STOCK PURCHASE AGREEMENT
Exhibit
10.1
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”)
is
made as of February 2, 2006, by and among Conversion Services International,
Inc., a Delaware corporation (the “Company”),
with
an address of 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxxxx 00000, and Taurus
Advisory Group, LLC, a ____ limited liability company, with an address of 0
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000, along with each additional
party
set forth on Schedule A hereto (each an “Investor”)
that
enters into this Agreement pursuant to an Additional Closing (as defined
below).
RECITALS
WHEREAS,
the Investor desires to purchase and acquire, and the Company desires to issue
and sell to the Investor, shares of shares of the Company's Series A Convertible
Preferred Stock (the “Series
A Preferred Stock”)
in the
form of the Certificate of Designations of Preferences, Rights and Limitations
of Series A Convertible Preferred Stock appended hereto as Exhibit
A (the
"Series
A Certificate of Designations"),
and a
warrant to purchase Common Stock, the form of which is attached as Exhibit
B
hereto
(the “Warrant”);
and
WHEREAS,
the parties hereto desire to enter into this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Sale
of
Series A Convertible Preferred Stock.
1.1
Sale
and
Issuance of Series A Convertible Preferred Stock.
Subject
to the terms and conditions of this Agreement, the Investor agrees to purchase
at the Closing (as defined below), and the Company agrees to sell and issue
to
the Investor at the Closing, 19,000 shares of the Company's Series A Convertible
Preferred Stock (the “Series
A Preferred Stock”),
$.001
par value per share and stated value $100.00 per share, at a purchase price
of
$100 per share. Each share of shall be convertible, subject to applicable
anti-dilution provisions, into 200 shares of Common Stock.
1.2 Warrant.
The
Company shall issue to the Investor the Warrant to purchase, subject to
applicable anti-dilution provisions, an aggregate of 1,900,000 shares of Common
Stock at $0.60 cents per share until January [__], 2011, subject to the
compliance with applicable securities laws.
1.3
Closing.
(a)
The
purchase and sale of the Series A Preferred Stock and the Warrant shall take
place at such time and place as shall be mutually agreed upon between the
Investors and the Company (the “Closing”).
(b)
At
the Closing, the Investor shall deliver to the Company the amount of its
investment in immediately available funds by certified check or wire transfer
to
an account of the Company designated by the Company or such other manner
reasonably acceptable to the Company.
(c)
At
the Closing, the Company shall deliver to the Investor a certificate for the
shares of Series A Preferred Stock to be issued to the Investor in definitive
form and duly registered in the name of the Investor, and the
Warrant.
2. Representations
and Warranties of the Company. [Except for the exceptions set forth on the
Schedule of Exceptions attached hereto and furnished to the Investor, which
exceptions shall be deemed to be representations and warranties as if made
hereunder, t]he Company hereby represents and warrants to the Investor
that:
2.1
Organization; Good Standing; Qualification and Corporate Power.
(a)
The
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to carry
on
its business as now conducted and as proposed to be conducted. The Company
and
each of its subsidiaries is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have
a
material adverse effect on its business or properties. True and correct copies
of the Company's Certificate of Incorporation, as amended (the "Certificate
of Incorporation")
and
Bylaws have been provided to the Investor or made available via the SEC XXXXX
website.
(b)
The
Company has all requisite legal and corporate power and authority to execute
and
deliver this Agreement among the Company and the Investor, to issue and sell
the
Series A Preferred Stock and the Warrant and to carry out and perform its
obligations under the terms of this Agreement and to consummate the transactions
contemplated hereby and thereby. All necessary corporate action has been taken
by the Company with respect to the execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby and thereby. The Series A Preferred Stock, when issued in
accordance pursuant to the terms of the Agreement,
will be
legally issued, fully paid and non assessable and the purchasers thereof will
own the Series A Preferred Stock, free and clear of all liens and encumbrances.
The Warrant, when in accordance pursuant to the terms of the Agreement, will
constitute the legally binding obligation of the Company in accordance with
its
terms.
2.2
Capitalization
and Voting Rights. The authorized capital of the Company consists
of:
(a)
Common Stock. 85,000,000 shares of common stock, $.001 par value per share
(the
"Common Stock"), of which 54,093,916 shares are issued and outstanding as of
the
date hereof.
(b)
Preferred Stock. 20,000,000 shares of preferred stock (the "Preferred
Stock"),
of
which 0 shares are issued and outstanding as of the date hereof.
2.3
Subsidiaries;
Interests of the Company. Except as set forth in the Company’s public filings
with the Securities and Exchange Commission (the “SEC
Documents”),
the
Company does not currently own or control, directly or indirectly, any interest
in any other Person.
2.4
Authorization.
This Agreement and all other agreements executed and delivered by the Company
in
connection therewith, have been duly authorized, executed and delivered by
the
Company and constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, subject to (i) applicable
bankruptcy, insolvency, reorganization and moratorium laws, (ii) other laws
of
general application affecting the enforcement of creditors' rights generally
and
general principles of equity, (iii) the discretion of the court before which
any
proceeding therefor may be brought, and (iv) as rights to indemnity may be
limited by federal or state securities laws or by public policy.
2.5
Governmental
Consents. No consent, approval, order, or authorization of, or
registration,
qualification,
designation, declaration or filing with, any federal, state, local or provincial
governmental authority on the part of the Company is required in connection
with
the consummation of the transactions contemplated by this Agreement. The Company
and each of its subsidiaries has obtained all federal, state, local and foreign
governmental licenses and permits material to and necessary in the conduct
of
its business, such licenses and permits are in full force and effect, no
material violations are or have been recorded in respect of any such licenses
or
permits, and no proceeding is pending or threatened to revoke or limit any
thereof. There are no consents or waivers necessary for the consummation of
the
transactions contemplated by this Agreement.
2.6
Litigation.
Except as set forth in the SEC Documents, (i) there is no action, suit,
proceeding, or investigation pending or currently threatened against the
Company, and (ii) in the Company's reasonable judgment, none of such disclosures
are likely to question the validity of this Agreement, or the right of the
Company to enter into such agreements, or to consummate the transactions
contemplated hereby or thereby, or which might result, either individually
or in
the aggregate, in any material adverse change in the assets, condition, affairs,
or property of the Company, financially or otherwise, or any change in the
current equity ownership of the Company, including, without limitation, actions
pending or to the Company's knowledge threatened involving the prior employment
of any of the Company's employees, their use in connection with the Company's
business of any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior
employers.
2.7
Compliance
with Other Instruments. The Company is not in violation or default of any
provisions of its Certificate of Incorporation or Bylaws or of any instrument,
judgment, order, writ, decree, or contract to which it is a party or by which
it
is bound or, to its knowledge, of any provision of Federal or state statute,
rule or regulation, license, or permit applicable to the Company, the violation
or default of which would have a material adverse effect on the Company. The
execution, delivery, and performance of this Agreement and the consummation
of
the transactions contemplated hereby and thereby will not result in any such
violation or be in conflict with or constitute, with or without the passage
of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree, or material contract or an event
which results in the creation of any lien, charge, or encumbrance upon any
assets of the Company.
2.8 Finders'
Fees. There is no investment banker, broker, finder or other intermediary that
has been retained by or is authorized to act on behalf of the Company who might
be entitled to any fee or commission from the Investor upon consummation of
the
transactions contemplated by this Agreement.
3.
Representations
and Warranties of the Investor. Each Investor, severally and not jointly, hereby
represents and warrants to the Company that:
3.1
Organization
and Existence. To the extent indicated on the signature pages hereto, the
Investor is either (i) a limited partnership duly organized and validly existing
under the laws of its respective state of formation, (ii) a limited liability
company duly organized and validly existing under the laws of its respective
state of formation, (iii) a corporation duly organized and validly existing
under the laws of its respective state of incorporation or (iv) an individual.
The Investor represents that it was not
organized
for the purpose of making an investment in the Company.
3.2
Authorization.
The execution, delivery and performance of this Agreement and any applicable
ancillary agreements by the Investor and the consummation by the Investor of
the
transactions contemplated hereby and thereby are within the powers of the
Investor and have been duly authorized by all necessary individual, corporate,
partnership or limited liability company action, as appropriate, on the part
of
the Investor. This Agreement and any applicable ancillary agreements constitute
valid and binding agreements of the Investor, enforceable in accordance with
their respective terms, subject to (i) applicable bankruptcy, insolvency,
reorganization and moratorium laws, (ii) other laws of general application
affecting the enforcement of creditors' rights generally and general principles
of equity, (iii) the discretion of the court before which any proceeding
therefor may be brought, and (iv) as rights to indemnity may be limited by
federal or state securities laws or by public policy. All action required for
the lawful execution and delivery of this Agreement and any applicable ancillary
agreements has been taken.
3.3
Finders'
Fees. There is no investment banker, broker, finder or other intermediary that
has been retained by or is authorized to act on behalf of the Investor who
might
be entitled to any fee or commission from the Company upon consummation of
the
transactions contemplated by this Agreement.
3.4
Purchase
Entirely for Own Account. The Series A Preferred Stock to be received by the
Investor pursuant to the terms hereof will be acquired for investment for the
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof. The Investor has no current
intention of selling, granting any participation in, or otherwise distributing
the shares of Series A Preferred Stock acquired by the Investor except in
compliance with applicable securities laws. The Investor has no contract,
undertaking, agreement or arrangement with any Person to sell or transfer,
or
grant any participation to such Person or to any third Person, with respect
to
any shares of Series A Preferred Stock to be acquired by the
Investor.
3.5
Investor
Address, Access to Information, Experience, Etc.
(a)
The
address set forth on the signature pages of this Agreement is the Investor's
true and correct business, residence or domicile address. The Investor has
received and read and is familiar with this Agreement. The Investor has had
an
opportunity to ask questions of and receive answers from representatives of
the
Company concerning the terms and conditions of this investment. The Investor
has
substantial experience in evaluating non-liquid investments such as the Series
A
Preferred Stock and is capable of evaluating the merits and risks of an
investment in the Company. The Investor is an “accredited investor” as that term
is defined in Rule 501 of Regulation D promulgated under the Securities Act
of
1933, as amended (the “Securities
Act”).
(b)
The
Investor has been furnished access to the business records of the Company and
such additional information and documents as the Investor has requested and
has
been afforded an opportunity to ask questions of, and receive answers from,
representatives of the Company concerning the terms and conditions of this
Agreement, the purchase of the Series A Preferred Stock, the business,
operations, market potential, capitalization, financial condition and prospects
of the Company, and all other matters deemed relevant to the
Investor.
(c)
The
Investor acknowledges that it has had an opportunity to evaluate all information
regarding the Company as it has deemed necessary or desirable in connection
with
the transactions contemplated by this Agreement, has independently evaluated
the
transactions contemplated by this Agreement and has reached its own decision
to
enter into this Agreement.
3.6
Restricted
Securities. The Investor understands that the shares of Series A Preferred
Stock
to be acquired by the Investor and the Common Stock issuable upon conversion
of
the shares of Series A Preferred Stock and exercise of the Warrant have not
been
registered under the Securities Act or the laws of any state and may not be
sold
or transferred, or otherwise disposed of, without registration under the
Securities Act and applicable state securities laws, or pursuant to an exemption
therefrom. In the absence of an effective registration statement or an exemption
therefrom covering the shares of Series A Preferred Stock to be acquired by
the
Investor and the Common Stock issuable upon conversion of the shares of Series
A
Preferred Stock and exercise of the Warrant, the Investor will not sell or
transfer, or otherwise dispose of, the shares of Series A Preferred Stock to
be
acquired by the Investor only in a manner consistent with its representations
and agreements set forth herein, the terms and conditions set forth in the
ancillary agreements and any applicable Federal and state securities
laws.
3.7
Legends.
It is understood that the certificates evidencing the shares of Series A
Preferred Stock may bear one or all of the following legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES
LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF
AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES EVIDENCED
BY
THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED, AND SUCH APPLICABLE STATE SECURITIES LAWS OR, UNLESS REASONABLY
REQUESTED BY THE COMPANY, THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH ACT
AND
SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
(b) Any
legend required by the Blue Sky laws of any state.
The
legend referred to in clause (a) above shall be removed by the Company from
any
certificate at such time as the holder of the securities represented by the
certificate delivers an opinion of counsel reasonably satisfactory to the
Company to the effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act, or at such time as the
holder of such shares satisfies the requirements of Rule 144(k) or such other
substantially similar rule promulgated under the Securities Act then in effect
under the Securities Act; provided, that the Company has received from the
holder a written representation that (i) such holder is not an affiliate of
the
Company and has not been an affiliate during the preceding three (3) months,
(ii) such holder has beneficially owned the shares represented by the
certificate for a period of at least two (2) years (or the period of time then
required by Rule 144(k) or such other substantially similar rule promulgated
under the Securities Act then in effect), and (iii) such holder otherwise
satisfies the requirements of Rule 144(k) as then in effect with respect to
such
shares.
4. Conditions
of the Investor's Obligations at Closing. The obligations of the Investor under
Sections 1.1 and 1.3(b) of this Agreement are subject to the fulfillment on
or
before the Closing of each of the following conditions, the waiver of which
shall not be effective against the Investor unless the Investor has consented
in
writing thereto:
4.1 Representations
and Warranties. The representations and warranties of the Company contained
in
Section 2 shall be true on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of
the
Closing.
4.2
Performance.
The Company shall have performed and complied with all agreements, obligations,
and conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Closing.
4.3
Filing
with the Secretary of the State of Delaware. The Company shall have filed with
the Secretary of the State of Delaware the Series A Certificate of
Designations.
4.4
Share
Certificates and Warrant. The Investor shall have received a certificate or
certificates representing such number of Series a Preferred Shares of their
investment and the Warrant with all such certificates and the Warrant registered
in the name of each such respective Investor.
4.5
Consents
and Waivers. The Company shall have obtained any and all consents and waivers
necessary or appropriate for consummation of the transactions contemplated
by
this Agreement and any ancillary agreements.
4.6 Execution
of Registration Rights Agreement. The Company shall have executed and delivered
to the Investor the Registration Rights Agreement in the form appended hereto
as
Exhibit
C.
5.
Conditions
of the Company's Obligations at Closing. The obligations of the Company under
Sections 1.1 and 1.2(c) of this Agreement are subject to the fulfillment on
or
before the Closing of each of the following conditions, the waiver of which
shall not be effective unless the Company has consented in writing
thereto:
5.1
Representations
and Warranties. The representations and warranties of the Investor contained
in
Section 3 shall be true on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of
the
Closing.
5.2
Performance.
The Investor shall have performed and complied with all agreements, obligations,
and conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Closing.
6.
Covenants
of the Company. In addition to the covenants set forth in the Company's
Certificate of Incorporation, the Company agrees that, so long as any shares
of
Series a Preferred Stock remain outstanding:
6.1
Maintenance
of Existence. The Company shall at all times (a) preserve, renew and keep in
full force and effect its legal existence and rights and franchises with respect
thereto; and (b) maintain in full force and effect all permits, licenses,
trademarks, trade names, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be
conducted.
6.2 Payment
of Obligations. The Company shall pay and discharge at or before maturity,
all
of its material obligations and liabilities, including, without limitation,
tax
liabilities, except where the same may be contested in good faith by appropriate
proceedings or as waived, forgiven or modified by the creditor, and will
maintain, in accordance with generally accepted accounting principles as they
then exist, appropriate reserves for the accrual of any of the
same.
6.3 Reservation
of Shares. The Company shall at all times duly reserve for issuance the shares
of Common Stock issuable upon conversion or exercise of the Series A Preferred
Stock and the Warrant. The Company shall comply with the terms and conditions
of
the Series A Preferred Stock as set forth in the Company's Certificate of
Incorporation including the Series A Certificate of Designations.
7.
Indemnity.
The Company shall, with respect to the representations, warranties, covenants
and agreements made by the Company herein indemnify, defend and hold the
Investor (and their respective shareholders, directors, officers, employees,
partners, agents, affiliates and controlling parties) (each, an “Indemnified
Party”)
harmless from and against all liability, loss or damage, together with all
reasonable costs and expenses related thereto (including legal and accounting
fees and expenses), arising from the untruth, inaccuracy or breach of any such
representations, warranties, covenants or agreements of the Company contained
in
this Agreement or the assertion of any claims relating to the foregoing. Without
limiting the generality of the foregoing, each Indemnified Party shall be deemed
to have suffered liability,
loss
or
damage as a result of the untruth, inaccuracy or breach of any such
representations, warranties, covenants or agreements if such liability, loss
or
damage shall be suffered by the Indemnified Party as a result of, or in
connection with, such untruth, inaccuracy or breach or any facts or
circumstances constituting such untruth, inaccuracy or breach. The Company
shall
indemnify and hold harmless each Indemnified Party against any losses, claims,
damages or liabilities, joint or several, to which any of the foregoing persons
may become subject, insofar as such losses, claims, damages or liabilities
(or
actions in respect thereof) arise out of or are based upon any violations by
the
Company of the Securities Act or state securities or "blue sky" laws applicable
to the Company relating to action or inaction required of the Company in
connection with the Securities Act or registration or qualification under such
state securities or blue sky laws; and shall reimburse each such Indemnified
Party for any legal or any other expenses reasonably incurred by any of them
in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that no indemnification shall be
required hereunder for the gross negligence or willful misconduct of any
Indemnified Party or material breach by the Investor of any of the
representations and warrants set forth in Section 3 hereof. In case any such
action is brought against an Indemnified Party, the Company will be entitled
to
participate in and assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party, and after notice from the Company to
such Indemnified Party of its election to assume the defense thereof, the
Company shall be responsible for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof, provided that
if
any Indemnified Party shall have reasonably concluded that there may be one
or
more legal defenses available to such Indemnified Party that conflict in any
material respect with those available to the Company, or that such claims or
litigation involves or could have an effect upon matters beyond the scope of
the
indemnity provided by this Section 7, the Company shall reimburse such
Indemnified Party and shall not have the right to assume the defense of such
action on behalf of such Indemnified party and the Company shall reimburse
each
such Indemnified Party and any person controlling such Indemnified Party for
that portion of the reasonable fees and expenses of any counsel retained by
the
Indemnified Party. The Company shall not make any settlement of any claims
indemnified against hereunder without the written consent of the Indemnified
Party or Parties, which consent shall not be unreasonably withheld. Any claim
for indemnification under this Section 7 with respect to representations and
warranties must be made not later than the end of the 12-month survival period
set forth in Section 8.1.
8.
Miscellaneous.
8.1
Survival
of Warranties. The warranties, representations, and covenants of the Company
and
the Investor contained in or made pursuant to this Agreement shall survive
the
execution and delivery of this Agreement and the Closing for a period of 12
months and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the Company.
8.2
Successors
and Assigns. The provisions of this Agreement shall be binding upon and inure
to
the benefit of the parties hereto and their respective successors and assigns.
Except as provided under Section 7, neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto
any
rights or remedies hereunder.
8.3
Governing
Law. This Agreement shall be governed by and construed under the laws of the
State of Delaware, without regard to principles of conflicts of laws and rules
of such state.
8.4
Counterparts.
This Agreement may be executed in two or more counterparts and by facsimile,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.5
Titles
and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting
this
Agreement.
8.6
Notices.
Unless otherwise provided, any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given (i) upon
personal delivery to the party to be notified, (ii) four (4) days after deposit
with the United States Post Office, by registered or certified mail, postage
prepaid, or (iii) one day after deposit with a reputable overnight courier
service and addressed to the party to be notified at the address indicated
for
such party in the preamble above.
8.7
Entire
Agreement; Amendments and Waivers. This Agreement constitutes the full and
entire understanding and agreement among the parties with regard to the subjects
hereof. Any term of this Agreement may be amended and the observance of any
term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of
the
Company and Investors that represent in the aggregate at least a majority of
the
outstanding shares of Series A Preferred Stock (provided that no such amendment
shall unfairly discriminate against a particular Investor relative to the other
Investors). Any amendment or waiver effected in accordance with this Section
8.7
shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding, each future holder of all such securities,
and the Company.
8.8
Severability.
If one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision was so
excluded and shall be enforceable in accordance with its terms.
IN
WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement
as of the day and year first above written.
| CONVERSION SERVICES INTERNATIONAL, INC. | ||
| |
|
|
| By: | ||
|
Name: Xxxxx Xxxxxx |
||
| Title: President and Chief Executive Officer | ||
| TAURUS ADVISORY GROUP, LLC | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
SCHEDULE
A
[As
of
[date], there were no additional investors.]
