute, rule or regulation of any
governmental authority to which it is subject which could reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Effect. The business of the Company and its Subsidiaries is not being
conducted, and shall not be conducted, in violation of any law, ordinance,
rule or regulation of any governmental entity, except where such violations
have not resulted or would not reasonably result, individually or in the
aggregate, in a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in breach of any agreement where such breach, individually or
in the aggregate, would have a Material Adverse Effect.
i. DISCLOSURE; ABSENCE OF CERTAIN CHANGES. None of this
Agreement, the Schedules to this Agreement, the Transaction Documents or any
other written or formally presented information, report, financial statement,
exhibit, schedule or document furnished by or on behalf of the Company in
connection with the negotiation of the transactions contemplated hereby
contained, contains, or will contain at the time it was or is so furnished
any untrue statement of a material fact or omitted, omits or will omit at
such time to state any material fact necessary in order to make the
statements made herein and therein, in light of the circumstances under which
they were made, not misleading. Except as disclosed on SCHEDULE 2.1(i),
since December 31, 1998, there has been no material adverse change and no
material adverse development in the business, properties, operations,
financial condition, liabilities or results of operations or, insofar as can
reasonably be foreseen, prospects of the Company or the
5
Subsidiaries. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any bankruptcy law
nor does the Company or any of its Subsidiaries have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy
proceedings. No event, liability, development or circumstance has occurred
or exists, or is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations or
financial condition or, insofar as can reasonably be foreseen, prospects,
which could reasonably be expected to, individually or in the aggregate, have
a Material Adverse Effect.
j. PRIVATE OFFERING. The Company and all Persons acting on
its behalf have not made, directly or indirectly, and will not make, offers
or sales of any securities or solicited any offers to buy any security under
circumstances that would require registration of the Securities, the
Warrants, the Conversion Shares, the Warrant Shares or the Underlying Shares
or the issuance of such securities under the Securities Act. The offer, sale
and issuance of the Securities, the Warrants, the Conversion Shares and the
Warrant Shares to the Purchasers will not be integrated with any other offer,
sale and issuance of the Company's securities (past, current, or future)
under the Securities Act or any regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated or for purposes of any stockholder approval provision applicable
to the Company or its securities. Subject to the accuracy and completeness
of the representations and warranties of the respective Purchasers contained
in Section 2.2 hereof, the offer, sale and issuance by the Company to the
Purchasers of the Securities, the Warrants and the Underlying Shares is
exempt from the registration requirements of the Securities Act.
k. CONTRACTS. SCHEDULE 2.1(k) sets forth a list of the
following contracts and other agreements to which the Company and its
Subsidiaries are a party or by or to which the Company or its Subsidiaries
are bound or subject:
(i) any agreement that individually requires aggregate
expenditures by the Company in any one year of more than $100,000;
(ii) any indenture, trust agreement, loan agreement or note that
involves or evidences outstanding indebtedness, or liabilities for
borrowed money in excess of $100,000;
(iii) any lease, sublease, installment purchase or similar
arrangement for the purchase, use or occupancy of personal property that
individually requires aggregate expenditures by the Company in any one
year of more than $100,000;
(iv) any agreement of surety, guarantee or indemnification,
other than (a) an agreement in the ordinary course of business with
respect to obligations in an aggregate amount not in excess of $100,000,
or (b) indemnification provisions contained in leases not otherwise
required to be disclosed;
(v) any employment agreements or bonus plans, relating to the
compensation of (a) officers or (b) other employees earning more than
$100,000 per year; and
6
(vi) any agreement containing covenants of the Company not to
compete in any line of business, in any geographic area or with any
person, or covenants of any other person not to compete with the Company
or in any line of business of the Company;
Complete and correct copies of all of the contracts and other
agreements set forth in SCHEDULE 2.1(k) have been or will promptly be
provided to the Purchasers. All contracts and other agreements set forth in
SCHEDULE 2.1(k) are valid, existing, in full force and effect, and are
binding upon the Company and/or its Subsidiaries and the other parties
thereto in accordance with their terms. The Company and/or its Subsidiaries
are not in default, in any material respect, under any such contracts, nor
does any condition exist that with notice or lapse of time or both would
constitute a default thereunder, nor, to the knowledge of the Company, is any
other party to any such contract or other agreement in default thereunder.
l. INVESTMENT COMPANY. The Company is not, and is not
controlled by or under common control with an affiliate (an "AFFILIATE") of
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
m. BROKER'S FEES. Except for the fees payable solely by
the Company to Xxxxx Xxxxxxx Management pursuant to Section 6.6 hereof and to
EBI Securities Corporation, no fees or commissions or similar payments with
respect to the transactions contemplated by this Agreement or the Transaction
Documents have been paid or will be payable by the Company to any broker,
financial advisor, finder, investment banker, or bank. The Purchasers shall
have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
Section 2.1(m) that may be due in connection with the transactions
contemplated by this Agreement and the Transaction Documents.
n. FINANCIAL STATEMENTS. The Company has delivered to the
Purchasers balance sheet of the Company as at December 31, 1998 and the
related statement of income, changes in stockholders' equity, and cash flow
for the fiscal year then ended, together with the report thereon of Ernst &
Young, independent certified public accountants. Such financial statements
and notes fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Company as
at December 31, 1998 and for the periods referred to in such financial
statements, all in accordance with United States generally accepted
accounting principals ("GAAP"), and the financial statements referred to in
this Section reflect the consistent application of such accounting principles
throughout the period involved. No financial statements of any Person other
than the Company are required by GAAP to be included in the consolidated
financial statements of the Company.
o. OTCBB COMPLIANCE. The principal market on which the
Common Stock is currently traded is the OTCBB. The Company is not aware of
any facts which would reasonably lead to delisting or suspension of the
Common Stock by the OTCBB. After giving effect to the transactions
contemplated by this Agreement and the Transaction Documents, the Company is
and will be in compliance with all requirements of the OTCBB.
p. INTELLECTUAL PROPERTY RIGHTS. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trademark applications, trade names and service marks, whether or
not registered, and all patents, patent applications, copyrights,
7
inventions, licenses, approvals, governmental authorizations, trade secrets
and intellectual property rights (collectively, "INTELLECTUAL PROPERTY
RIGHTS") which are necessary for use in connection with their respective
businesses as now conducted. Except as set forth on SCHEDULE 2.1(p), none of
the Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate within two years from the date of this
Agreement. Neither the Company nor any of its Subsidiaries has, to their
knowledge, infringed or is infringing on any of the Intellectual Property
Rights of any Person and, except as set forth on SCHEDULE 2.1(p), there is no
claim, action or proceeding which has been made or brought against, or to the
Company's knowledge, is being made, brought or threatened against, the
Company or its Subsidiaries regarding the infringement of any of the
Intellectual Property Rights, and the Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing, except where any of the foregoing would not have a Material
Adverse Effect. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
q. EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of
the Company or any of its Subsidiaries, is any such dispute threatened.
Except as set forth on SCHEDULE 2.1(q) neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that relations with their employees are good.
Except as set forth on SCHEDULE 2.1(q), since December 31, 1998 no executive
officer (as defined in Rule 501(f) under the Securities Act) has notified the
Company that such officer intends to leave the Company or otherwise terminate
such officer's employment with the Company.
r. REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as
described on SCHEDULE 2.1(r) hereto, (i) the Company has not granted or
agreed to grant to any Person any rights (including "piggy-back" registration
rights) to have any securities of the Company registered with the Commission
or any other governmental authority which has not been satisfied and (ii) no
Person, including, but not limited to, current or former stockholders of the
Company, underwriters, brokers or agents, has any right of first refusal,
preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by this Agreement or any Transaction
Document.
s. TITLE. Except as disclosed on SCHEDULE 2.1(s), the
Company and the Subsidiaries have good and marketable title in fee simple to
all real property and personal property owned by them which is material to
the business of the Company and its Subsidiaries, in each case free and clear
of all Liens, except for Liens that do not materially adversely affect the
value of such property and do not interfere with the use made and proposed to
be made of such property by the Company and the Subsidiaries. Any real
property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and, to the Company's best
knowledge, enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property and
buildings by the Company and the Subsidiaries.
t. PERMITS. The Company and the Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals,
orders and permits necessary to own, lease and operate their respective
properties and to conduct their respective businesses as
8
currently conducted except where the failure to possess such permits would
not, individually or in the aggregate, have a Material Adverse Effect
("MATERIAL PERMITS"), and there is no proceeding pending, or, to the
knowledge of the Company, threatened relating to the revocation,
modification, suspension or cancellation of any Material Permit. Neither the
Company nor any of the Subsidiaries is in conflict with or default or
violation of any Material Permit.
u. 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
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 coverages as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business,
at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the
Company and its Subsidiaries, taken as a whole.
v. INTERNAL ACCOUNTING CONTROLS. The Company and each of
the 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, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with United States 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.
w. TAX STATUS; FIRPTA. Except as set forth on SCHEDULE
2.1(w), the Company and each of the Subsidiaries has made or filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on
such returns, reports and declarations, except those being contested in good
faith (which are set forth on SCHEDULE 2.1(w) hereof), and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of
the Company know of no basis for any such claim. The Company is not a
"United States real property holding corporation" within the meaning of
Section 847(c)(2) of the Internal Revenue Code of 1986, as amended.
x. TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 2.1(x), and other than the grant of stock options and warrants
disclosed on SCHEDULE 2.1(c), none of the officers, directors, or 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
9
payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or entity in
which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.
y. APPLICATION TO TAKEOVER PROTECTION. The Company and its
Board of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination or
other similar anti-takeover provision under the Certificate of Incorporation,
Bylaws or the laws of the State of Delaware which is or could become
applicable to the Purchasers or the Transaction Documents as a result of the
transactions contemplated by this Agreement or the Transaction Documents.
None of the transactions contemplated by this Agreement or the Transaction
Documents, including the conversion of the Securities and the exercise of the
Warrants, will trigger any poison pill provisions of any of the Company's
stockholders' rights or similar agreements.
z. ENVIRONMENTAL LAWS. Except as set forth on SCHEDULE
2.1(z), the Company and its Subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permits, licenses or other approvals except where the
failure of any of the foregoing would not result in a Material Adverse Effect.
aa. FOREIGN CORRUPT PRACTICES. Neither the Company, nor any
of its Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee form
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
bb. SOLICITATION MATERIALS; CERTAIN INFORMATION. The
Company has not (i) distributed any offering materials in connection with the
offering and sale of the Securities or the Warrants, other than the Schedules
to this Agreement, any amendments and supplements thereto and the materials
listed on SCHEDULE 2.1(bb), or (ii) solicited any offer to buy or sell the
Securities or the Warrants by means of any form of general solicitation or
advertising. Neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf, has engaged or will engage 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 or Warrants. The Company acknowledges that the Purchasers will be
trading in the securities of the Company in reliance on the foregoing
representation and warranty.
cc. ACKNOWLEDGEMENT OF DILUTION. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares and Warrant Shares upon conversion of the
Securities or exercise of the
10
Warrants. The Company further acknowledges that its obligation to issue
Conversion Shares and Warrant Shares upon conversion of the Securities or
exercise of the Warrants in accordance with this Agreement, the Certificate
of Designation and the Warrants is absolute and unconditional regardless of
the dilutive effect that such issuance may have on the ownership interests of
other stockholders of the Company, except as any underwriters may require
with respect to any delay of any registration of the Securities pursuant to
the terms of the Registration Rights Agreement..
dd. ACKNOWLEDGEMENT REGARDING PURCHASERS' PURCHASE OF
SECURITIES. The Company acknowledges and agrees that the Purchasers are
acting solely in the capacity of arm's length purchasers with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement
and the transactions contemplated hereby and any statement made by any
Purchaser or any of their respective representatives or agents in connection
with this Agreement and the transactions contemplated hereby is not advice or
a recommendation and is merely incidental to the Purchasers' purchaser of the
securities. The Company further represents to each Purchaser that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereunder by Company
and its representatives.
ee. SOLVENCY. The Company (both before and after giving
effect to the transactions contemplated by this Agreement) is solvent (I.E.,
its assets have a fair market value in excess of the amount required to pay
its liabilities on its existing debts as they become absolute and matured)
and currently the Company has no information that would lead it to reasonably
conclude that the Company would not have the ability to, nor does it intend
to take any action that would impair its ability to, pay its debts from time
to time incurred in connection therewith as such debts mature. The Company
did not receive a qualified opinion from its auditors with respect to its
most recent fiscal year end and does not anticipate or know of any basis upon
which its auditors might issue a qualified opinion in respect of its current
fiscal year.
ff. OTHER AGREEMENTS. The Company has not, directly or
indirectly, made any agreements with any Purchasers relating to the terms and
conditions of the transactions contemplated by the Transaction Documents
except as set forth in the Transaction Documents.
The Purchasers acknowledge and agree that the Company makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.1.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
a. ORGANIZATION; AUTHORITY. Such Purchaser is a
corporation or a limited duration company or a limited liability company or
limited partnership duly formed, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation with the
requisite power and authority, corporate or otherwise, to enter into and to
consummate the transactions contemplated hereby and by the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The purchase by such Purchaser of the Securities and the
Warrants hereunder has been duly authorized by all necessary action on the
part of such
11
Purchaser. Each of this Agreement and the Registration Rights Agreement has
been duly executed and delivered by such Purchaser and constitutes the valid
and legally binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
b. INVESTMENT INTENT. Such Purchaser is acquiring the
Securities and the Warrants for its own account and not with a present view
to or for distributing or reselling the Securities, the Warrants, the
Conversion Shares or the Warrant Shares or any part thereof or interest
therein in violation of the Securities Act; PROVIDED, HOWEVER, that by making
the representations herein, such Purchaser does not agree to hold any of the
Securities, the Warrants, the Conversion Shares or the Warrant Shares for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
c. PURCHASER STATUS. At the time such Purchaser was
offered the Securities and the Warrants, and at the Closing Date, (i) it was
and will be an "accredited investor" as defined in Rule 501 under the
Securities Act and (ii) such Purchaser, either alone or together with its
representatives, had and will have such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, the Warrants, the Warrant Shares and the Conversion Shares.
d. RELIANCE. Such Purchaser understands and acknowledges
that (i) the Securities and the Warrants are being offered and sold to such
Purchaser without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the Securities
Act under Section 4(2) of the Securities Act or Regulation D promulgated
thereunder or other applicable federal and state securities laws and (ii) the
availability of such exemptions depends in part on, and the Company will rely
upon the accuracy and truthfulness of, the representations set forth in this
Section 2.2 and such Purchaser hereby consents to such reliance.
e. INFORMATION. Such Purchaser and its advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities and Warrants which have been requested by such Purchaser or its
advisors. Such Purchaser and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigation conducted by Purchaser or any of its
advisors or representatives shall modify, amend or affect Purchaser's right
to rely on the Company's representations and warranties contained in Section
2.1 above or representations and warranties of the Company contained in any
other Transaction Document. Such Purchaser understands that its investment
in the Securities and Warrants involves a significant degree of risk.
f. GOVERNMENTAL REVIEW. Such Purchaser understands that no
United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities or Warrants.
12
g. RESIDENCY. Such Purchaser is a resident of the
jurisdiction set forth immediately below such Purchaser's name on Schedule II
hereto.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III.
OTHER AGREEMENTS
3.1 TRANSFER RESTRICTIONS.
a. If any Purchaser should decide to dispose of the
Securities, the Warrants, the Conversion Shares or the Warrant Shares held by
it, such Purchaser understands and agrees that it may do so only pursuant to
(i) an effective registration statement under the Securities Act, (ii) to the
Company or (iii) an available exemption from the registration requirements of
the Securities Act or Rule 144 promulgated under the Securities Act ("RULE
144"). The Company shall announce any material non-public information that
it legally is required to announce on or prior to the Effectiveness Date (as
defined in the Registration Rights Agreement) of the registration statement
filed pursuant to the Registration Rights Agreement and shall not enter into
any subsequent non-disclosure agreements that would prevent it from
announcing any such information that otherwise legally could have been
announced on or prior to the Effectiveness Date, unless confidential
treatment for such information is granted by the Commission. In connection
with any transfer of any Securities, Warrants, Conversion Shares or Warrant
Shares other than pursuant to an effective registration statement, Rule
144(k) or to the Company, the Company may require the transferor thereof to
provide to the Company a written opinion of counsel experienced in the area
of United States securities laws selected by the transferor, the form and
substance of which opinion shall be customary for opinions of counsel in
comparable transactions, to the effect that such transfer does not require
registration of such transferred securities under the Securities Act;
PROVIDED, HOWEVER, that if the Securities, Warrants, Conversion Shares or
Warrant Shares may be sold pursuant to Rule 144(k), no written opinion of
counsel shall be required from the Purchaser if such Purchaser provides
reasonable assurances that such security can be sold pursuant to Rule 144(k).
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on its books any transfer by any Purchaser to an Affiliate of such
Purchaser, provided that the transferee certifies to the Company that it is
an "accredited investor" as defined in Rule 501(a) under the Securities Act.
Any such transferee shall agree in writing to be bound by the terms of this
Agreement and the Transaction Documents and shall have the rights of a
Purchaser under this Agreement and the Transaction Documents. If a Purchaser
provides the Company with an opinion of counsel, the form and substance of
which opinion shall be customary for opinions of counsel in comparable
transactions, to the effect that a public sale, assignment or transfer of the
Securities, the Conversion Shares, the Warrants and the Warrant Shares may be
made without registration under the Securities Act or the Purchaser provides
the Company with reasonable assurances that the Securities, the Warrants, the
Conversion Shares and the Warrant Shares can be sold pursuant to Rule 144(k)
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company shall permit
the transfer, and, in the case of the
13
Conversion Shares and the Warrant Shares, promptly instruct its transfer
agent to issue one or more certificates in such name and in such
denominations as specified by such Purchaser and without any restrictive
legend. Notwithstanding the foregoing or anything else contained herein to
the contrary, the securities may be pledged as collateral in connection with
a BONA FIDE margin account or other lending arrangement.
b. Each Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b) or applicable state and federal securities
laws, of the following legend on the Securities, the Warrants, the Conversion
Shares and the Warrant Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
Neither the Securities, the Warrants, the Conversion Shares, nor
the Warrant Shares shall contain the legend set forth above (or any other
legend) (i) at any time while a registration statement is effective under the
Securities Act covering such security, (ii) if in the written opinion of
counsel to the Purchaser experienced in the area of United States securities
laws (the form and substance of which opinion shall be customary for opinions
of counsel in comparable transactions), such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) or
(iii) if such Securities, Warrants, Conversion Shares or Warrant Shares may
be sold pursuant to Rule 144(k). The Company agrees that it will provide
each Purchaser, upon request, with a certificate or certificates representing
Securities, Warrants, Conversion Shares or Warrant Shares, free from such
legend at such time as such legend is no longer required. If such
certificate or certificates had previously been issued with such a legend or
any other legend, the Company shall, upon request, issue such certificate or
certificates free of any legend hereunder in exchange for the certificate or
certificates bearing such legend.
3.2 STOP TRANSFER INSTRUCTION. The Company may not make any
notation on its records or give instructions to any transfer agent of the
Company which enlarge the restrictions on transfer set forth in Section 3.1.
3.3 FURNISHING OF INFORMATION. As long as any Purchaser owns the
Securities, the Warrants, the Conversion Shares or the Warrant Shares, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act,
as well as any other information required thereby, in the time period that
such
14
filings would have been required to have been made under the Exchange Act.
The Company shall deliver its first quarterly financial report to the
Purchasers no later than June 15, 1999. If at any time while any Purchaser
owns the Securities, the Warrants, the Conversion Shares or the Warrant
Shares the Company is at any time required to register its Common Stock
under Section 12(g) of the Exchange Act or to file reports pursuant to
Section 13, 14, or 15(d) of the Exchange Act, then the Company will cause the
Common Stock to continue at all times to be registered under Section 12(g) of
the Exchange Act, will timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed
by the Company after the date hereof pursuant to Section 13, 14 or 15(d) of
the Exchange Act and promptly furnish, but in no event later than two (2)
business days after the filing thereof with the Commission, the Purchasers
with true and complete copies of all such filings, 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. The Company further covenants that it will take such further
action as any holder of the Securities, the Warrants, the Conversion Shares or
the Warrant Shares may reasonably request, all to the extent required from
time to time to enable such Person to sell the Securities, the Warrants, the
Conversion Shares, or the Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act. Upon the request of any such Person,
the Company shall deliver to such Person a written certification of a duly
authorized officer as to whether it has complied with such requirements.
3.4 BLUE SKY LAWS. In accordance with the Registration Rights
Agreement, the Company shall (i) qualify the Conversion Shares and the
Warrant Shares under the securities or "blue sky" laws of such jurisdictions
as the Purchasers may request (or to obtain an exemption from such
qualification), (ii) shall provide evidence of any such action so taken to
each Purchaser on or prior to the Closing Date and (iii) shall continue such
qualification at all times through the resale of all Conversion Shares or
Warrant Shares, but in any event not past the fourth anniversary of the
Closing Date.
3.5 INTEGRATION. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities, the Warrants, the Conversion Shares or the
Warrant Shares in a manner that would require the registration under the
Securities Act of the sale of the Securities, the Warrants, the Conversion
Shares or the Warrant Shares to any Purchaser or cause the offering of such
securities to be integrated with any other offering of securities by the
Company for the purpose of any stockholder approval provision applicable to
the Company or its securities.
3.6 RESERVATION OF CONVERSION SHARES AND WARRANT SHARES. The
Company at all times shall reserve a sufficient number of shares of its
authorized but unissued Common Stock to provide for 150% of the full
conversion of the outstanding Securities (including the payment of all
dividends thereon) and exercise of the outstanding Warrants. Shares of
Common Stock reserved for issuance upon conversion of the Securities and the
exercise of the Warrants shall be allocated pro rata to each of the
Purchasers in accordance with the amount of Securities and Warrants issued
and delivered to such Purchaser at the Closing. If at any time the number of
shares of Common Stock authorized and reserved for issuance is insufficient
to cover 150% of the number of Conversion Shares and Warrant Shares issued
and issuable upon conversion of the
15
Securities and exercise of the Warrants (based on the Conversion Price (as
defined in the Certificate of Designation) of the Securities in effect from
time to time and the Exercise Price (as defined in the Warrants) of the
Warrants in effect from time to time) without regard to any limitation on
conversions or exercises, the Company will promptly take all corporate action
necessary to authorize and reserve 150% of such shares pursuant to Section
3(b) of the Registration Rights Agreement, including, without limitation,
calling a special meeting of stockholders to authorize additional shares to
meet the Company's obligations under this Section 3.6(b), in the case of an
insufficient number of authorized shares, and using its best efforts to
obtain stockholder approval of an increase in such authorized number of
shares.
3.7 NOTICE OF BREACHES.
a. The Company and each Purchaser shall give prompt written
notice to the other of any breach by it of any representation, warranty or
other agreement contained in this Agreement or in the Transaction Documents,
as well as any events or occurrences arising after the date hereof and prior
to the Closing Date, which would reasonably be likely to cause any
representation or warranty or other agreement of such party, as the case may
be, contained herein to be incorrect or breached as of the Closing Date
provided such notice will not constitute material non-public information.
However, no disclosure by either party pursuant to this Section 3.7 shall be
deemed to cure any breach of any representation, warranty or other agreement
contained herein or in the Transaction Documents.
b. Notwithstanding the generality of Section 3.7(a), the
Company shall promptly notify, provided such notification will not constitute
material non-public information, each Purchaser of any notice or claim
(written or oral) that it receives from any lender of the Company or any
Subsidiary to the effect that the consummation of the transactions
contemplated hereby and by the Registration Rights Agreement violates or
would violate any written agreement or understanding between such lender and
the Company or any Subsidiary, and the Company shall promptly furnish by
facsimile to the Purchasers a copy of any written statement in support of or
relating to such claim or notice.
c. The default by any Purchaser of any of its obligations,
representations or warranties under this Agreement or the Transaction
Documents shall not be imputed to, and shall have no effect upon, any other
Purchaser or affect the Company's obligations under this Agreement or any
Transaction Document to any non-defaulting Purchaser.
3.8 FORM D. The Company agrees to file a Form D with respect to
the Securities and Warrants as required by Rule 506 under Regulation D and to
provide a copy thereof to each Purchaser promptly after such filing.
3.9 FUTURE FINANCINGS. Except for (i) issuance of the Underlying
Shares; (ii) shares of Common Stock deemed to have been issued by the Company
in connection with any plan which has been approved by the Board of Directors
of the Company prior to the date hereof, pursuant to which the Company's
securities may be issued to any employee, officer, director or consultant of
the Company; (iii) shares of Common Stock issuable upon the exercise of any
options or warrants outstanding on the date hereof and listed in Schedule
2.1(c) hereto; (iv) shares of Common Stock issued or deemed to have been
issued as consideration for an acquisition
16
(including earn-out payments funded with stock, which payments are set forth
on SCHEDULE 3.9 hereof) by the Company of a division, assets or business (or
stock constituting any portion thereof) from another Person; (v) the issuance
of any securities (including, but not limited to, subordinated debt,
preferred stock or warrants) to General Electric Capital Corporation or its
affiliates (collectively, "GE") in connection with certain financing
currently being negotiated by the Company and GE (which negotiation has not
been finalized as of the Closing Date); or (vi) securities to be issued by
the Company or selling stockholders in connection with a public offering by
the Company, if the Company agrees to issue shares of Common Stock or other
securities convertible into or exchangeable or exercisable for Common Stock
(the "NEW SECURITY") while any Securities are outstanding at (a) an effective
price per share which is less or may be less (including, without limitation,
any security which is convertible into or exchangeable or exercisable for
Common Stock at a price which may change with the market price of the Common
Stock) than the Conversion Price (as defined in the Certificate of
Designation) of the Securities as of the date thereof or (b) an effective
price per share greater than the Conversion Price but less than the Average
Price (as defined in the Certificate of Designation) on the date of such
issuance or sale (either of (a) or (b) a "FUTURE FINANCING"), the Company
shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the
third (3rd) Trading Day (as defined below) after the decision to issue the
New Security has been made, written notice of the Future Financing containing
in reasonable detail (i) the proposed terms of the Future Financing, (ii) the
amount of the proceeds that will be raised and (iii) the Person with whom
such Future Financing shall be effected, and attached to which shall be a
term sheet or similar document relating thereto (the "FUTURE FINANCING
NOTICE"). Upon receiving the Future Financing Notice, each Purchaser shall
have the pro rata right (based on the principal amount of the Securities held
by such Purchaser relative to the aggregate principal amount of Securities
outstanding) to purchase, on the same terms as the Future Financing, an
amount of New Securities having a purchase price which shall not exceed the
sum of (i) the number of shares of Common Stock issuable upon conversion of
the Security (ii) the number of shares of Common Stock which is the product
of the Exercise Price (as defined in the Warrants) multiplied by that number
of shares of Common Stock underlying the outstanding Warrants. In the event
a Purchaser desires to exercise the right granted under this Section 3.9,
such Purchaser must notify the Company on or prior to the fifth (5th)Trading
Day after such Purchaser has received the Future Financing Notice. In the
event the terms and conditions of a proposed Future Financing are amended in
any respect after delivery of the Future Financing Notice but prior to the
closing of the proposed Future Financing to which such Future Financing
Notice relates, the Company shall deliver a new notice to each Purchaser
describing the amended terms and conditions of the proposed Future Financing
and each Purchaser thereafter shall have an option during the five (5)
Trading Days period following delivery of such new notice to purchase its pro
rata share (based on the Purchaser's percentage of the principal amount of
the outstanding Securities such Purchaser owns) of the New Securities being
offered on the same terms as contemplated by such proposed Future Financing,
as amended. The foregoing sentence shall apply to successive amendments to
the terms and conditions of any proposed Future Financing. In the event one
or more Purchasers elects not to exercise its rights granted hereby, the
Company shall permit those Purchasers electing to exercise the right granted
under this Section 3.9 to purchase, on a pro rata basis equal to its
percentage ownership of the then outstanding principal amount of the
Securities, the sum of the number of shares of Common Stock that the other
Purchaser(s) were eligible to purchase, if they had exercised their right
hereunder. Those Purchasers desiring to
17
purchase additional shares of Common Stock must notify the Company of their
intention to do so within five (5) Trading Days after the Company has
informed the Purchasers of their right to purchase additional shares of
Common Stock. Within five (5) Trading Days of the termination of the final
notice period, the transactions contemplated by this Section 3.9 shall close,
subject to the completion of mutually satisfactory documentation, and the
Company shall tender to each Purchaser certificates representing the New
Securities that it agreed to purchase and the Purchasers shall make payment
for the entire purchase price in immediately available funds at the closing
of such sale. "TRADING DAY" shall mean a day on which the OTCBB (or in the
event the Common Stock is not traded on the OTCBB, such other securities
market on which the Common Stock is listed) is open for trading.
3.10 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Securities and the exercise of the Warrants for the repayment of
short-term indebtedness, working capital and pending acquisitions.
3.11 TRANSACTIONS WITH AFFILIATES. So long as any Securities or
Warrants are outstanding, the Company shall not, and shall cause each of its
Subsidiaries not to, enter into, amend, modify or supplement, or permit any
Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors or persons who were officers or directors at any time
during the previous two years, stockholders who beneficially own 5% or more
of the Common Stock, or Affiliates or any individual related by blood,
marriage or adoption to any such individual or with any entity in which any
such entity or individual owns a 5% or more beneficial interest (each a
"RELATED PARTY"), except for (a) customary employment arrangements and
benefit programs on reasonable terms, (b) any agreement, transaction,
commitment or arrangement on an arms-length basis on terms no less favorable
than terms which would have been obtainable from a Person other than such
Related Party, or (c) any agreement, transaction, commitment or arrangement
which is approved by a majority of the disinterested directors of the
Company. For purposes hereof, any director who is also an officer of the
Company or any Subsidiary of the Company shall not be a disinterested
director with respect to any such agreement, transaction, commitment or
arrangement. "AFFILIATE" for purposes of this section only means, with
respect to any person or entity, another person or entity that, directly or
indirectly, (i) has a 5% or more equity interest in that person or entity,
(ii) has 5% or more common ownership with that person or entity, (iii)
controls that person or entity, or (iv) shares common control with that
person or entity. "CONTROL" or "CONTROLS" for purposes of this section means
that a person or entity has the power, direct or indirect, to conduct or
govern the policies of another person or entity.
3.12 TRANSFER AGENT INSTRUCTIONS. At the Closing the Company shall
issue irrevocable instructions to its transfer agent (and shall issue to any
subsequent transfer agent as required), to issue certificates, registered in
the name of each such Purchaser or its respective nominee(s), for the
Conversion Shares and/or the Warrant Shares in such amounts as specified from
time to time by each Purchaser to the Company in a form acceptable to such
Purchasers (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). So long as
required pursuant to Section 3.1(b), all such certificates shall bear the
restrictive legend specified in Section 3.1(b) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 3.12, and stop transfer
instructions to give effect to Section 3.1 hereof (in the case of the
Conversion Shares and the Warrant Shares, prior to registration of the
18
Conversion Shares under the Securities Act) will be given by the Company to
its transfer agent and that the Securities, the Warrants, the Conversion
Shares and the Warrant Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement and the Transaction Documents. If a Purchaser provides the Company
with an opinion of counsel, the form and substance of which opinion shall be
customary for opinions of counsel in comparable transactions, to the effect
that a public sale, assignment or transfer of the Securities, the Conversion
Shares, the Warrants and the Warrant Shares may be made without registration
under the Securities Act or the Purchaser provides the Company with
reasonable assurances that the Warrants, the Conversion Shares and the
Warrant Shares can be sold pursuant to Rule 144(k) without any restriction as
to the number of securities acquired as of a particular date that can then be
immediately sold, the Company shall permit the transfer, and, in the case of
the Conversion Shares and the Warrant Shares, promptly instruct its transfer
agent to issue one or more certificates in such name and in such
denominations as specified by such Purchaser and without any restrictive
legend. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Purchasers by violating the
intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 3.12 will be inaequate and agrees, in the event of a beach
or threatened breach by the Company of the provisions of this Section 3.12,
that the Purchasers, shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic
loss and without any bond or other security being required.
3.13 PRESS RELEASE. Subject to the provisions of Section 6.10
hereof, prior to the opening of OTCBB on April 27, 1999, the Company shall
file a press release in form and substance acceptable to the Purchasers.
3.14 FINANCIAL INFORMATION. The Company agrees to send the
following to each Purchaser prior to and during the Effectiveness Period (as
defined in the Registration Rights Agreement): (i) within three (3) business
days after the filing thereof with the SEC, a copy of its Annual Reports on
Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form
8-K and any registration statements or amendments (other than on Form S-8)
filed pursuant to the Securities Act, if any, (ii) on the same day as the
release thereof, facsimile copies of all press releases issued by the Company
or any of its Subsidiaries, and (iii) copies of any notices and other
information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to
the stockholders.
3.15 ORDINARY COURSE BROKERAGE AND TRADING. Subject to compliance
with all applicable securities laws, no Purchaser shall be prohibited from
engaging in its ordinary course brokerage and trading activities in respect
of the Company's Common Stock; PROVIDED that the personnel engaged in such
activities have not been involved with the transactions contemplated hereby
and have not been provided with confidential information with respect to the
Company.
3.16 BEST EFFORTS. Each of the parties hereto shall use its best
efforts to satisfy each of the conditions to be satisfied by it as provided
in Article IV of this Agreement.
19
3.17 CORPORATE EXISTENCE. Until such time as all of the Purchasers
provide the Company with written notice that they do not beneficially own any
Securities or Warrants, the Company shall maintain its corporate existence
and shall not sell all or substantially all of the Company's assets, except
in the event of a merger or consolidation or sale of all or substantially all
of the Company's assets, where the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) (a)
is a publicly traded corporation whose common stock is listed for trading on
the Nasdaq, the New York Stock Exchange or the American Stock Exchange or (b)
redeems all of the Securities then outstanding.
3.18 NO VIOLATION OF APPLICABLE LAW. Notwithstanding any provision
of this Agreement to the contrary, if the redemption of Securities or
Underlying Shares otherwise required under this Agreement, any applicable
Certificate of Designations or the Registration Rights Agreement would be
prohibited by the relevant provisions of the General Corporation Law of the
State of Delaware, such redemption shall be effected as soon as it is
permitted under such law; provided, however, that from the fifth (5th) day
after such redemption notice until such redemption price is paid in full,
interest on any such unpaid amount shall accrue and be payable at the rate of
15% per annum in accordance with the applicable Certificate of Designation.
3.19 REPORTING REQUIREMENT. The Company covenants that it will be
subject to the periodic reporting requirements of Section 13(a) of the
Exchange Act by the Effectiveness Date (as such term is defined in the
Registration Rights Agreement).
3.20 CONVERSION OBLIGATIONS OF THE COMPANY. The Company covenants
to convert the Securities and to deliver Underlying Shares in accordance with
the terms and conditions and time period set forth in the respective
Certificate of Designation.
3.21 MATERIAL INFORMATION. The Company covenants that, subsequent
to the Filing Date (as such term is defined in the Registration Rights
Agreement), it will not provide the Purchasers or their agents or counsel
with any information that constitutes or might constitute material non-public
information. The Company further covenants that any information provided by
the Company to the Purchasers, their agents or their counsel which could be
deemed to constitute material non-public information, will cease to be
material non-public information (either through disclosure by the Company or
otherwise) by the Filing Date (as such term is defined in the Registration
Rights Agreement).
3.22 NASDAQ REPORTING REQUIREMENT. The Company covenants that by
January 31, 2000 it shall apply to become listed on the NASDAQ Stock Market.
3.23 SENIORITY; EXCLUSIVITY. Excluding any securities which may be
issued by the Company to GE, no class of equity securities of the Company
will be senior to the Securities in right of payment, whether upon
liquidation, dissolution or otherwise. The Securities shall rank PARI PASSU
with the Company's Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock. So long as any Securities issued hereunder
remain outstanding, the Company shall not exchange, redeem or covert any of
the Company's capital stock for indebtedness, including convertible debt, of
the Company. The Company shall not issue and sell any
20
Securities, other than to the Purchasers pursuant to this Agreement, without
the prior written consent of each of the Purchasers.
ARTICLE IV.
CONDITIONS
4.1 CLOSING CONDITIONS.
a. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
SELL. The obligation of the Company to sell the Securities and the Warrants
hereunder is subject to the satisfaction or waiver (with prior written notice to
each Purchaser) by the Company, at or before the Closing, of each of the
following conditions:
(i) ACCURACY OF THE PURCHASERS' REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each Purchaser in this Agreement
shall be true and correct in all material respects as of the date when
made (except for representations and warranties that speak as of a
specific date) and as of the Closing Date;
(ii) PERFORMANCE BY THE PURCHASERS. Each Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or prior to
the Closing; and
(iii) 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 this Agreement or the Transaction Documents.
b. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE. The obligation of each Purchaser hereunder to acquire and pay for the
Securities and Warrants is subject to the satisfaction or waiver (with prior
written notice to the Company and each other Purchaser) by such Purchaser, at or
before the Closing, of each of the following conditions:
(i) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects as of the
date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific
date);
(ii) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing;
(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or
21
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement
and the Transaction Documents;
(iv) NO SUSPENSIONS OF TRADING IN COMMON STOCK. The trading in
the Common Stock shall not have been suspended by the Commission or on
the OTCBB (except for any suspension of trading of limited duration
solely to permit dissemination of material information regarding the
Company);
(v) LISTING OF COMMON STOCK. The Common Stock on the Closing
Date shall be listed for trading on the OTCBB;
(vi) REQUIRED APPROVALS. All Required Approvals shall have been
obtained and copies thereof delivered to such Purchaser;
(vii) SHARES OF COMMON STOCK. The Company shall have duly
reserved the number of Underlying Shares required by this Agreement and
the Transaction Documents to be reserved for issuance upon conversion of
the Securities and the exercise of the Warrants;
(viii) CHANGE OF CONTROL. No Change of Control shall have
occurred between the date hereof and the Closing Date. "CHANGE OF
CONTROL" means the occurrence of any of (i) an acquisition after the date
hereof by an individual or legal entity or "group" (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act), other than the
Purchasers or any of their Affiliates, of in excess of 33% of the voting
securities of the Company, (ii) a replacement of more than one-half of
the members of the Company's Board of Directors which is not approved by
those individuals who are members of the Board of Directors on the date
hereof in one or a series of related transactions, (iii) the merger of
the Company with or into another entity, consolidation or sale of all or
substantially all of the assets of the Company in one or a series of
related transactions or (iv) the execution by the Company of an agreement
to which the Company is a party or by which it is bound, providing for
any of the events set forth above in (i), (ii) or (iii);
(ix) TRANSFER AGENT INSTRUCTIONS. The Irrevocable Transfer Agent
Instructions, in a form acceptable to the Purchasers, shall have been
delivered to and acknowledged in writing by the Company's transfer agent
with a copy forwarded to each Purchaser; and
(x) RESOLUTIONS. The Board of Directors of the Company shall
have adopted resolutions consistent with Section 2.1(b) and in a form
reasonably acceptable to each Purchaser (the "RESOLUTIONS").
c. DOCUMENTS AND CERTIFICATES. At the Closing, the Company
shall have delivered to the Purchasers the following in form and substance
reasonably satisfactory to the Purchasers:
(i) OPINION. An opinion of the Company's legal counsel in the
form attached hereto as EXHIBIT D dated as of the Closing Date;
22
(ii) SECURITY. A Security(ies) representing the principal
amount of Securities purchased by such Purchaser as set forth next to
such Purchaser's name on SCHEDULE I, registered in the name of such
Purchaser, each in form satisfactory to the Purchaser;
(iii) WARRANT. A Warrant(s) representing the Warrants purchased
by such Purchaser as set forth next to such Purchaser's name on SCHEDULE
I, registered in the name of such Purchaser;
(iv) REGISTRATION RIGHTS. The Company shall have executed and
delivered the Registration Rights Agreement;
(v) OFFICER'S CERTIFICATE. An Officer's Certificate dated the
Closing Date and signed by an executive officer of the Company confirming
the accuracy of the Company's representations, warranties and covenants
as of the Closing Date and confirming the compliance by the Company with
the conditions precedent set forth in this Section 4.1 as of the Closing
Date;
(vi) SECRETARY'S CERTIFICATE. A Secretary's Certificate dated
the Closing Date and signed by the Secretary or Assistant Secretary of
the Company certifying (A) that attached thereto is a true and complete
copy of the Certificate of Incorporation of the Company, as in effect on
the Closing Date, (B) that attached thereto is a true and complete copy
of the By-laws of the Company, as in effect on the Closing Date and (C)
that attached thereto is a true and complete copy of the Resolutions duly
adopted by the Board of Directors of the Company authorizing the
execution, delivery and performance of this Agreement and of the
Transaction Documents, and that such Resolutions have not been modified,
rescinded or revoked;
(vii) CERTIFICATES OF INCORPORATION. The Company shall have
delivered to each of the Purchasers a copy of a certificate evidencing
the incorporation and good standing of the Company and each Subsidiary,
in such corporation's state of incorporation issued by the Secretary of
State of such state of incorporation as of a date within ten days of the
Closing Date. The Company shall have delivered to each of the Purchasers
a copy of its Certificate of Incorporation as certified by the Secretary
of State of the State of Delaware within ten days of the Closing Date;
(viii) CERTIFICATES OF DESIGNATION. The Certificate of
Designation shall have been duly approved by the Company's Board of
Directors and filed with the Secretary of State of Delaware, and the
Company shall have delivered a copy thereof to the Purchaser certified as
filed by the office of the Secretary of State of Delaware.
(ix) TRANSFER AGENT LETTER. The Company shall have delivered to
each Purchaser a letter from the Company's transfer agent certifying the
number of shares of Common Stock outstanding as of a date within five
days of the Closing Date; and
(x) OTHER DOCUMENTS. The Company shall have delivered to each
Purchaser such other documents relating to the transactions contemplated
by the Transaction Documents as the Purchasers or its counsel may
reasonably request.
23
ARTICLE V.
INDEMNIFICATION
5.1 INDEMNIFICATION. Except to the extent that matters which could
be covered by this Section 5 are covered by Section 5 of the Registration
Rights Agreement, in consideration of the Purchasers execution and delivery
of this Agreement and the Transaction Documents and acquiring the Securities,
Conversion Shares, Warrants and Warrant Shares thereunder and in addition to
all of the Company's other obligations under this Agreement and the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless each Purchaser, its Affiliates and their successors and assigns (in
accordance with the provisions of Section 6.5 hereof), each other holder of
the Underlying Shares and all of their stockholders, officers, directors,
employees and direct or indirect investors and any of the foregoing Person's
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, proceedings, costs (as incurred),
penalties, fees (including legal fees and expenses), 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 interest, penalties and 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 made by the Company in this
Agreement or in the Transaction Documents, or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in this Agreement
or the Transaction Documents, or any other certificate, instrument or
document contemplated hereby or thereby, or (c) any cause of action, suit or
claim brought or made, other than by the Company, against such Indemnitee and
arising out of or resulting from (i) the execution, delivery, performance or
enforcement of this Agreement or the Transaction Documents, (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 Warrants
or (iii) solely the status of such Purchasers or holder of the Securities,
the Conversion Shares, the Warrants or the Warrant Shares as an investor in
the Company. The indemnification obligations of the Company under this
paragraph shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
affiliate of the Purchasers and partners, directors, agents, employees and
controlling Persons (if any), as the case may be, of the Purchasers and any
such affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, the
Purchasers and any such affiliate and any such Person. The Company also
agrees that neither the Purchasers nor any such Affiliates, partners,
directors, agents, employees or controlling Persons shall have any liability
to the Company or any Person asserting claims on behalf of or in right of the
Company in connection with or as a result of the consummation of this
Agreement or any of the Transaction Documents except to the extent that any
losses, claims, daages, liabilities or expenses incurred by the Company
result from the gross negligence or willful misconduct of such Purchaser or
entity in connection with the transactions contemplated by this Agreement or
the Transaction Documents. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company
24
shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
ARTICLE VI.
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
and Schedules hereto and the Transaction Documents contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with
respect to such matters.
6.2 NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party (if received
by 7:00 p.m. EST where such notice is received) or the first business day
following such delivery (if received after 7:00 p.m. EST where such notice is
received); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
ThermoView Industries, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
With a copy to:
Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxxxx, Xx., Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
25
If to the Transfer Agent:
American Securities, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. to:
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
If to Xxxxx Xxxxxxx Strategic Growth Fund, L.P. to:
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
With a copy, in the case of Notice to Xxxxx Xxxxxxx Strategic
Growth Fund, Ltd. or Xxxxx Xxxxxxx Strategic Growth Fund, L.P. to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxx
Each party shall provide written notice to the other party of any change in
address or facsimile number in accordance with the provisions hereof.
6.3 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and each of the Purchasers or, in the case of
a waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the
26
exercise of any such right accruing to it thereafter. Notwithstanding the
foregoing, no such amendment shall be effective to the extent that it applies
to less than all of the holders of the Securities outstanding. The Company
shall not offer or pay any consideration to a Purchaser for consenting to
such an amendment or waiver unless the same consideration is offered to each
Purchaser and the same consideration is paid to each Purchaser which consents
to such amendment or waiver.
6.4 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
6.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each of the
Purchasers. The Purchasers may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Company,
provided, that any assignees must make the representations and warranties set
forth in Section 2.2 and otherwise comply with the terms of this Agreement
otherwise applicable to its assignor. This provision shall not limit a
Purchaser's right to transfer securities in accordance with all of the terms
of this Agreement or the Transaction Documents.
6.6 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.
6.7 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the nonexclusive 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 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 contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
6.8 SURVIVAL. The representations and warranties of the Company
and the Purchasers contained in Sections 2.1 and 2.2, the agreements and
covenants set forth in Section 3, and the indemnification provisions set
forth in Section 5, shall survive the Closing and any conversion of the
Securities or exercise of the Warrants regardless of any investigation made
by or on behalf of the such Purchaser or by or on behalf of the Company,
except that, in the case of representations
27
and warranties such survival shall be limited to the period of three (3)
years following the Closing Date on which they were made or deemed to have
been made (other than with respect to any claim by a third party against the
party to this Agreement who seeks to assert a claim based on such
representations and warranties). This section shall have no effect on the
survival of the indemnification provisions of the Registration Rights
Agreement.
6.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create
a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if
such facsimile signature page were an original thereof.
6.10 PUBLICITY. The Company and the Purchasers shall consult with
each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and neither
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed, except that no prior consent shall
be required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such
public statement. The Company shall not publicly or otherwise disclose the
names of any of the Purchasers without each such Purchaser's prior written
consent. The Purchasers and their affiliated companies shall, without
further cost, have the right to use in its advertising, marketing or other
similar materials all or parts of the Company's press releases that focus on
the Transaction forming the subject matter of this Agreement or which make
reference to the Transaction. The Purchasers understand that this grant by
the Company only waives objections that the Company might have to the use of
such materials by the Purchasers and in no way constitutes a representation
by the Company that references in such materials to the activities of
third-parties have been cleared or constitute a fair use.
6.11 SEVERABILITY. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement
shall not in any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision which shall be a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.12 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of the
Company under this Agreement or the Transaction Documents without the showing
of economic loss and without any bond or other security being required. Each
of the Company and the Purchasers (severally and not jointly) agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence
and hereby agree to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
28
6.13 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser
pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert
with respect to such obligations or the transactions contemplated by this
Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this Agreement
or out of the Transaction Documents, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for
such purpose.
6.14 PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to the Purchasers hereunder or pursuant to the
Transaction Documents or the Purchasers enforce or exercise their rights
hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
6.15 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.
6.16 FEES AND EXPENSES. Except as set forth in the Registration
Rights Agreement, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement; provided, however, that the
Company shall pay to Xxxxx Xxxxxxx Asset Management $50,000, of which $15,000
was paid upon the execution of the term sheet and $35,000 shall have been
paid upon the execution of this Agreement. The Company shall pay all stamp
and other taxes and duties levied in connection with the issuance of the
Conversion Shares and the Warrant Shares pursuant hereto.
[Signature Pages Follow]
29
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons
as of the date first indicated above.
THERMOVIEW INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, LTD.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Principal
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, L.P.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Principal
SCHEDULE I
Name of Purchaser Purchase Price of Securities Number of Securities Number of Warrants
----------------- ---------------------------- -------------------- ------------------
Xxxxx Xxxxxxx $3,750,000 3,750 750,000
Strategic Growth
Fund, Ltd
Xxxxx Xxxxxxx $2,250,000 2,250 450,000
Strategic Growth
Fund, L.P.
SCHEDULE II
Name of Purchaser Address
----------------- -------
Xxxxx Xxxxxxx Strategic Growth Fund, 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Ltd. Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Residence: Grand Cayman, Cayman
Islands
Xxxxx Xxxxxxx Strategic Growth Fund, 000 Xxxx 00xx Xxxxxx, 00xx Floor
L.P. New York, New York 10019
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Residence: New York, New York
Exhibit A
[Form of Series C Certificate of Designation]
Exhibit B
[Form of Warrant]
Exhibit C
[Registration Rights Agreement]
Exhibit D
[Company's Legal Opinion]
