EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made by and
between TELENETICS CORPORATION, a California corporation, with its address at 00
Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 (the "COMPANY"), and the undersigned (the
"SUBSCRIBER"), effective as of the date this Agreement is accepted by the
Company.
R E C I T A L S
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A. The Company is offering (the "OFFERING") up to 15,285,715 shares of
the Company's common stock, no par value per share (the "COMMON STOCK"),
pursuant to the Company's Confidential Private Placement Memorandum dated
December 15, 2004, as amended or supplemented (the "MEMORANDUM").
B. Subscriber desires to acquire shares of Common Stock in the amount
set forth on the signature page hereof.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. SUBSCRIPTIONS FOR SECURITIES AND REPRESENTATIONS BY
SUBSCRIBER.
(a) Subject to the terms and conditions of this Agreement, the
Subscriber hereby subscribes for and agrees to purchase from the Company shares
of the Company's Common Stock in an amount aggregating the Purchase Price (as
set forth on the signature page hereof) and the Company agrees to sell such
shares of Common Stock to the Subscriber for the Purchase Price, subject to the
Company's right to sell to the Subscriber such lesser amount as it may, in its
sole discretion, deem necessary or desirable. The Purchase Price is payable by
wire transfer or by check, subject to collection, as set forth in the
Subscription Documents Booklet of which this Agreement is a part. The price per
share of Common Stock is $0.07.
(b) The Subscriber recognizes that the purchase of the shares
of Common Stock involves a high degree of risk in that (i) a limited public
market exists for the shares of Common Stock; (ii) the shares of Common Stock
have not been registered under the Securities Act of 1933, as amended
("SECURITIES ACT"), and the Company has no obligation to register the shares of
Common Stock, except as described in SECTION 3 below and in the Registration
Rights Agreement attached hereto as EXHIBIT A; (iii) an investment in the shares
of Common Stock is highly speculative and only investors who can afford the loss
of their entire investment should consider investing in the Company and the
shares of Common Stock; (iv) the Subscriber may not be able to liquidate the
Subscriber's investment; and (v) the Subscriber could sustain the loss of the
Subscriber's entire investment. Such risks are more fully set forth in the
Memorandum and the attachments thereto and documents incorporated by reference
thereto.
(c) The Offering shall continue for a period commencing on the
date of the Memorandum and ending on the date set forth in the Memorandum.
(d) The Subscriber represents as follows:
(i) The Subscriber represents that the Subscriber is
an Accredited Investor (as defined in Rule 501 of Regulation D
promulgated under the Securities Act) as indicated by the Subscriber's
responses to the Subscriber Questionnaire, a copy of which is included
in the Subscription Documents Booklet, and that the Subscriber is able
to bear the economic risk of an investment in the Shares.
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(ii) The Subscriber acknowledges that the Subscriber
has significant prior investment experience, including investment in
non-registered securities. The Subscriber recognizes the highly
speculative nature of this investment. The Subscriber acknowledges that
the Subscriber has carefully read the Memorandum, including but not
limited to, the Exhibits to the Memorandum which are incorporated by
reference into the Memorandum, and fully understands the contents
thereof.
(iii) The Subscriber hereby acknowledges that this
Offering and the Memorandum have not been reviewed by the United States
Securities and Exchange Commission ("SEC") or by any state securities
regulator because it is intended to be a non-public offering pursuant
to Sections 3(a), 4(2) and 4(6) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder. The Subscriber represents that the
shares of Common Stock are being purchased for the Subscriber's own
account, for investment purposes only and not for distribution or
resale to others. The Subscriber agrees that the Subscriber will not
sell or otherwise transfer the shares of Common Stock unless they are
registered under the Securities Act or unless an exemption from such
registration is available.
(iv) The Subscriber understands that the shares of
Common Stock have not been registered under the Securities Act by
reason of a claimed exemption under the provisions of the Securities
Act which depends, in part, upon the Subscriber's investment intention.
In this connection, the Subscriber understands that it is the position
of the SEC that the statutory basis for such exemption would not be
present if the Subscriber's representation merely meant that the
Subscriber's present intention was to hold the shares of Common Stock
for a short period, such as the capital gains period of tax statutes,
for a deferred sale, for a market rise, assuming that a market exists
or develops, or for any other fixed period. The Subscriber realizes
that, in the view of the SEC's position, a purchase now with an intent
to resell after a pre-determined amount of time would represent a
purchase with an intent inconsistent with the Subscriber's
representation to the Company, and the SEC might regard such a sale or
disposition as a deferred sale to which such exemptions are not
available.
(v) The Subscriber understands that Rule 144 (the
"RULE") promulgated by the SEC under the Securities Act requires, among
other conditions, a one year holding period prior to the resale (in
limited amounts) of securities acquired in a non-public offering
without having to satisfy the registration requirements under the
Securities Act. The Subscriber understands and hereby acknowledges that
the Company is the only entity that can register the shares of Common
Stock under the Securities Act and that the Company is under no
obligation to register the shares of Common Stock under the Securities
Act, with the exception of certain registration rights described in
SECTION 3 below and as set forth in EXHIBIT A attached hereto and made
a part hereof. The Subscriber acknowledges that the Company may, if it
desires, permit the transfer of shares of Common Stock out of the
Subscriber's name only when the Subscriber's request for transfer is
accompanied by an opinion of counsel reasonably satisfactory to the
Company that neither the sale nor the proposed transfer results in a
violation of the Securities Act or any applicable state "blue sky" laws
and subject to the provisions of SECTION 1(d)(vi) hereof.
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(vi) The Subscriber consents to the placement of a
legend on any certificate or other document evidencing the shares of
Common Stock stating that they have not been registered under the
Securities Act and under applicable state securities laws and setting
forth or referring to the restrictions on transferability and sale
thereof.
(vii) The Subscriber understands that the Company
will review this Agreement; and it is further agreed that the Company
reserves the unrestricted right to reject or limit any subscription and
to close or extend the Offering at any time.
(viii) The Subscriber hereby represents that the
address of the Subscriber furnished by the Subscriber in the Subscriber
Questionnaire is the Subscriber's principal residence, if the
Subscriber is an individual, or its principal business address, if the
Subscriber is a corporation or other entity.
(ix) The Subscriber has had a reasonable opportunity
to ask questions of and receive answers from the Company concerning the
Company and the Offering, and all such questions, if any, have been
answered to the full satisfaction of the Subscriber; and the Company
shall provide Subscriber with the opportunity to ask additional
questions of and receive answers from the Company concerning the
Company during the period which the Subscriber owns the shares of
Common Stock.
(x) The Subscriber has such knowledge and expertise
in financial and business matters that the Subscriber is capable of
evaluating the merits and risks involved in an investment in the
Company and the shares of Common Stock.
(xi) The Subscriber has full power and authority to
execute and deliver this Agreement and to perform the obligations of
the undersigned hereunder; and this Agreement is a legally binding
obligation of the Subscriber enforceable in accordance with its terms.
(xii) Except as set forth in this Agreement and the
Memorandum, no representations or warranties have been made to the
Subscriber by the Company, or any of its agents, employees or
affiliates, and in entering into this transaction, the Subscriber is
not relying on any information, other than that contained in the
Memorandum, the public documents of the Company and the results of an
independent investigation by the Subscriber.
(xiii) The Subscriber agrees that the Subscriber will
not sell or otherwise transfer the shares of Common Stock unless they
are registered under the Securities Act and applicable state "blue sky"
laws or unless an exemption from such registration is available. The
Subscriber represents that (a) the Subscriber has adequate means of
providing for the Subscriber's current needs and possible personal
contingencies, (b) the Subscriber has no need for liquidity in this
investment, (c) the Subscriber is able to bear the substantial economic
risk of an investment in the Shares for an indefinite period of time,
and (d) at the present time the Subscriber could afford a complete loss
of such investment.
(xiv) It is understood that all documents, records
and books pertaining to this investment have been made available for
the inspection by the Subscriber's attorney and/or accountant and the
Subscriber.
2. TERMS OF SUBSCRIPTION.
The Offering of shares of Common Stock is being made on a
"best efforts" basis by the Placement Agent (as defined in the Memorandum) in
the manner more particularly set forth in the Memorandum. If the Company fails
to deliver to the Placement Agent the certificates representing the shares of
Common Stock purchased pursuant to this Agreement on or before the third (3rd)
business day ("Delivery Deadline") following the Closing Date (as defined in the
Memorandum and assuming December 24, 2004 is not a business day), then the
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Company will be required to pay to the Subscriber on or before the tenth (10th)
day after the Closing Date, as liquidated damages, a cash payment in an amount
equal to two percent (2%) of the Purchase Price of the Subscriber's shares of
Common Stock that were not delivered to the Placement Agent on or before the
Delivery Deadline.
3. REGISTRATION RIGHTS.
Holders of shares of Common Stock purchased pursuant to this
Agreement shall be afforded certain "demand" and "piggy-back" registration
rights as more particularly described in the Registration Rights Agreement
attached hereto as EXHIBIT A and made a part hereof by this reference.
4. MISCELLANEOUS.
(a) All notices, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (i)
when delivered by hand, (ii) one business day after the business day of
transmission if sent by telecopier (with transmission confirmed), provided that
a copy is mailed by certified mail, return receipt requested, or (iii) one
business day after the business day of deposit with the carrier, if sent for
next business day delivery by Express Mail, Federal Express or other recognized
express delivery service (receipt requested), in each case addressed to the
Company at the address indicated on the first page of this Agreement marked
"Attention: Xxxxx X. Xxxxx, Chief Financial Officer" and to the Subscriber at
the Subscriber's address listed in the Subscriber Questionnaire (or to such
other addresses and telecopier numbers as a party may designate as to itself by
notice to the other parties).
(b) This Agreement shall not be changed, modified or amended
except by a writing signed by the parties to be charged, and this Agreement may
not be discharged except by performance in accordance with its terms or by a
writing signed by the party to be charged.
(c) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter thereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
(d) Notwithstanding the place where this Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed in accordance with and governed
by the laws of the State of California. The parties hereby agree that any
dispute which may arise between them arising out of or in connection with this
Agreement shall be adjudicated before a court located in California and they
hereby submit to the exclusive jurisdiction of the courts of the State of
California and of the federal courts in California with respect to any action or
legal proceeding commenced by any party, and irrevocably waive any objection
they now or hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Agreement or any acts or
omissions relating to the sale of the securities hereunder, and consent to the
service of process in any such action or legal proceeding by means of registered
or certified mail, return receipt requested, in case of the address set forth in
this Agreement for notices or such other address as the undersigned shall
furnish in writing to the other.
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(e) This Agreement may be executed in counterparts. Upon the
execution and delivery of this Agreement by the Subscriber, this Agreement shall
become a binding obligation of the Subscriber with respect to the purchase of
the shares of Common Stock as herein provided; subject, however, to the right
hereby reserved to the Company to enter into the same agreements with other
subscribers and to add and/or to delete other persons as subscribers.
(f) The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Agreement, which shall remain in full force and
effect.
(g) It is agreed that a waiver by either party of a breach of
any provision of this Agreement shall not operate, or be construed, as a waiver
of any subsequent breach by that same party.
(h) The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
(signature pages follow)
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date indicated below as the date the subscription is accepted by the
Company.
TO BE COMPLETED BY SUBSCRIBER
INDIVIDUALS: ENTITIES:
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Print Name Print Name of Subscriber
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Signature Authorized Signature
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Signature (if Joint Tenants Print Name of Signatory and
or Tenants in Common) Capacity in which Signed
Proposed Investment Amount: $_____________
TO BE COMPLETED BY THE COMPANY
The foregoing subscription is accepted by the Company as to an
aggregate purchase price of $________________ ("Purchase Price") effective as of
December 23, 2004.
TELENETICS CORPORATION,
a California corporation
By:
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Xxxxx X. Xxxxx, Chief Financial Officer
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Attachment to Exhibit 10.1
Subscriber Name Common Shares Purchased
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Xxxxxx X. Xxxxxxxxxxx 785,714
Xxxxxx Xxxxxx 500,000
Xxxxxx Xxxxxx & Xxxxxx Xxxxxx Trust DTD 8/1/95 285,714
Xxxxx X. Xxxx 500,000
Xxxx Xxxxxx and Xxxxxxxx Xxxxxx Ten Com 714,286
Meadowbrook Opportunity Fund LLC 5,000,000
Xxxxxxxx Xxxx 1,000,000
Kuefenhoef Equity Fund, L.P. 1,071,429
Xxxxxxx X. Xxxxxxx 714,286
Xxxxxx X. Xxxxxxx 714,286
J. Xxxxxxx Xxxxxxx Inc. 357,143
Xxxxxx Ventures Fund LP 1,492,857
Xxxxxx X. Xxxxxx 142,857
Xxxxxxx Xxx Xxxxxxx 142,857
D. Xxxxxx Xxxx 714,286
Xxxx X. Xxxx 150,000
Xxxxxxx X. Xxxxxx 285,714
Xxxxx X. Xxxxxx Revocable Trust 714,286
