EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated and effective as of September 30,
2002, is by and between AMBIENT CORPORATION, a Delaware corporation (the
"Company"), and CONSOLIDATED EDISON, INC., a New York corporation (the
"Investor", each of the Company and the Investor being a "Party" and together
the "Parties").
WITNESSETH:
WHEREAS, the Company and the Consolidated Edison Company of New York, Inc.
("CECONY") have entered into the Research and Development Agreement dated as of
February 7, 2002, as subsequently amended by Amendment No. 1 dated as of June
11, 2002 and by Amendment No. 2 dated as of August 19, 2002 (the "Development
Agreement", capitalized terms used herein and not otherwise defined being used
herein as defined in the Development Agreement), pursuant to which they are
jointly designing, developing and testing the Company's proposed power-line
communications technology;
WHEREAS, as of August 19, 2002, the Company and CECONY entered into
Amendment No. 2 to the Development Agreement ("Amendment No.2") pursuant to
which, inter-alia, Investor is entitled to purchase from the Company shares of
the Company's Common Stock, par value $0.001 (the "Common Stock"), for an
aggregate investment of $1.4 million, subject to the completion of a due
diligence examination to the Investor's satisfaction in its sole and unfettered
discretion not subject to any standard of commercial reasonableness (the
"Investment"); and
WHEREAS, the Investor has notified the Company that it intends to complete
the Investment and, accordingly, the Parties are entering into this Agreement,
as contemplated by Amendment No. 2, to address the Parties' respective rights
and obligations concerning the Investment.
NOW, THEREFORE, the Parties hereto agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK
1.1 Sale and Issuance of Common Stock. Subject to the terms and conditions
of this Agreement, and to the completion of a due diligence examination to the
Investor's satisfaction in its sole and unfettered discretion not subject to any
standard of commercial reasonableness the Investor agrees to purchase and the
Company agrees to sell and issue to the Investor, an aggregate of thirty-five
million (35,000,000) shares (the "Shares") of the Company's Common Stock. The
purchase price for the Shares shall be Four Cents ($0.04) per Share, for an
aggregate purchase price of One Million Four Hundred Thousand Dollars
($1,400,000) (the "Purchase Price").
1.2 Closing. The purchase and sale of the Shares shall take place as
hereinafter provided. The purchase and sale of an initial tranche of twelve
million two hundred fifty thousand (12,250,000) of the Shares shall take place
at the Investor's headquarters at 0 Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, at 10 a.m.
on September 30, 2002 (or such other location and time as the Investor and the
Company consent to)(the "Initial Closing") against the payment of $225,000 of
the Purchase Price and the cancellation by the Investor of the principal amount
of $265,000 previously advanced to the Company pursuant to
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Amendment No. 2 and pursuant to Amendment No. 1 to the Development Agreement
("Amendment No. 1") entered into by the Company and the Investor on August 19,
2002 and June 11, 2002, respectively, and further amended and restated as of the
date hereof. Thereafter, subsequent closings for the purchase and sale of five
additional tranches shall take place at intervals of not more than 30 days, with
the first such subsequent closing taking place not more than 30 days from the
Initial Closing (each such subsequent closing shall be referred to as a
"Subsequent Closing" and collectively with the Initial Closing, may be referred
to as the "Closing") and with the first four (4) such subsequent Closings being
for five million (5,000,000) Shares each against the payment of $200,000 and the
last Closing being for two million seven hundred fifty thousand (2,750,000)
Shares against the payment of $110,000. At each of the Initial Closing and each
respective Subsequent Closing, the Company shall deliver to the Investor the
certificate representing the Shares purchased at such Closing against receipt by
the Company from the Investor of payment of the respective portion of the
Purchase Price then due.
1.3 Forgiveness of Amounts Previously Advanced by the Investor. Upon the
Initial Closing and the conversion into Shares as provided in Section 1.2 above,
the obligations of the Company to repay the advance of $175,000 made pursuant to
Amendment No. 2 and the advance of $90,000 made pursuant to Amendment No. 1, in
each case by the Investor, shall be deemed to have been satisfied in full.
1.4 Continuing Effect of Amendment No. 2 and Amendment No. 1. As provided
in Section 7.10 hereof, each of the Company and the Investor covenant and agree
that it is their intention that the terms and provisions of this Agreement shall
reflect their entire understanding and agreement with respect to the Investment
and the other matters addressed herein. Notwithstanding the foregoing, all of
the terms and provisions contained in the Development Agreement, Amendment No. 1
and Amendment No. 2 (other than the provisions relating to the Investment which
are superceded by this Agreement, and except that all references to Second
Advance and Third Advance contained in the Development Agreement, as amended by
Amendment No. 1 and Amendment No. 2, shall be null and void and of no further
force and effect) shall be of continuing force and effect and CECONY may choose
to assign any right thereunder to the Investor or to any other affiliate and
CECONY hereby agrees and, if requested by Ambient at the time of such
assignment, CECONY will at that time confirm in writing that such assignment
does not operate as a novation of CECONY. In the event of an inconsistency
between this Agreement and Amendment No. 1 or Amendment No. 2, the provisions of
this Agreement shall control.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in a Disclosure Letter delivered to Investor prior to
the Initial Closing, as of the date hereof, the date of the Initial Closing and
the date of each Subsequent Closing, the Company hereby represents and warrants
to the Investor as follows:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted. The Company 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 (a) the business,
operations, assets, or financial condition of the Company on a consolidated
basis or (b) the ability of the Company to perform its obligations pursuant to
the transactions contemplated by this Agreement or under the agreements or
instruments to be entered into or filed in connection herewith ("Material
Adverse Effect").
2.2 Authorization. All corporate action on the part of the Company
necessary for the authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder and the authorization,
issuance and delivery of the Shares being sold hereunder, has been taken or will
be taken prior to the Initial Closing, and this Agreement, upon due execution
and
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delivery, constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally.
2.3 Valid Issuances. The Shares being purchased by the Investor hereunder,
or any portion(s) thereof, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable, and the Investor shall have good
and valid title to such Shares, free and clear of any liens, pledges,
encumbrances, taxes, charges or restrictions of any kind (other than as created
by or through the Investor).
2.4 Compliance with Law and Charter Documents. The Company is in
compliance with, and is not in violation of, or default under, any provisions of
its Certificate of Incorporation or Bylaws, both as currently in effect. To its
knowledge, the Company is in compliance in all material respects with all
applicable laws, rules, regulations, judgments, decrees and governmental orders,
except for such non-compliance that would not have a Material Adverse Effect.
The execution, delivery and performance of the Agreement and the consummation of
the transactions contemplated hereby will not result in a violation or default
of any agreement that the Company is party to, or be in conflict with or
constitute, either a default under the Company's Certificate of Incorporation or
Bylaws, both as currently in effect, or an event which results in the creation
of any material lien, charge or encumbrance upon the capital stock or any asset
of the Company, or a default under any agreement, contract, license, instrument
or commitment (oral or written) to which the Company is a party or is bound and
which involves payment by the Company or any of its subsidiaries which is
material to the business, properties, financial condition or results of
operation of the Company or its subsidiaries (a "Material Agreement"), or a
violation of any material laws, rules, regulations, judgments, decrees or
orders. All material licenses, permits, approvals, registrations,
qualifications, certificates and other authorizations necessary for the conduct
of the Company's business as presently conducted (the "Licenses") have been duly
obtained and are in full force and effect, and there are no proceedings pending
or threatened which may result in the revocation, cancellation, suspension or
any material adverse modification of any of such Licenses, except for Licenses
that, individually or in the aggregate, the Company need not hold or possess in
order to avoid a Material Adverse Effect
2.5 Litigation. Except as set forth in the Disclosure Letter, there is no
action, suit, proceeding or investigation pending or currently threatened
against the Company which questions the validity of this Agreement or the
consummation of the transactions contemplated hereby, which might result, either
individually or in the aggregate, in any Material Adverse Effects on the assets,
financial condition, operations or business of the Company, financially or
otherwise. There is no action, suit, proceeding or investigation by the Company
currently pending.
2.6 Intellectual Property.
(i) As used in this Agreement, the term "Intellectual Property" means the
following items that are held for use or used in the businesses of the Company
and its subsidiaries as conducted as of the date hereof or as presently
contemplated to be conducted and any licenses to use any of the following: all
trademarks, service marks, trade names, Internet domain names, designs, logos,
slogans and general intangibles of like nature, together with the goodwill,
registrations and applications relating to the foregoing, and any material
unregistered trademarks or service marks (collectively, "Trademarks"); patents,
patent applications and any continuations, divisionals, continuations-in-part,
renewals, reissues for any of the foregoing (collectively, "Patents");
copyrights (including registrations and applications for any of the foregoing
and material common law or unregistered copyrights) (collectively,
"Copyrights"); computer programs, including any and all software implementations
of algorithms, models and methodologies whether in source code or object code
form, databases and compilations, including any
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and all data and collections of data, all documentation, including user manuals
and training materials, related to any of the foregoing and the content and
information contained on any Web site (collectively, "Software"); confidential
information, technology, know-how, inventions, processes, formulae, algorithms,
models and methodologies (collectively, "Trade Secrets").
(ii) Except as set forth in this Agreement, in the Development Agreement
and in the Disclosure Letter, the Company has the right to use all Intellectual
Property, free and clear of all liens, pledges, encumbrances, taxes, charges or
restrictions of any kind, and the Company is listed in the records of the
appropriate United States, state, or foreign registry as the sole current owner
of record for each application and registration.
(iii) Any Intellectual Property owned or used by the Company has been duly
maintained, is valid and subsisting, is in full force and effect and has not
been cancelled, expired or abandoned.
(iv) There is no pending or, to the knowledge of the Company, threatened
claim, suit, arbitration or other adversarial proceeding before any court,
agency, arbitral tribunal, or registration authority, in any jurisdiction, and
neither the Company nor its subsidiaries has received written notice regarding
any of the foregoing, involving: (i) the Intellectual Property owned by the
Company, (ii) the Intellectual Property licensed to the Company, (A) alleging
that the activities or the conduct of the businesses of the Company infringes
upon, violate, or constitute the unauthorized use of the intellectual property
rights of any third party, or (B) challenging the ownership rights of the
Company, or validity, enforceability, and registrability of, any Intellectual
Property.
(v) To the knowledge of the Company, no third party is misappropriating,
infringing, diluting or violating any Intellectual Property owned by the
Company.
(vi) The Company takes reasonable measures to protect the confidentiality
of Trade Secrets. No Trade Secret of the Company has been disclosed or
authorized to be disclosed to any third party other than pursuant to a written
nondisclosure agreement that adequately protects the proprietary interests of
the Company in and to such Trade Secrets.
2.7 Title to Property and Assets. The Company owns and has valid title to
its property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise and do not
materially impair the Company's ownership or use of such property or assets or
which would not, in the aggregate, have a Material Adverse Effect. With respect
to the property and assets it leases, the Company is in compliance with such
leases and, to the best of its knowledge, holds a valid leasehold interest free
of any liens, claims or encumbrances. The Company does not own any real
property.
2.8 Security Interest in the Collateral. The Company is in compliance and
has been in compliance at all times since February 7, 2002 with the covenants
set forth in the first two sentences of Section 3.6(e) of the Development
Agreement.
2.9. Capitalization. The capitalization of the Company is as set forth in
Schedule 2.9 hereto, which Schedule 2.9 includes all warrants, options, calls,
puts, pre-emptive or appraisal rights, or other rights to buy, sell or otherwise
acquire or dispose of Common Stock.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
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As of the date hereof, the date of the Initial Closing and the date of
each Subsequent Closing, the Investor hereby represents and warrants to the
Company that:
3.1 Authorization, Compliance with Laws and Charter Documents. The
Investor has full power and authority to enter into this Agreement. This
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally. The
execution, delivery and performance of the Agreement and the consummation of the
transactions contemplated hereby will not result in any such violation or
default, or be in conflict with or constitute, with or without the passage of
time or the giving of notice or both, either a default under the Investor's
organizational documents, as currently in effect, or an event which results in
the creation of any lien, charge or encumbrance upon the capital stock or any
asset of the Investor, or a default under any agreement or contract of the
Investor, or a violation of any laws, rules, regulations, judgments, decrees or
orders, except in the case of any of the foregoing, such default(s), lien(s)
charge(s), encumbrance(s) or violation(s) as would not have a material adverse
effect on the Investor and Consolidated Edison, Inc. ("CEI") and all other
companies (besides the Investor) directly or indirectly owned by CEI, considered
as a whole.
3.2 Purchase Entirely for Own Account. The Investor is acquiring the
Shares for investment for its own account, not as a nominee or agent, and not
with a view to, or for the resale or distribution of any part thereof. The
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. The Investor further represents that it does
not have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Shares.
3.3 Disclosure of Information. The Investor has received all of the
information which it considers necessary or appropriate for deciding whether to
purchase the Shares. The Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares.
3.4 Accredited Investor. The Investor is an "accredited investor" within
the meaning of Rule 501 of Regulation D, as presently in effect.
3.5 Restricted Securities. The Investor acknowledges that, because the
Shares have not been registered under the Securities Act, the Shares, and must
be held indefinitely unless the resale of which is subsequently registered under
the Securities Act or an exemption from such registration is available. The
Investor is aware of the provisions of Rule 144 promulgated under the Securities
Act which permits limited resale of securities purchased in a private placement
subject to the satisfaction of certain conditions.
3.6 Possession of Material Non-Confidential Information: Investor
acknowledges, in connection with Investor's purchase of the Shares and
discussions and negotiations with respect thereto, that the Investor may be in
possession of material non-public information and, accordingly, agrees that it
may not transfer any securities owned by it unless in compliance with applicable
securities laws and regulations.
3.7 Legends. The Investor understands that until (a) the Shares may be
sold by the Investor under Rule 144(k) or (b) such time as the resale of the
Shares have been registered under the Securities Act as contemplated in Section
4 hereof, the certificates representing the Shares will bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for such Shares):
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO
AN OPINION FROM COUNSEL THAT SUCH OFFER, SALE OR TRANSFER FALLS WITHIN AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THOSE LAWS.
3.8 Standstill. The Investor hereby agrees that neither the Investor nor
any of its affiliates (as defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), will (and the Investor and such
affiliates will not assist, provide or arrange financing to or for others or
encourage others to), directly or indirectly, acting alone or in concert with
others: (a) acquire or agree, offer, seek or propose to acquire through a
business combination or otherwise, ownership (including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the Exchange Act) of a
substantial portion of the assets or business of the Company (other than in the
ordinary course of business) or any additional securities of the Company, or any
bank debt, claims or other obligations of the Company, or any rights or options
to acquire such ownership (including from a third party), or make any public
announcement with respect to any of the foregoing; or (b) sell, assign,
transfer, pledge or otherwise convey any or all of the Shares (other than in
connection with open market transactions pursuant to an effective registration
statement), in either case pursuant to (a) or (b) above unless the Investor
shall first give the Company thirty (30) days prior written notice of the
conveyance and the opportunity to acquire the Shares on the same terms.
4. COVENANTS OF THE COMPANY AND DEMAND REGISTRATION RIGHTS
4.1 Board Representation: Following the Initial Closing and so long as the
Investor shall hold, in the aggregate, at all times following the completion of
all the Closings, at least 25.0% of the issued and outstanding shares of the
Company's Common Stock (the "Requisite Percentage"), the Investor shall be
entitled to designate one member (the Investor's Director Designee") of the
Company's board of directors (the "Board"). The Investor shall be entitled to
first exercise its right hereunder to designate the Investor's Director Designee
only after it has paid into the Company the final installment of the Purchase
Price at the last Closing and such right shall then continue in full force and
effect so long as the Investor shall hold the Requisite Percentage. Investor
acknowledges and agrees that the director designated by it to sit on the
Company's Board shall be subject to re-election by the Company's stockholders at
the Company's scheduled meetings for the election of directors.
4.1.1 The right of the Investor under Section 3.7 of the Development
Agreement to appoint an observer to the Company Board shall, upon the
first exercise of the Investor's right under Section 4.1 to appoint the
Investor's Director Designee, cease and be of no further force and effect.
4.2 Approvals: Following the Initial Closing and so long as the Investor
shall hold, in the aggregate, at all times following the completion of all the
Closings, at least the Requisite Percentage of the Common Stock, the Company
covenants to notify the Investor in writing in advance of, and the Investor
shall be entitled to approve or reject, in a commercially reasonable manner: (1)
any debt or equity financing or asset sale to be undertaken by Ambient involving
an amount in excess of $500,000; and (2) any single expenditure involving in
excess of $100,000 or aggregate monthly expenditures involving in excess of
$300,000, provided, however, that the rights specified in (1) above shall
terminate on the earlier to occur of the Investor's decision to terminate such
rights, or June 30, 2003.
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Subsequent to June 30, 2003, the Investor retains the right to approve or reject
a debt or equity financing in excess of $750,000 provided that in the event the
Investor disapproves, the Investor is to provide financing to the Company on
substantially similar terms and conditions within 30 days. In addition, the
right specified in (2) above shall expire upon the earlier to occur of the
successful raising by the Company of $500,000 of capital other than from the
Investment or February 28, 2003.
4.3 Registration Rights (i) Upon the written request of the Investor, the
Company shall file a registration statement (the "Registration Statement"), with
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933 (the "Act") with respect to the Shares; provided, however that such request
must be for the registration of not less than 10,000,000 Shares.
(ii) At such time as the Company files a Registration Statement with the
SEC under the Act with respect to securities held by any of the Company's other
stockholders or rights holders, the Company will include the Shares in such
Registration Statement, subject to the Investor agreeing to any lock up or other
restriction then asked of the other registering holders, and if the such
securities (the "Outstanding Shares") cannot be accommodated in such
Registration Statement, then the Outstanding Shares shall be included in
proportion to corresponding respective ownership stakes they represent.
(iii) The Shares sought to be registered pursuant to (i) or (ii) above are
hereinafter referred to as the "Securities". The Investor (also referred to
hereinafter as the "Holder") shall pay any and all underwriting commissions, if
any, in connection with the registration and sale of the Securities under this
Section 4.3, but the Company shall bear all fees and expenses attendant to
registering the Securities under federal, state and any other securities laws,
and any required filings with the NASD, including, without limitation, all
printing costs.
(iv) The Company shall use its best efforts through its officers,
directors, auditors, and counsel to cause such registration statement to become
effective as promptly as practicable.
(v) The Company shall use its best efforts to cause the Securities to be
registered or qualified for sale under the securities or blue sky laws of such
jurisdictions as the Holder may reasonably request; provided, however, that the
Company shall not by reason of this Section 4.3 be required to qualify to do
business in any state in which it is not otherwise required to qualify to do
business or to file a general consent to service of process in such
jurisdiction.
(vi) Upon request, the Company shall furnish the Holder and its counsel
copies of all registration statements and amendments and supplements thereto,
each preliminary and final prospectus and amendment and supplement thereto,
comment letters from the SEC, the National Association of Securities Dealers
("NASD") and state securities commissions, and such other documents as the
Investor shall reasonably request to facilitate the disposition of the
Securities included in such registration.
(vii) The Company will indemnify and hold harmless the Holder, and each
partner, officer, director, and controlling person of the Holder, with respect
to which registration, qualification or compliance has been effected pursuant to
this Agreement against all claims, losses, damages and liabilities (or actions
in respect thereof under the Act, the Exchange Act, common law or otherwise
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like as
amended and supplemented) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Act or any state securities or blue sky laws
applicable to the Company and relating to action or
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inaction required of the Company in connection with any such registration,
qualification or compliance, and will promptly reimburse the Holder, and each
partner, officer, director, and each controlling person of the Holder, for any
legal and other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, that the
Company will not be liable to the Holder or any partner, officer, director and
controlling person of the Holder, to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission contained in information furnished to the Company by the Holder in
writing for use therein.
(viii) In connection with any registration statement in which the Holder
is participating, the Holder shall furnish to the Company in writing such
information and affidavits as the Company and any underwriter reasonably
requests for use in connection with any such registration statement or
prospectus and shall indemnify the Company, its directors and officers and each
Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by the Holder.
(ix) If the indemnification provided for in subparagraph (vi) above is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such of loss, liability, claim, damage, expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of competent jurisdiction by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the party's relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
(x) With a view to making available the benefits of certain rules and
regulations of the SEC which may permit the sale of restricted securities (as
that term is used in Rule 144 under the Act) to the public without registration,
the Company undertakes to use its best efforts to:
(A) make and keep public information available as those terms are
understood and defined in Rule 144 under the Act;
(B) file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the Exchange Act at any time after it
has become subject to such reporting requirements; and
(C) so long as the Holder owns any restricted Securities, furnish to the
Holder promptly upon a written request by the Holder as to the Company's
compliance with the reporting requirements of Rule 144 (at any time from and
after ninety days following the effective date of the first registration
statement filed by the Company for an offering of Securities to the general
public), and of the Act and Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as the Holder may reasonably request in availing himself, herself or itself of
any rule or regulation of the SEC allowing the Holder to sell any such
Securities without registration.
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(ix) Notwithstanding the forgoing, if at any time or from time to time
after the date of effectiveness of the Registration Statement, the Company
notifies the Holder in writing of the existence of a Potential Material Event,
the Holder shall not offer or sell any Securities, or engage in any other
transaction involving or relating to the Securities, from the time of the giving
of notice with respect to a Potential Material Event until either the events or
circumstances comprising such Potential Material Event have been disclosed to
the public or no longer constitute a Potential Material Event; provided however,
that the Company may not so suspend the right to the Holder during the periods
the Registration Statement is required to be in effect other than during a
Permitted Suspension Period. The term "Permitted Suspension Period" means one or
more suspension periods during any consecutive 12-month period and the term
"Potential Material Event" shall mean any of the following: (i) the possession
by the Company of material information not ripe for disclosure in a registration
statement, which shall be evidenced by determinations in good faith by the Board
of Directors of the Company that disclosure of such information in the
registration statement would be detrimental to the business and affairs of the
Company; or (ii) any material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination.
Notwithstanding anything to the contrary contained herein, the provisions hereof
shall not apply to the extent that any of the Securities then included in such
Registration Statement may be sold or otherwise transferred under Rule 144 under
the Act or are transferred in a private non-brokerage transaction.
4.4 Security Interest Granted Pursuant to Development Agreement. The
Company agrees to take any action reasonably requested by the Investor to
further assure the attachment and perfection of the security interest granted
pursuant to Section 3.6(e) of the Development Agreement, including, without
limitation, executing appropriate instruments required by the Uniform Commercial
Code (UCC) and pursuant to the rules and regulations of the United States Patent
and Trademark Office ("PTO"). Specifically the Company covenants to provide,
prior to any public announcement of the granting to it of any US or foreign
jurisdiction patent, a letter to the Investor for purposes of filing with the
PTO or its foreign counterpart(s), substantially identical to the letter
provided by the Company to the Investor dated September 18, 2002 regarding US
Patent #6,452,482.
5. CONDITIONS OF INVESTOR'S SIGNING AND OF INVESTOR'S OBLIGATIONS AT CLOSING.
The obligations of the Investor under subsection 1.1 of this Agreement are
subject to the fulfillment, or written waiver by the Investor, on or before the
Initial Closing and, thereafter, on each Subsequent Closing, of each of the
following conditions:
5.1 Representatives, Warranties, Covenants. The representations and
warranties of the Company must be true and correct in all material respects as
of the Closing as though made at that time (except for representations and
warranties that speak as of a specific date, which representations and
warranties must be true and correct as of such date) and the Company must have
performed and complied in all material respects with the covenants and
conditions required by this Agreement to be performed or complied with by the
Company at or prior to the Closing.
5.2 Litigation. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction will have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
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5.3 Miscellaneous Conditions. There shall not have occurred any of the
following events (any of which shall give the Investor the option, but not the
obligation, to refuse to consummate the Initial Closing or any Subsequent
Closing, as the case may be):
(a) there shall occur any event, voluntary or involuntary, relating to
the Company's bankruptcy, insolvency, reorganization, moratorium or
liquidation, or to the Company's inability to pay its debts as they
come due, including but not limited to any filing under Chapter 7 or
11 of the United States Bankruptcy Code;
(b) the commencement of any proceeding, judicial or administrative,
which in the Investor's sole and unfettered discretion not subject
to any standard of commercial reasonableness, is likely to have a
Material Adverse Effect; and
(c) any of Xxxx Xxxxx, Xxxxxx Cern or Xxx Xxx shall die or become unable
to perform their duties as presently being performed, which
inability shall continue for a period of at least 10 days; provided,
however, that during any such 10 day period, the Investor's
obligation's under Section 1.2 hereunder shall be temporarily
suspended.
6. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to the Investor under this Agreement are
subject to the fulfillment on or before the Initial Closing and, thereafter, on
each Subsequent Closing, of each of the following conditions:
6.1 Execution of Agreement. The Investor will have executed and delivered
this Agreement to the Company.
6.2 Purchase Price. The Investor will have delivered the Purchase Price
then due to the Company in accordance with this Agreement.
6.3 Representations, Warranties, Covenants. The representations and
warranties of the Investor must be true and correct in all material respects as
of the Initial Closing and must remain true and correct through each Additional
Closing, as though made at that time (except for representations and warranties
that speak as of a specific date, which representations and warranties must be
correct as of such date), and the Investor will have performed and complied in
all material respects with the covenants and conditions required by this
Agreement to be performed or complied with by the Investor at or prior to the
Initial Closing and each Additional Closing.
6.3 Legal Impediment. No statute, rule, regulation, executive order,
decree, ruling or injunction will have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
7. MISCELLANEOUS.
7.1 Survival of Representations,, Warranties and Covenants. 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 completion of all of the Subsequent Closings
and
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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.
7.2 Successor and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of any Shares). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of New York as applicable to contracts to be performed
entirely within that state. Each of the parties consents to the exclusive
jurisdiction of the state or federal courts whose districts encompass any part
of the New York County or the Second Circuit, in connection with any dispute
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions. Each party waives its
right to trial by jury. Each party to this Agreement irrevocably consents to the
service of process in any such proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party at its address set
forth herein. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original by the party executing
the same, but all of which together shall constitute one and the same
instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience and are not to be considered in construing or
interpreting this Agreement.
7.6 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been given or made if in
writing and (i) delivered personally, (ii) mailed by registered or certified
mail (postage prepaid, return receipt requested) or (iii) sent by telecopier,
with the written notice sent by mail as set forth in (ii) above, to the parties
as follows:
(i) if to Company to:
Ambient Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx - Chief Executive Officer
Telecopier No.: 0-000-000-0000
with a copy to:
Aboudi & Xxxxxxxxxx
0 Xxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxx
Telecopier No. 000-000-0 764-4833
(ii) if to Investor to:
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Consolidated Edison, Inc.
0 Xxxxxx Xxxxx - Xxxx 0000
Xxx Xxxx, XX 00000
Attention: Senior Vice President and General Counsel
Telecopier No.: (000) 000-0000
with a copy to:
Consolidated Edison Company of New York, Inc.
0 Xxxxxx Xxxxx -Xxxx 000
Xxx Xxxx, XX 00000
Attention: Vice President, Corporate Planning
Telecopier No.: (000) 000-0000
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made as
of the date so delivered, mailed or sent.
7.7 Finder's Fee. Each Party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
7.8 Amendments and Waivers. 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 the Investor.
7.9 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 were so excluded and shall be enforceable in accordance with its
terms.
7.10 Entire Agreement. This Agreement and all schedules and exhibits
attached thereto, constitute the entire agreement among the parties and no party
shall be liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein. All other prior agreements, understandings and representations, both
oral and written, between the parties with respect to the subject matter hereof,
including without limitation, Amendment No. 2, are superseded and of no effect.
This Agreement may be executed in counterparts and by the exchange of facsimile
signed copies.
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IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement.
AMBIENT CORPORATION
BY: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
CONSOLIDATED EDISON, INC.
BY: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Treasurer
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