EXECUTION COPY
SECURED CONVERTIBLE DEBENTURE PURCHASE AND EXCHANGE AGREEMENT (this
"AGREEMENT"), dated as of June 29, 2001, among Silver Xxxxxx Mining, Inc., a
Delaware corporation (the "COMPANY"), and the investors signatory hereto (each
such investor is a "PURCHASER" and all such investors are, collectively, the
"PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and in accordance with Section 4(2) under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and Rule 506 promulgated thereunder, the
Company desires to issue and sell to the Purchasers and the Purchasers,
severally and not jointly, desire to purchase from the Company, (i) an
aggregate principal amount of $500,000 of the Company's 10% Secured
Convertible Debentures, due twenty-four months from issuance ("CLOSING
DEBENTURE"), which shall be in the form of EXHIBIT A, which are convertible
into shares of the Company's common stock, $.001 par value per share (the
"COMMON STOCK"). All references herein to dollars ($) shall be to US$ (United
States dollars), unless otherwise specified.
WHEREAS, certain of the Purchasers own convertible debentures of
Achievement Tec, Inc. in the aggregate principal amount set forth beside their
name on their signature page to this Agreement (the "ACHIEVEMENT TEC
DEBENTURES"), and shares of Common Stock in such number, as set forth beside
their respective names on their signature page to this Agreement (the
"EXCHANGE SHARE," and together with the Achievement Tec Debenture, the
"EXCHANGE SECURITIES") and the Company has requested that such Purchasers
exchange the Exchange Securities for additional debentures in the form of
EXHIBIT A (the "EXCHANGE DEBENTURES").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers
agree as follows:
ARTICLE I
PURCHASE AND SALE
I.1 THE CLOSING; SETTLEMENT DATES
(1) (1) Subject to the terms and conditions set forth in this
Agreement, the Company shall issue and sell to the Purchasers and the
Purchasers shall, severally and not jointly, purchase from the Company, on the
closing settlement dates described in this Section 1.1, Debentures in the
aggregate principal amount of $500,000 for an aggregate purchase price of
$500,000. The closing of the purchase and sale of such Debentures (the
"CLOSING") shall take place at the offices of Xxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP ("XXXXXXXX XXXXXXXXX"), 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
(2) On the date of this Agreement (the "CLOSING DATE"),
the parties shall deliver or shall cause to be delivered the following: (A)
the Company shall deliver to each Purchaser: (1) Closing Debentures registered
in the name of such Purchaser, in the aggregate principal amount equal to the
sum of (a) 50% of the purchase price indicated below such Purchaser's name on
the signature page to this Agreement, (b) if such Purchaser is exchanging
Exchange Shares, the aggregate principal amount equal to the number of
Exchange Shares indicated below such Purchaser's name on the signature page
multiplied by $1.429, and (c) if such Purchaser is exchanging Achievement Tec
Debentures, the aggregate principal amount of the Achievement Tec Debenture
indicated below such Purchaser's name on the signature page, (2) the legal
opinion of Xxxxxxxxx X. Xxxxxxx, III, P.C., outside counsel to the Company, in
the form of EXHIBIT C, (3) an executed original of this Agreement and the
Registration Rights Agreement, dated the date hereof, among the Company and
the Purchasers, in the form of EXHIBIT B (the "REGISTRATION RIGHTS
AGREEMENT"), (4) Transfer Agent Instructions, in the form of EXHIBIT D,
delivered to and acknowledged in writing by the Company's transfer agent (the
"TRANSFER AGENT INSTRUCTIONS"), and (5) an executed Security Agreement, dated
the date hereof, among the Company and the Purchasers, in the form of EXHIBIT
E (the "SECURITY AGREEMENT"), and an executed Intellectual Property Security
Agreement, dated the date hereof, among the Company and the Purchasers, in the
form of EXHIBIT F (the "INTELLECTUAL PROPERTY SECURITY AGREEMENT" and together
with the Security Agreement, the "SECURITY AGREEMENTS"); and (B) each
Purchaser will deliver to the Company: (1) 50% of the purchase price indicated
below such Purchaser's name on the signature page to this Agreement in United
States Dollars in immediately available funds by wire transfer to an account
designated in writing by the Company for such purpose, (2) if such Purchaser
is exchanging Exchange Securities, the Exchange Securities indicated below
such Purchaser's name on the signature page to this Agreement, and (3)
executed originals of this Agreement, the Registration Rights Agreement, the
Intellectual Property Security Agreement and Security Agreement.
(3) If the conditions set forth in Section 1.1(b) have
been either satisfied by the Company or waived by the Purchasers, then on the
second (2nd) Trading Day (the "ADDITIONAL FUNDING DATE") after the Effective
Date (as defined herein), (A) the Company will, against delivery of the
amounts set forth in clause (B) in this paragraph, deliver to each Purchaser
(i) Closing Debentures in the aggregate principal amount of 50% of the
purchase price indicated below such Purchaser's name on the signature page to
this Agreement (the "ADDITIONAL DEBENTURES") and (B) each Purchaser will
deliver to the Company, 50% of the purchase price indicated below such
Purchaser's name on the signature page to this Agreement in United States
Dollars in immediately available funds by wire transfer to an account
designated in writing by the Company for such purpose.
(2) CONDITIONS PRECEDENT TO THE PURCHASE OF ADDITIONAL
DEBENTURES. The obligation of a Purchaser to purchase the Additional
Debentures referenced in Section 1.1(c)(iii) is subject to the satisfaction by
the Company of each of the following conditions as of the Additional Funding
Date:
(1) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects as of the
date when made and as of the Additional Funding Date, as though made on and as
of the Additional Funding Date (other than representations and warranties
which relate to a specific date, which shall be true as of such specific date);
(2) UNDERLYING SHARES REGISTRATION STATEMENT. The
Underlying Shares Registration Statement (as hereinafter defined) shall have
been declared effective under the Securities Act by the Securities and
Exchange Commission (the "COMMISSION") by the 90th day following the Closing
Date and shall have remained effective at all times from the date the
Commission first declared it effective (the "EFFECTIVE DATE") through the
Additional Funding Date, not subject to any actual or threatened stop order or
subject to any actual or threatened suspension;
(3) NO INJUNCTION. Since the Closing Date, no statute,
rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated, amended, modified or endorsed by any court
of governmental authority of competent jurisdiction or governmental authority,
stock market or trading facility which prohibits the consummation of any of
the transactions contemplated by the Transaction Documents; and
(4) ADVERSE CHANGES. Since the Closing Date, no event or
series of events which reasonably would be expected to have or result in a
material adverse effect on the results of operations, assets or financial
condition of the Company and the Subsidiaries (taken as a whole) shall have
occurred.
I.2 CERTAIN DEFINED TERMS. As used herein, Debentures shall
include all "Closing Debentures", "Additional Debentures" and all "Exchange
Debentures" (all as hereinafter defined). For purposes of this Agreement,
"CONVERSION PRICE," "ORIGINAL ISSUE DATE" and "TRADING DAY" shall have the
meanings set forth in the Debentures; "BUSINESS DAY" shall mean any day except
Saturday, Sunday and any day which shall be a federal legal holiday in the
United States or a day on which banking institutions in the State of New York
or the State of Texas are authorized or required by law or other governmental
action to close. A "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.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
II.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
makes the following representations and warranties to the Purchasers on the
date of this Agreement, on the Closing Date and on the Additional Funding Date:
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(1) 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. The Company has no subsidiaries other than as set forth in SCHEDULE
2.1(a) (collectively the "SUBSIDIARIES"). Each of the Subsidiaries is an
entity, duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. Each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not, individually
or in the aggregate, (x) adversely affect the legality, validity or
enforceability of the Securities (as defined below) or any of this Agreement,
the Registration Rights Agreement, the Security Agreement, the Intellectual
Property Security Agreement, or the Transfer Agent Instructions (collectively,
the "TRANSACTION DOCUMENTS"), (y) have or result in a material adverse effect
on the results of operations, assets, prospects, or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (z)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under any of the Transaction Documents (any of (x), (y) or (z), a
"MATERIAL ADVERSE EFFECT").
(2) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out
its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company or its shareholders. Each of 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. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, by-laws or other
organizational or charter documents.
(3) CAPITALIZATION. The number of authorized, issued and
outstanding capital stock of the Company is set forth in SCHEDULE 2.1(c). No
shares of Common Stock are entitled to preemptive or similar rights, nor is
any holder of the securities of the Company entitled to preemptive or similar
rights arising out of any agreement or understanding with the Company by
virtue of any of the Transaction Documents. Except as a result of the purchase
and sale of the Debentures and except as disclosed in SCHEDULE 2.1(c), there
are no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound
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to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. The issue and sale of
Underlying Shares (as hereinafter defined) will not obligate the Company to
issue shares of Common Stock or other securities to any person other than the
Purchaser and will not result in a right of any holder of Company securities
to adjust the exercise or conversion or reset price under such securities.
(4) ISSUANCE OF THE DEBENTURES. The Debentures will be duly and
validly issued, free and clear of all liens, encumbrances and rights of first
refusal of any kind (collectively, "LIENS"). On the date hereof, the Company
will have (and will, at all times while Debentures are outstanding, maintain)
an adequate reserve of duly authorized shares of Common Stock, reserved for
issuance to the holders of such Debentures, to enable it to perform its
conversion and other obligations thereunder. Such number of reserved and
available shares of Common Stock shall not be less than the sum of 20% of the
number of shares of Common Stock which would be issuable upon conversion in
full of the Debentures, assuming such conversion occurred on the Original
Issue Date, the Debentures remain outstanding for one year and all interest is
paid in shares of Common Stock. The shares of Common Stock issuable upon
conversion of the Debentures are collectively referred to herein as the
"UNDERLYING SHARES." All Underlying Shares shall be duly reserved for issuance
to the holders of the Debentures. The Debentures and the Underlying Shares are
collectively referred to herein as, the "SECURITIES." When delivered to the
Purchasers in accordance with the terms of the Debentures, the Underlying
Shares will be duly authorized, validly issued, fully paid and nonassessable,
free and clear of all Liens.
(5) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument or other understanding 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 violation of any
law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), as
could not, individually or in the aggregate, have or result in a Material
Adverse Effect. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental authority,
except for violations which, individually or in the aggregate, could not have
or result in a Material Adverse Effect.
(6) FILINGS, CONSENTS AND APPROVALS. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any
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filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than (i) the filings required pursuant to Section 3.9, (ii) the filing with
the Commission of a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale of the Underlying
Shares by the Purchasers (the "UNDERLYING SHARES REGISTRATION STATEMENT"),
(iii) applicable Blue Sky filings, and (iv) in all other cases where the
failure to obtain such consent, waiver, authorization or order, or to give
such notice or make such filing or registration could not have or result in,
individually or in the aggregate, a Material Adverse Effect (collectively, the
"REQUIRED APPROVALS").
(7) LITIGATION; PROCEEDINGS. There is no action, suit, inquiry,
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,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "ACTION" ) which
(i) adversely affects or challenges the legality, validity or enforceability
of any of the Transaction Documents or the Securities or (ii) could, if there
were an unfavorable decision, individually or in the aggregate, have or result
in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. The Company does not
have pending before the Commission any request for confidential treatment of
information and the Company has no knowledge of any expected such request that
would be made prior to the Effectiveness Date (as defined in the Registration
Rights Agreement). There has not been, and to the best of the Company's
knowledge there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer
of the Company.
(8) NO DEFAULT OR VIOLATION. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has
occurred which has not been waived which, with notice or lapse of time or
both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound, (ii) is in violation of any order
of any court, arbitrator or governmental body, or (iii) is in violation of any
statute, rule or regulation of any governmental authority, in each case of
clauses (ii) or (iii) above, except as could not individually or in the
aggregate, have or result in a Material Adverse Effect. The security interests
granted to the Purchasers pursuant to the Security Agreement and Intellectual
Property Security Agreement will convey and grant to the Purchasers a first
priority security interest in all of the Collateral (as such term is defined
in such Agreements).
(9) PRIVATE OFFERING. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections
2.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers
as contemplated hereby are exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf has
taken or is, to the knowledge of the Company, contemplating taking any action
which could subject the offering,
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issuance or sale of the Securities to the registration requirements of the
Securities Act including soliciting any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.
(10) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed by it under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law to file such material) (the
foregoing materials being collectively referred to herein as the "SEC
DOCUMENTS" and, together with the Schedules to this Agreement, the "DISCLOSURE
MATERIALS") on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Documents prior to the expiration of any
such extension. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. All
material agreements to which the Company is a party or to which the property
or assets of the Company are subject have been filed as exhibits to the SEC
Documents as required under the Exchange Act. The financial statements of the
Company included in the SEC Documents comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved ("GAAP"), except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects
the financial position of the Company and its consolidated subsidiaries as of
and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. Since December 31, 2000, except as
specifically disclosed in the SEC Documents, (a) there has been no event,
occurrence or development that has or that could result in a Material Adverse
Effect, (b) the Company has not incurred any liabilities (contingent or
otherwise) other than (x) liabilities incurred in the ordinary course of
business consistent with past practice and (y) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required
to be disclosed in filings made with the Commission, (c) the Company has not
altered its method of accounting or the identity of its auditors, (d) the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in
compliance with existing Company stock option plans) with respect to its
capital stock, or purchased, redeemed (or made any agreements to purchase or
redeem) any shares of its capital stock and (e) the Company has not issued or
committed to issue shares of Common Stock or securities that are convertible
or exchangeable into, or give holders thereof the right to receive, shares of
Common Stock.
(11) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate (as defined in Rule 405 under the Securities Act) of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
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(12) CERTAIN FEES. No fees or commissions will be payable by the
Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement. 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
that may be due in connection with the transactions contemplated by this
Agreement. The Company shall indemnify and hold harmless the Purchasers, their
employees, officers, directors, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses suffered in respect of
any such claimed or existing fees, as such fees and expenses are incurred.
(13) LISTING AND MAINTENANCE REQUIREMENTS. Except as set forth in
the SEC Documents, the Company has not, in the two years preceding the date
hereof received notice (written or oral) from any stock exchange, market or
trading facility on which the Common Stock is or has been listed (or on which
it has been quoted) to the effect that the Company is not in compliance with
the listing or maintenance requirements of such exchange, market or trading
facility. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements
(14) SENIORITY. No indebtedness of the Company is senior to the
Debentures in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise.
(15) PATENTS AND TRADEMARKS. The Company and its Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
rights which are necessary or material for use in connection with their
respective businesses and which the failure to so have would have a Material
Adverse Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the
Company nor any Subsidiary has received a written notice that the Intellectual
Property Rights used by the Company or its Subsidiaries violates or infringes
upon the rights of any Person. To the best knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. In
the event that while the Debentures are outstanding the Company or a
Subsidiary shall ever own additional patents, trademarks or should make an
application therefore, then the Company shall promptly execute and cooperate
to cause to be filed with the Patent and Trademark Office an Intellectual
Property Security Agreement in the form to be prepared by Purchasers to
provide the Purchasers a first priority lien on all such intellectual property.
(16) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as set
forth on SCHEDULE 6(b) to the Registration Rights Agreement, 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. Except as set forth on SCHEDULE 6(b) to the Registration
Rights Agreement, no Person has any right
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of first refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the Transaction
Documents.
(17) REGULATORY PERMITS. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such permits could
not, individually or in the aggregate, have or result in a Material Adverse
Effect ("MATERIAL PERMITS"), and neither the Company nor any such Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(18) (1) TITLE. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them which is
material to the business of the Company and its Subsidiaries and good and
marketable title in all 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 granted to Silicon Valley Bank as set forth in
SCHEDULE 2.1(r) HERETO, and the Liens granted to the Purchasers pursuant to
the Security Agreements and for other Liens as do not materially 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 its Subsidiaries. Any real
property and facilities held under lease by the Company and its Subsidiaries
are held by them under valid, subsisting and enforceable leases of which the
Company and its Subsidiaries are in compliance and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.
(2) The Company is in compliance with all its obligations
as set forth in its agreements with Silicon Valley Bank and has not received
any notice from Silicon Valley Bank regarding any default under such
agreements.
(19) LABOR RELATIONS. No material labor problem exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company.
(20) SOLVENCY. Based on the financial condition of the Company as
of the Closing Date, (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
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(21) APPLICATION OF TAKEOVER PROTECTIONS. 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, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is
or could become applicable to the Purchasers as a result of the Purchasers and
the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company's issuance of
the Securities and the Purchasers' ownership of the Securities.
(22) DISCLOSURE. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Purchasers or its agents
or counsel with any information that constitutes or might constitute material
non-public information. The Company understands and confirms that the
Purchasers shall be relying on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by
or on behalf of the Company are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
II.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby for itself and for no other Purchaser represents and warrants to the
Company as follows:
(1) ORGANIZATION; AUTHORITY. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of Transaction Documents has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms.
(2) INVESTMENT INTENT. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and
not with a view to or for distributing or reselling such Securities or any
part thereof, without prejudice, however, to such Purchaser's right, subject
to the provisions of this Agreement and the Registration Rights Agreement, at
all times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold the Securities for any
period of time. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such
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Purchaser does not have any agreement, understanding or arrangement, directly
or indirectly, with any Person to distribute any of the Securities.
(3) PURCHASER STATUS. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is an "accredited investor"
as defined in Rule 501(a) under the Securities Act.
(4) EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has
so evaluated the merits and risks of such investment.
(5) ABILITY OF SUCH PURCHASER TO BEAR RISK OF INVESTMENT. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(6) ACCESS TO INFORMATION. Such Purchaser acknowledges that it
has reviewed the SEC Documents and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment; and (iii)
the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment and to verify the accuracy and completeness of the information
contained in the SEC Documents. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its
representatives or counsel shall modify, amend or affect such Purchaser's
right to rely on the truth, accuracy and completeness of the SEC Documents and
the Company's representations and warranties contained in the Transaction
Documents.
(7) GENERAL SOLICITATION. To the best of its knowledge, such
Purchaser is not purchasing the Securities as a result of or subsequent to any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(8) RELIANCE. Such Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and
truthfulness of, the foregoing representations and such Purchaser hereby
consents to such reliance.
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The Company acknowledges and agrees that no Purchaser makes or has
made any 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 OF THE PARTIES
III.1 TRANSFER RESTRICTIONS. (1) The Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act, to
the Company or pursuant or to an available exemption from or in a transaction
not subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. In
connection with any transfer of Securities other than pursuant to an effective
registration statement or to the Company, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. Any such
transferee shall agree in writing to be bound by the terms of this Agreement
and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.
(2) The Purchasers agree to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE 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 AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
Underlying Shares shall not contain the legend set forth above nor
any other legend if the conversion of Debentures occurs at any time while an
Underlying Shares Registration Statement is effective under the Securities Act
or the holder is relying on Rule 144(k) promulgated under the Securities Act
("RULE 144(K)") in connection with the resale of such Underlying Shares, or in
the event there is not an effective Underlying Shares Registration Statement,
and Rule 144(k) is not then available for resale of the Underlying Shares, at
such time as such legend is not required under applicable requirements of the
Securities Act (including, without limitation, judicial interpretations and
pronouncements issued by the staff of the Commission). The Company shall
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cause its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Company's transfer agent on the Effective Date. The
Company agrees that following the Effective Date, it will, no later than three
Trading Days following the delivery by a Purchaser to the Company of a
certificate or certificates representing such Underlying Shares issued with a
restrictive legend, deliver to such Purchaser certificates representing such
Underlying Shares which shall be free from all restrictive and other legends.
The Company may not make any notation on its records or give instructions to
any transfer agent of the Company which enlarge the restrictions of transfer
set forth in this Section.
III.2 ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the
issuance of Underlying Shares upon the conversion of the Debentures will
result in dilution of the outstanding shares of Common Stock, which dilution
may be substantial under certain market conditions. The Company further
acknowledges that its obligation to deliver Underlying Shares to the
Purchasers upon conversion of the Debentures is unconditional and absolute
regardless of the effect of any such dilution.
III.3 FURNISHING OF INFORMATION. The Company covenants to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as the
Purchasers own Securities, if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act such information as is required for the Purchasers to sell the
Securities under Rule 144 ("RULE 144") promulgated under the Securities Act.
The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell Underlying Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, including causing
its attorneys to render and deliver any legal opinion required in order to
permit a Purchaser to receive Underlying Shares free of all restrictive
legends and to subsequently sell Underlying Shares under Rule 144 upon receipt
of a notice of an intention to sell or other form of notice having a similar
effect. 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.
III.4 INTEGRATION. The Company shall not, and shall use its best efforts
to ensure that, no Affiliate of the Company shall, 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 in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Purchasers.
III.5 INCREASE IN AUTHORIZED SHARES. If on any date the Company would
be, if a notice of conversion were to be delivered on such date, precluded
from issuing 200% of the number of Underlying Shares as would then be issuable
upon a conversion in full of the Debentures (the "CURRENT REQUIRED MINIMUM")
due to the unavailability of a sufficient number of authorized but
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unissued or reserved shares of Common Stock, then the Board of Directors of
the Company shall promptly prepare and mail to the stockholders of the Company
proxy materials requesting authorization to amend the Company's certificate or
articles of incorporation to increase the number of shares of Common Stock
which the Company is authorized to issue to at least such number of shares as
reasonably requested by the Purchasers in order to provide for such number of
authorized and unissued shares of Common Stock to enable the Company to comply
with its issuance, conversion and reservation of shares obligations as set
forth in this Agreement and the Debentures (the sum of (x) the number of
shares of Common Stock then outstanding plus all shares of Common Stock
issuable upon exercise of all outstanding options, warrants and convertible
instruments, and (y) the Current Required Minimum, shall be a reasonable
number). In connection therewith, the Board of Directors shall (a) adopt
proper resolutions authorizing such increase, (b) recommend to and otherwise
use its best efforts to promptly and duly obtain stockholder approval to carry
out such resolutions (and hold a special meeting of the stockholders no later
than the earlier to occur of the sixtieth (60th) day after delivery of the
proxy materials relating to such meeting and the ninetieth (90th) day after
request by a holder of Securities to issue the number of Underlying Shares in
accordance with the terms hereof) and (c) within five (5) Business Days of
obtaining such stockholder authorization, file an appropriate amendment to the
Company's certificate or articles of incorporation to evidence such increase.
III.6 RESERVATION AND LISTING OF UNDERLYING SHARES. (1) The Company
shall (i) in the time and manner required by any national securities exchange,
market, trading or quotation facility on which the Common Stock is then
traded, prepare and file with such national securities exchange, market,
trading or quotation facility on which the Common Stock is then traded an
additional shares listing application covering a number of shares of Common
Stock which is not less than the Initial Minimum, (ii) take all steps
necessary to cause such shares of Common Stock to be approved for listing on
any such national securities exchange, market or trading or quotation facility
on which the Common Stock is then listed as soon as possible thereafter, and
(iii) provide to the Purchasers evidence of such listing, and the Company
shall maintain the listing of its Common Stock thereon. If the number of
Underlying Shares issuable upon conversion in full of the then outstanding
Debentures exceeds eighty-five percent (85%) of the number of Underlying
Shares previously listed on account thereof with any such required exchanges,
then the Company shall take the necessary actions to immediately list a number
of Underlying Shares as equals no less than the then Current Required Minimum.
(2) The Company shall maintain a reserve of shares of Common
Stock for issuance upon conversion of the Debentures in full in accordance
with this Agreement, in such amount as may be required to fulfill its
obligations in full under the Transaction Documents, which reserve shall equal
no less than the then Current Required Minimum.
III.7 CONVERSION PROCEDURES. The Transfer Agent Instructions and the
Conversion Notice (as defined in the Debentures) sets forth the totality of
the procedures with respect to the conversion of the Debentures, including the
form of legal opinion, if necessary, that shall be rendered to the
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Company's transfer agent and such other information and instructions as may be
reasonably necessary to enable the Purchasers to convert their Debentures.
III.8 SUBSEQUENT FINANCING; LIMITATION ON REGISTRATIONS. (1) From the
date of this Agreement through the ninetieth (90th) Trading Day following the
Effective Date, the Company will not offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition) any of its or its Affiliates' equity
or equity equivalent securities (including the issuance of any debt or other
instrument at any time over the life thereof convertible into or exchangeable
for Common Stock) other than to the Purchasers. Accordingly, during such time,
the Company shall not enter into any equity line of credit or similar
transaction.
(2) The Company shall not, directly or indirectly, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition) any of its equity
or equity-equivalent securities or securities of any of its Affiliates that
are exchangeable or convertible (directly or indirectly) for shares of Common
Stock, including the issuance of any debt or other instrument at any time over
the life thereof convertible into or exchangeable for Common Stock
(collectively, a "SUBSEQUENT PLACEMENT") from the date hereof until the
expiration of the 180th Trading Day after the Effective Date, unless (A) the
Company delivers to each of the Purchasers a written notice (the "SUBSEQUENT
PLACEMENT NOTICE") of its intention to effect such Subsequent Placement, which
Subsequent Placement Notice shall describe in reasonable detail the proposed
terms of such Subsequent Placement, the amount of proceeds intended to be
raised thereunder, the Person with whom such Subsequent Placement shall be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (B) such Purchaser shall not have notified the Company by
6:30 p.m. (New York City time) on the tenth Trading Day after its receipt of
the Subsequent Placement Notice of its willingness to provide (or to cause its
sole designee to provide), subject to completion of mutually acceptable
documentation, financing to the Company on the same terms set forth in the
Subsequent Placement Notice. If the Purchasers shall fail to notify the
Company of their intention to enter into such negotiations within such time
period, the Company may effect the Subsequent Placement substantially upon the
terms and to the Persons (or Affiliates of such Persons) set forth in the
Subsequent Placement Notice; PROVIDED, that the Company shall provide the
Purchasers with a second Subsequent Placement Notice, and the Purchasers shall
again have the right of first refusal set forth above in this paragraph (a),
if the Subsequent Placement subject to the initial Subsequent Placement Notice
shall not have been consummated for any reason on the terms set forth in such
Subsequent Placement Notice within thirty (30) Trading Days after the date of
the initial Subsequent Placement Notice with the Person (or an Affiliate of
such Person) identified in the Subsequent Placement Notice. If the Purchasers
shall indicate a willingness to provide financing in excess of the amount set
forth in the Subsequent Placement Notice, then each Purchaser shall be
entitled to provide financing pursuant to such Subsequent Placement Notice up
to an amount equal to such Purchaser's pro-rata portion of the aggregate
number of Securities purchased by such Purchaser under this Agreement, but the
Company shall not be required to accept financing from the Purchasers in an
amount in excess of the amount set forth in the Subsequent Placement Notice.
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(3) Except for (x) Underlying Shares, (y) other "REGISTRABLE
SECURITIES" (as such term is defined in the Registration Rights Agreement) to
be registered, and securities of the Company permitted pursuant to Section
6(c) of the Registration Rights Agreement to be registered, in the Underlying
Shares Registration Statement in accordance with the Registration Rights
Agreement, and (z) Common Stock permitted to be issued pursuant to Section 3.8
(e), the Company shall not, for a period of not less than ninety (90) Trading
Days after the Effective Date, without the prior written consent of the
Purchasers, file a Registration Statement with respect to any securities of
the Company.
(4) With respect to Section 3.8(a), (b) and (c), the ninety (90)
and one hundred and eighty (180) Trading Day periods shall be extended for the
number of Trading Days following the Effective Date during such period (A) in
which trading in the Common Stock is suspended by any securities exchange or
market or quotation system on which the Common Stock is then listed, or (B)
during which the Underlying Shares Registration Statement is not effective, or
(C) during which the prospectus included in the Underlying Shares Registration
Statement may not be used by the holders thereof for the resale of Underlying
Shares.
(5) The restrictions contained in Section 3.8(a) and (b) hereof
shall not apply to the granting of options or warrants to employees, officers
and directors of the Company, and the issuance of Common Stock upon exercise
of such options or warrants granted under any stock option plan heretofore or
hereinafter duly adopted by the Company.
III.9 CERTAIN SECURITIES LAWS DISCLOSURES; PUBLICITY. The Company shall:
(i) on the Closing Date, issue a press release reasonably acceptable to the
Purchasers disclosing the transactions contemplated hereby, (ii) file with the
Commission a Report on Form 8-K disclosing the transactions contemplated
hereby within ten Business Days after the Closing Date, and (iii) timely file
with the Commission a Form D promulgated under the Securities Act. The Company
shall, no less than two Business Days prior to the filing of any disclosure
required by clauses (ii) and (iii) above, provide a copy thereof to the
Purchasers for their review. The Company and the Purchasers shall consult with
each other in issuing any other press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency or stock market or trading facility with respect to the
transactions contemplated hereby and neither party shall issue any such press
release or otherwise make any such public statement, filings or other
communications without the prior written consent of the other, except that if
such disclosure is required by law or stock market regulation, in which such
case the disclosing party shall promptly provide the other party with prior
notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the
names of the Purchasers, or include the names of the Purchasers in any filing
with the Commission, or any regulatory agency, trading facility or stock
market without the prior written consent of the Purchasers, except to the
extent such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by law or stock market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure.
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III.10 USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior
practices), to redeem any Company equity or equity-equivalent securities or to
settle any outstanding litigation.
III.11 REIMBURSEMENT. So long as Purchasers have complied with the terms
and conditions of this Agreement, if any Purchaser becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
Person, including stockholders of the Company, solely as a result of acquiring
the Securities under this Agreement, the Company will reimburse such Purchaser
for its reasonable legal and other expenses (including, but not limited to,
the cost of any investigation, preparation or travel) incurred in connection
therewith, as such expenses are incurred. The reimbursement 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 Affiliates of the Purchasers who are actually named in such action,
proceeding or investigation, 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
solely as a result of acquiring the Securities under this Agreement.
III.12 NON-DISCLOSURE OF NON-PUBLIC INFORMATION. The Company shall not
disclose non-public information to the Purchasers or their advisors or
representatives unless prior to disclosure of such information the Company
identifies such information as being non-public information and the Purchasers
enter into a non-disclosure agreement in form mutually acceptable to the
Company and the Purchasers.
III.13 SHAREHOLDER RIGHTS PLAN. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities or shares of Common Stock under the Transaction Documents.
ARTICLE IV
MISCELLANEOUS
IV.1 FEES AND EXPENSES. At the Closing, the Company shall reimburse the
Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to Xxxxxxxx
Xxxxxxxxx an aggregate of $22,500 for the
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preparation and negotiation of the Transaction Documents. The amount
contemplated by the immediately preceding sentence shall be retained by the
Purchasers and shall not be delivered to the Company at the Closing. Other
than the amount contemplated herein, and except as otherwise specified in the
Registration Rights Agreement and the Security 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. The Company shall pay all stamp and other taxes and duties levied
in connection with the issuance of the Securities.
IV.2 ENTIRE AGREEMENT; AMENDMENTS. The Transaction Documents, together
with the Exhibits and Schedules thereto and Transfer Agent Instructions,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.
IV.3 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (i) the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York
City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:
If to the Company: Silver Xxxxxx Mining, Inc.
0000 Xxxxxxx 000, Xxxxx 000-X,
Xxxxx Xxxxxxx, Xxxxx 00000
Facsimile No.:(000) 000 0000
Attn: Xxxxxx Xxxxxx, Chief Executive Officer
With copies to: Xxxxxxxxx X. Xxxxxxx, III
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to a Purchaser: To the address set forth under such Purchaser's
name on the signature pages hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
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IV.4 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 exercise of any such right accruing to it thereafter.
IV.5 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.
IV.6 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 the Purchasers. The
Purchasers may not assign this Agreement or any of the rights or obligations
hereunder without the consent of the Company.
IV.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.
IV.8 GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), 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
hereto 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 via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto (including its affiliates, agents,
officers, directors and employees) hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this
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Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of a Transaction
Document, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.
IV.9 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the conversion of the
Debentures and the Delivery of the Underlying shares.
IV.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile 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.
IV.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 affecting 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.
IV.12 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. The parties hereto agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence
and hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
IV.13 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document is several and
not joint with the obligations of any other Purchaser and no Purchaser shall
be responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant 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 the Transaction Document. Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the
other 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Secured
Convertible Debenture Purchase and Exchange Agreement to be duly executed by
their respective authorized signatories as of the date first indicated above.
SILVER XXXXXX MINING, INC.
By:
----------------------------------------
Xxxxxx Xxxxxx
Chief Executive Officer
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SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
Its Investment Manager
By:
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Xxxxx X. Xxxxxxxxx
Member
Principal Amount of Debentures to be Purchased: $250,000
Number of Exchange Shares: 394,752
Principal and Interest of
Achievement Tec Debentures: $105,019.18
Address for Notice: New Millennium Capital Partners II, LLC
000 Xxxxx Xxxxxx
Xxxxx X
Xxxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
-23-
AJW PARTNERS, LLC
By: SMS Group, LLC
Its Investment Manger
By:
----------------------------------------
Xxxxx X. Xxxxxxxx
Member
Principal Amount of Debentures to be Purchased: $250,000
Number of Exchange Shares: 191,623
Principal and Interest of Achievement Tec Debentures: $0.00
Address for Notice: AJW Partners, LLC
000 Xxxxx Xxxxxx, Xxxxx X
Xxxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
-24-
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SECURED CONVERTIBLE DEBENTURE
PURCHASE AND EXCHANGE AGREEMENT
Among
SILVER XXXXXX MINING, INC.
and
THE INVESTORS SIGNATORY HERETO
Dated as of June 29, 2001
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