REGULATION S STOCK PURCHASE AGREEMENT
Dated May 2, 2003
by and between
LaserLock Technologies, Inc.
and
Californian Securities S.A.
Regulation S Stock Purchase Agreement, dated as of May 2, 2003 between
LaserLock Technologies, Inc., a Nevada corporation having offices at 000 Xxxxx
Xxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000 (the "Company"), and Californian
Securities S.A., Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxxx, Xxxxxx Xxxx,
Xxxxxxxx of Panama (the "Purchaser"). The Company and the Purchaser, intending
to be bound and for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, covenant and agree as follows:
Definitions:
The "Company" means LaserLock Technologies, Inc., a corporation
organized under the laws of the State of Nevada.
"Purchaser" means Californian Securities S.A., a Panamanian business
company.
"Purchase Notice" means a written or an electronic notice from the
Purchaser to the Company of its binding, irrevocable commitment to purchase a
specific number of Shares in an exempt transaction subject to Regulation S. The
Purchase Notice shall set forth the closing date desired by Purchaser, the
number of Shares to be purchased with respect to each date (a "Purchase Date")
covered by the Purchase Notice (which shall be the same date or dates on which
Shares were sold by or on behalf of Purchaser to third parties), the Share Price
as of the trading day immediately preceding each Purchase Date, the proposed
Purchase Price per Share on each Purchase Date, the proposed aggregate Purchase
Price for all Shares covered by the Purchase Notice, the number of Share
certificates to be issued, and the number of Shares represented by each Share
certificate.
"Purchase Price" means an amount calculated by multiplying .30 times
the Share Price, calculated as of the trading day immediately preceding each
Purchase Date.
"Regulation S" shall mean Regulation S and the related Rules
promulgated by the SEC pursuant to the Securities Act as an exemption from
registration.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SEC" shall mean the United States Securities and Exchange Commission.
"Shares" means shares of common stock of the Company and "Share" means
a single share of common stock of the Company.
"Share Price" means the closing bid price (if traded on the OTCBB) or
the closing price (if traded on the American Stock Exchange, or on such other
United States stock exchange or public trading market on which the Shares
trade).
"United States" means the United States of America, its territories and
possessions, any State of the United States and the District of Columbia.
ARTICLE 1
PURCHASE, SALE AND TERMS OF SHARES
1.1 Purchase and Sale. In consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this
Agreement, the Company agrees to sell to the Purchaser in an "offshore
transaction" as defined by Regulation S, and the Purchaser agrees to
purchase, subject to the conditions hereinafter set forth, up to
18,000,000 Shares of the Company, subject to Section 1.4.
1.2 Closing. The Closing of each purchase of Shares hereunder will occur as
described in this Section 1.2. On or before the proposed closing date
specified in the Purchase Notice (which shall not be less than two
business days after receipt by the Company of a Purchase Notice for
Shares), the Company will deliver stock certificates representing such
Shares in the name of Purchaser (collectively "Certificate") or its
nominee, to Californian Securities Nominee Ltd. ("CSN") at its office
in Panama, located at Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx of Panama, to be held in escrow by [CSN or its
designee (the "Escrow Agent")] pending delivery to the Company of the
Purchase Price for such Shares. Purchaser will pay the Purchase Price
for the Shares to be purchased pursuant to such Purchase Notice by wire
transfer to the Company of immediately available funds within three (3)
business days after receipt of the Share certificates by the Escrow
Agent, at which time the Escrow Agent shall release the Share
certificates as directed by the Purchaser. The foregoing to the
contrary notwithstanding, Purchaser shall initially direct CSN to hold
the Certificate as Nominee for the benefit of Purchaser and any
individuals purchasing from Purchaser for the duration of the
"Distribution Compliance Period" (as defined by Rule 902(f) to
Regulation S) [unless instructed otherwise by Purchaser]. CSN will
receive a one-time fee of US$500 to act as custodian for all
Certificates issued to Purchaser pursuant to this Agreement. CSN may
use the offices of Xxxxxx X. Xxxxxx, an attorney, located at 60 X.
Xxxxxxxx St., Chicago, IL USA, as disbursement agent and custodian for
the benefit of the parties. All reasonable out-of-pocket expenses
incurred by Purchaser, CSN or the disbursement agent in connection with
the purchase and sale of Shares including, but not limited to, courier
fees, wire transfer fees, stock transfer agent fees and any charge by
custodian or the disbursement shall be born by the Company and deducted
from the Purchase Price.
1.3 Floor Price. The Purchaser shall have no obligation to present a
Purchase Notice and the Company shall have no obligation to accept and
honor a Purchase Notice received from Purchaser for Shares purchased on
a day when the Purchase Price for such day was based on a Share Price
that was less than $0.17 per share for the first two million
(2,000,000) Shares or such price per Share, which may be less than
$0.20 per share, as may be specified by the Company by notice to the
Purchaser from time to time ("Floor Price").
1.4 Delivery of Purchase Notice; Term. Purchaser shall have to and until
August 2, 2003 to deliver one or more Purchase Notices to the Company
at which time this Agreement shall terminate, unless extended in
writing by the parties. A Purchase Notice may be for all or a part of
the Shares described in Section 1.1 above. Purchaser may deliver more
than one Purchase Notice; provided, however, that the number of shares
purchased pursuant to all Purchase Notices shall not exceed the number
of available Shares described in Section 1.1. Anything herein to the
contrary notwithstanding, any Purchase Notice accepted by the Company
after the end of the term of this Agreement shall be governed by the
terms of this Agreement as if it was timely delivered.
If forty-five (45) days after the date of execution of this Agreement,
the Purchaser has not submitted Purchase Notices and delivered payment
for an aggregate total of at least 6,000,000 Shares, the Issuer may, at
its discretion, elect to reduce from time-to-time during the term of
this Agreement the number of remaining Shares available to the
Purchaser.
1.5 Covenant of Best Efforts. The Purchaser agrees to use its best efforts
to purchase up to 18,000,000 Shares between the date hereof and August
2, 2003 ("Best Efforts Period"), subject Section 1.4. Purchaser shall
only be obligated and liable to purchase the number of Shares set forth
in each Purchase Notice.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
The Purchaser represents and warrants to, and agrees with, the Company
as follows, which representations and warranties shall be true and correct, and
which agreements to the extent possible shall have been performed, in all
material respects on the date on which the Purchaser delivers each Purchase
Notice and on the date of each closing of the purchase of the Shares:
2.1 Access to Information. The Purchaser, in making the decision to
purchase the Shares, has relied upon the representations and warranties
contained in this Agreement as well as independent investigations made
by it and/or its representatives, if any. The Purchaser and/or its
representatives during the course of this transaction, and prior to the
purchase of any Shares, has had the opportunity to ask questions of and
receive answers from the management of the Company concerning the
business of the Company and to receive any additional information,
documents, records and books relative to the business, assets,
financial condition, results of operations and liabilities (contingent
or otherwise) of the Company. Purchaser acknowledges that it has
reviewed the SEC Filings (as hereinafter defined).
2.2 Sophistication and Knowledge. The Purchaser and/or its representatives
has such knowledge and experience in financial and business matters
that the Purchaser can represent itself and is capable of evaluating
the merits and risks of the purchase of the Shares. The Purchaser is
not relying on the Company with respect to the tax and other economic
considerations of an investment in the Shares, and the Purchaser has
relied on the advice of, or has consulted with, only the Purchaser's
own advisor(s). The Purchaser represents that it has not been organized
for the purpose of acquiring the Shares.
2.3 Lack of Liquidity. The Purchaser acknowledges that the purchase of the
Shares involves a high degree of risk and further acknowledges that it
can bear the economic risk of the purchase of the Shares, including the
total loss of its investment. The Purchaser acknowledges and
understands that the Shares may not be sold to a U.S. Person (as
hereinafter defined) or into the United States for a period of one (1)
year from the date of purchase and that Purchaser or (to the
Purchaser's knowledge) the third party to whom the Purchaser sells such
Shares has no present need for liquidity in connection with its
purchase of the Shares.
2.4 No Public Solicitation. The Purchaser is not subscribing for the Shares
as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or presented at any
seminar or meeting, or any solicitation of a subscription by a person
not previously known to the Purchaser in connection with investments in
securities generally. Neither the Company nor the Purchaser nor any
person acting on behalf of either of them has engaged or will engage in
any "Directed Selling Efforts in the U.S." as defined by Regulation S
with respect to the Shares purchased hereby.
2.5 Organization and Standing. The Purchaser has been duly incorporated and
is validly existing and in good standing under the laws of the Republic
of Panama and has the requisite corporate power and authority necessary
to own its properties and to conduct its business as presently
conducted, to deliver this Agreement and all other agreements required
to be executed by the Purchaser in connection with performance under
this Agreement (collectively, the "Ancillary Agreements", and
collectively with this Agreement, the "Transaction Documents"), to
purchase the Shares and to carry out the provisions of, and otherwise
perform its obligations under, the Transaction Documents.
2.6 Authority for Agreement. The execution and delivery by the Purchaser of
the Transaction Documents, and the performance by the Purchaser of its
obligations thereunder, have been duly and validly authorized by all
requisite corporate action on the part of the Purchaser. The
Transaction Documents, when executed and delivered, will be legally
valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws of general application affecting enforcement of creditors' rights,
and general principles of equity that restrict the availability of
equitable remedies. The execution and delivery of the Transaction
Documents by the Purchaser and the performance by the Purchaser of its
obligations thereunder do not, as of the date hereof, (i) conflict with
or violate the provisions of the Purchaser's Charter or Bylaws, (ii)
require on the part of the Purchaser any filing with, or any permit,
authorization, consent or approval of, any governmental entity or
regulatory body (a "Governmental Entity"), (iii) conflict with, result
in a breach of, constitute (with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, lien,
encumbrance or other arrangement to which the Purchaser is a party or
by which the Purchaser is bound or to which its assets are subject,
(iv) result in the imposition of any security interest upon any assets
of the Purchaser or (v) violate or contravene any United States
federal, Panama corporate or applicable state statute, rule or
regulation applicable to the Purchaser or any order, writ, judgment,
injunction, decree, determination or award.
2.7 Governmental Approval. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing
with, any Governmental Entity is required on the part of the Purchaser
in connection with the execution and delivery of the Transaction
Documents, the purchase and receipt of the Shares, any sale of Shares
by the Purchaser or any other transaction contemplated by this
Agreement.
2.8 Brokers or Finders. No person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or
valid claim against or upon the Company for any commission, fee or
other compensation as a finder or broker because of any act or omission
by Purchaser or its respective agents.
2.9 Requirements for Transfer. Purchaser agrees that it will not transfer
the Shares, and also agrees for itself and any subsequent holder of the
Shares that the Company may refuse to transfer the shares on its books
unless the transferee executes a representation letter in a form
reasonably acceptable to the Company.
2.10 Compliance with Local Laws. The Purchaser will only make offers and
sales of the Shares during the "Distribution Compliance Period" as
defined by Rule 902(f) of Regulation S to persons permitted to purchase
such Shares in "offshore transactions" as defined by Regulation S and
in reliance upon Regulation S. Further, any such sale of the Shares in
any jurisdiction outside of the United States will be made in
compliance with the securities laws and any other applicable laws to
such transactions of such jurisdiction. Purchaser will not offer to
sell or sell the Shares in any jurisdiction unless the Purchaser
obtains all required consents, if any. If Purchaser engages a third
party to sell such Shares, the Purchaser shall provide a copy of a
representation letter from such third party to the Company, which
confirms such third party's (i) qualification to sell such Shares in
such jurisdiction and (ii) continued compliance with all local and
foreign laws, rules and regulations which relate to the sale of such
Shares. Such representation letter shall be in a form acceptable to the
Company and substantially similar to the form of representation letter
attached hereto as Annex 2.10.
2.11 Regulation S Exemption. The Purchaser understands that the Shares are
being offered and sold to it in reliance on an exemption from the
registration requirements of United States federal and state securities
laws under Regulation S and that the Company is relying upon the truth
and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in
order to determine the applicability of such exemptions and the
suitability of the Purchaser to acquire the Shares. In this regard, the
Purchaser represents, warrants and agrees that:
a. The Purchaser is not a U.S. Person (as defined below and as
defined by Regulation S) and is not an "affiliate" (as defined
by Rule 501(b) under the Securities Act) of the Company. The
Purchaser is not acquiring the Shares for the account of or
benefit of any U.S. Person. A U.S. Person means any one of the
following:
i. any natural person resident in the United States;
ii. any partnership or corporation organized or
incorporated under the laws of the United States;
iii. any estate of which any executor or administrator is
a U.S. person;
iv. any trust of which any trustee is a U.S. person;
v. any agency or branch of a foreign entity located in
the United States;
vi. any non-discretionary account or similar account
(other than an estate or trust) held by a dealer or
other fiduciary for the benefit or account of a U.S.
person;
vii. any discretionary account or similar account (other
than an estate or trust) held by a dealer or other
fiduciary organized, incorporated or (if an
individual) resident in the United States; and
viii. any partnership or corporation if:
(1) organized or incorporated under the laws of
any foreign jurisdiction; and
(2) formed by a U.S. person principally for the
purpose of investing in securities not
registered under the Securities Act, unless
it is organized or incorporated, and owned,
by "accredited investors" (as defined by
Rule 501(a) under the Securities Act) who
are not natural persons, estates or trusts.
b. At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this
Agreement, the Purchaser was outside of the United States and
any person acting on its behalf reasonably believes that the
Purchaser is outside of the United States.
c. The Purchaser will not, during the period commencing on the
date of issuance of the Shares and ending on the first
anniversary of such date, or such shorter period as may be
permitted by Regulation S or other applicable securities law
(the "Distribution Compliance Period"), offer, sell, pledge or
otherwise transfer the Shares in the United States, or to a
U.S. Person for the account or for the benefit of a U.S.
Person, or otherwise in a manner that is not in compliance
with Regulation S.
d. The Purchaser will, after expiration of the Distribution
Compliance Period, offer, sell, pledge or otherwise transfer
the Shares only pursuant to registration under the Securities
Act or an available exemption therefrom, and in accordance
with all applicable U.S. federal, state and foreign securities
laws. Without limiting the foregoing, the Purchaser will not,
in connection with its resale of the Shares, make any untrue
statement of a material fact or omit to state any material
fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
Purchaser agrees that, in connection with its resale of
Shares, it will provide to the persons who purchase Shares no
information regarding the Company that is not contained in the
SEC Filings or written materials approved in advance in
writing by the Company.
e. The Purchaser has not engaged in, and prior to the expiration
of the Distribution Compliance Period will not engage in, any
short selling of or any hedging transaction with respect to
the Shares, including without limitation, any put, call or
other option transaction, option writing or equity swap.
f. Neither the Purchaser nor any person acting on its behalf has
engaged, nor will engage, in any directed selling efforts to a
U.S. Person with respect to the Shares and the Purchaser and
any person acting on its behalf have complied and will comply
with the "offering restrictions" as defined by Regulation S.
i. All offers and sales of the securities prior to the
expiration of the Distribution Compliance Period
shall be made in
(1) accordance with the provisions of Regulation
S;
(2) pursuant to registration of the securities
under the Securities Act, as amended; or
(3) pursuant to an available exemption from the
registration requirements of the Securities
Act.
ii. Purchaser also agrees not to engage in hedging
transactions with regard to such securities prior to
the expiration of the Distribution Compliance Period.
g. The transactions contemplated by this Agreement have not been
pre-arranged with a buyer located in the United States or with
a U.S. Person, and are not part of a plan or scheme to evade
the registration requirements of the Securities Act.
h. All offering material and documents (other than press
releases) used in connection with offers and sales of the
securities prior to the expiration of the distribution
compliance shall contain statements to the effect that the
securities have not been registered under the Securities Act.
i. Neither the Purchaser nor any person acting on its behalf has
undertaken or carried out any activity for the purpose of, or
that could reasonably be expected to have the effect of,
conditioning the market in the United States, its territories
or possessions, for any of the Shares. The Purchaser agrees
not to cause any advertisement of the Shares to be published
in any newspaper or periodical or posted in any public place
and not to issue any circular relating to the Shares, except
such advertisements that include the statements required by
Regulation S, and only offshore and not in the U.S. or its
territories, and only in compliance with any local applicable
securities laws.
j. Each certificate representing the Shares shall be endorsed
with the following legends, or substantially similar legends,
in addition to any other legend required to be placed thereon
by applicable federal or state corporate or securities laws:
A. "THE SHARES ARE BEING OFFERED TO INVESTORS WHO ARE
NOT U.S. PERSONS (AS DEFINED BY REGULATION S UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES ACT")) AND
WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT."
B. "TRANSFER OF THESE SHARES IS PROHIBITED, EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT."
C. "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT OF 1933, UNLESS, IN THE OPINION (WHICH SHALL BE
IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION) OF
COUNSEL SATISFACTORY TO THE CORPORATION, SUCH REGISTRATION IS
NOT REQUIRED."
D. "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
FURTHER SUBJECT TO RESTRICTIONS SET FORTH IN A REGULATION S
STOCK PURCHASE AGREEMENT AMONG THE COMPANY AND CERTAIN HOLDERS
OF ITS COMMON STOCK. COPIES OF THIS AGREEMENT ARE ON FILE WITH
THE SECRETARY OF THE COMPANY."
k. The Purchaser consents to the Company making a notation on its
records or giving instructions to any transfer agent of the
Company in order to implement the restrictions on transfer of
the Shares set forth in this Section 2.5.
ARTICLE 3
COVENANTS OF THE COMPANY
3.1 Operations. From and after the date hereof through the final purchase
of the Shares, the Company will operate only in the ordinary course of
business.
3.2 Inspection. The Company shall permit authorized representatives of the
Purchaser to visit and inspect any of the properties of the Company,
including its books of account (and to make copies thereof and take
extracts there from), and to discuss its affairs, finances and accounts
with its officers, employees, independent accountants, consultants and
attorneys, all at such reasonable times and as often as may be
reasonably requested.
3.3 Share Registry; Removal of Legend. The Company consents to Purchaser
reselling Shares and to recording the ownership of such shares in book
entry form, provided, however, that all such sales are conducted in
full compliance with Regulation S and all applicable U.S. federal,
state and foreign law or regulation, and the Company and its transfer
agent are advised of the identity of each subsequent purchaser.
Purchaser or bona fide transferees of Purchaser may request
certification of Shares at any time and the Company will instruct its
transfer agent to cooperate in this regard. Shares for which the
Regulation S Distribution Compliance Period and 144 Restricted Period
(as defined by the Securities Act) has expired shall be delivered free
of any Regulation S and 144 legend, provided that the Purchaser or
holder of such Shares provides the Company and its counsel with such
customary representations as may be reasonably requested in connection
with the preparation and delivery to the Company's transfer agent of
any required legal opinion.
3.4 Press Release; Filing Form 8-K with the SEC. The Company acknowledges
that the successful completion of this transaction will require the
Company to make a press release and to file a Form 8-K with the SEC.
The Company agrees to provide the Purchaser or its counsel with a draft
of any press release or Form 8-K which discusses this Agreement or the
sale of shares pursuant to this Agreement at least three (3) days prior
to publication or filing, as the case may be. Purchaser, or its
counsel, shall review and may comment on the accuracy of the press
release and/or Form 8-K, and Purchaser will correct any inaccuracies or
omissions thereto identified by Purchaser prior to making the press
release or filing the Form 8-K.
3.5 Communications. The Company will first communicate with the Purchaser
or its authorized representative, A-Street Capital Corp., before
attempting to contact any third party engaged by the Purchaser with
regard to the sale of Shares pursuant to this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows, which
representations and warranties shall be true and correct in all material
respects on the date of each closing of the purchase of the Shares:
4.1 Organization and Standing. The Company has been duly incorporated and
is validly existing and in good standing under the laws of the State of
Nevada and has the requisite corporate power and authority necessary to
own its properties and to conduct its business as presently conducted,
to deliver this Agreement and all other agreements required to be
executed by the Company in connection with performance under this
Agreement and the Transaction Documents, to issue and sell the Shares
and to carry out the provisions of the Transaction Documents. The
Company is duly qualified to transact business as a foreign corporation
and is in good standing in every jurisdiction in which the failure to
so qualify would have a material adverse effect on the operations or
financial condition of the Company.
4.2 Authority for Agreement. The execution and delivery by the Company of
the Transaction Documents, and the performance by the Company of its
obligations thereunder, have been duly and validly authorized by all
requisite corporate action on the part of the Company. The Transaction
Documents, when executed and delivered, will be legally valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights, and
general principles of equity that restrict the availability of
equitable remedies. To the Company's knowledge, the execution and
delivery of the Transaction Documents by the Company and the
performance by the Company of its obligations thereunder do not, as of
the date hereof, (i) conflict with or violate the provisions of the
Company's Articles of Incorporation or Bylaws, each as amended, (ii)
require on the part of the Company any filing with, or any permit,
authorization, consent or approval of, any U.S. federal or state
Governmental Entity, (iii) conflict with, result in a breach of,
constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any material contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement
or mortgage for borrowed money, instrument of indebtedness, lien,
encumbrance or other arrangement to which the Company is a party or by
which the Company is bound or to which its assets are subject, (iv)
result in the imposition of any security interest upon any assets of
the Company or (v) violate or contravene any United States federal,
Nevada corporate or applicable state statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award
applicable to the Company, except, in the case of subsections (ii),
(iii), (iv) or (v), for any such items that would not have a material
adverse effect on the operations or financial condition of the Company.
4.3 Securities Law Filings, Etc. The Company has previously furnished to
the Purchaser the Company's filings with the SEC as follows: (i) all
filings made with the SEC on or after January 1, 2003 (the "SEC
Filings"). The SEC Filings, as of the date of the filing thereof with
the SEC, complied in all material respects with the provisions of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in each case
the rules and regulations promulgated thereunder, and none of such
filings contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
4.4 Capitalization and Issuances of Stock. As of April 14, 2003, the
Company has authorized and outstanding capital stock as set forth on
Schedule 4.4 and in the Form 10-KSB for the year ended December 31,
2002. All outstanding shares of capital stock of the Company are duly
authorized, validly issued and outstanding, fully paid and
nonassessable. Except as set forth in the Schedule 4.4: (i) there are
no outstanding options, stock subscription agreements, warrants or
other rights permitting or requiring the Company or others to purchase
or acquire any shares of capital stock or other equity securities of
the Company; (ii) there are no securities issued or outstanding which
are convertible into or exchangeable for any of the foregoing and there
are no contracts, commitments or understandings, whether or not in
writing, to issue or grant any such option, warrant, right or
convertible or exchangeable security; (iii) there are no shares of
stock or other securities of the Company reserved for issuance for any
purpose; and (iv) there are no voting trusts or other contracts,
commitments, understandings, arrangements or restrictions of any kind
with respect to the ownership, voting or transfer of shares of stock or
other securities of the Company to which the Company or, to the best of
the Company's knowledge, any stockholder of the Company is a party,
including without limitation, any preemptive rights, rights of first
refusal, proxies or similar rights. The issued and outstanding shares
of capital stock of the Company conform to all statements in relation
thereto contained in the SEC Filings, and the SEC Filings describe all
material terms and conditions thereof. To the Company's knowledge, all
issuances by the Company of its securities were exempt from
registration under the Securities Act and any applicable state
securities laws or were issued pursuant to a registration statement
declared effective by the SEC under the Securities Act and which
registration statement was available for the sale of the type of
securities sold thereunder.
4.5 Subsidiaries. The Company has no operating subsidiaries.
4.6 Issuance of Securities. The issuance, sale and delivery of the Shares
in accordance with this Agreement, have been, or will be on or prior to
the Closing, duly authorized, and the Shares reserved for issuance by
all necessary corporate action on the part of the Company. The Shares,
when issued, sold, delivered and paid for in accordance with the
provisions of this Agreement will be duly and validly issued, fully
paid and non-assessable, and will be free of all liens, charges,
claims, encumbrances and restrictions on transfer other than the
restrictions on transfer under the Transaction Documents and under
applicable state and federal securities laws.
4.7 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing
with, any U.S. federal or state Governmental Entity is required on the
part of the Company in connection with the execution and delivery of
the Transaction Documents, the offer, issue, sale and delivery of the
Shares or the other transactions to be consummated as contemplated by
this Agreement, except qualifications or filings under the Securities
Act and other applicable state securities laws which qualifications or
filings, if required, will be obtained or made and will be effective
within the time periods required by law.
4.8 Offering Exemption. Assuming the accuracy of the representations and
warranties made by the Purchaser, the offer, sale and issuance of the
Shares to the Purchaser will be exempt from the registration
requirements of the Securities Act and will have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable
state securities laws. Neither the Company nor any agent on its behalf
has solicited or will solicit any offers to sell or has offered to sell
or will offer to sell all or any part of the Shares to any person or
persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act or any state
securities laws.
4.9 Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened, against
the Company, except as described in the SEC Filings or Schedule 4.9
hereto. The Company is not aware of any basis for any of the foregoing
or any intent on its part to initiate any of the foregoing.
4.10 Financial Statements. The unaudited financial statements dated as of
January 31, 2003 attached hereto as Schedule 4.10 (the "Financial
Statements") fairly present the financial condition and results of
operations of the Company and are in accordance with the books and
records of the Company, in each case as of the dates and for the
periods indicated, and have been prepared in accordance with generally
accepted accounting principles consistently applied to companies
domiciled in the United States, except to the extent that the unaudited
financial statements may not contain all required footnotes and are
subject to normal year-end audit adjustments that in the aggregate will
not be, to the Company's knowledge, material.
4.11 Absence of Liabilities. Except as set forth in the Financial
Statements, the Company has no material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course
of business subsequent to January 31, 2003, that individually or in the
aggregate are not material to the financial condition or operating
results of the Company, and (ii) obligations not required under
generally accepted accounting principles to be reflected in the
Financial Statements.
4.12 Taxes. The Company has paid all taxes due as of the date hereof. The
Company has filed or has obtained presently effective extensions with
respect to all Federal, state, county, local and foreign tax returns
(collectively, "Tax Returns") that the Company is required to file. The
Tax Returns were true and correct in all material respects when filed,
and all taxes shown thereon to be due have been paid, with any
exceptions permitted by any taxing authority not having a materially
adverse effect on the Company. No material penalties or other charges
are or will become due with respect to any such Tax Returns as the
result of the late filing thereof. The Company has either paid or
established in the Financial Statements adequate reserves for the
payment of all such taxes due or claimed to be due by any taxing
authority in connection with any such Tax Returns. None of the
Company's federal income tax returns have been audited by the Internal
Revenue Service, and no controversy with respect to taxes of any type
is pending or, to the knowledge of the Company, threatened. The Company
has withheld or collected from each payment made to its employees the
amount of all taxes required to be withheld or collected therefrom and
has paid all such amounts to the appropriate taxing authorities when
due. Neither the Company nor, to the Company's knowledge, any of its
stockholders on behalf of the Company has ever filed (i) an election
pursuant to Section 1362 of the Internal Revenue Code of 1986, as
amended (the "Code"), that the Company be taxed as an S Corporation, or
(ii) a consent pursuant to Section 341(f) of the Code relating to
collapsible corporations.
4.13 Property and Assets. The Company has good title to, or a valid
leasehold interest in, all of its material properties and assets,
including all properties and assets reflected in the Financial
Statements. None of such properties or assets is subject to any
mortgage, pledge, lien, security interest, lease, charge or encumbrance
other than those the material terms of which are described in the
Financial Statements. The Company does not own any real estate. All
personal property of the Company is in good operating condition and
repair (ordinary wear and tear and routinely scheduled maintenance
excepted) and is suitable and adequate for the uses for which it is
intended or is being used.
4.14 Intellectual Property. To the Company's knowledge, the Company owns, or
has the right to use, free and clear of all liens, charges, claims and
restrictions, all patents, patent applications, trademarks, service
marks, trademark and service xxxx applications, trade names, copyrights
and licenses presently owned or held by the Company or employed or
proposed to be employed by it in its business as now conducted or
proposed to be conducted, as well as any agreement under which the
Company has access to any confidential information used by the Company
in its business (the "Intellectual Property Rights"). The Company has
not received any communications alleging that the Company has violated
any of the patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets or other proprietary rights of any other person
or entity ("Third-Party Intellectual Property Rights"), and to the
Company's knowledge the business proposed by the Company will not cause
the Company to infringe or violate any Third Party Intellectual
Property Rights. The Company is not aware of any violation by any third
party of any Intellectual Property Rights of the Company or of any
defects in the title thereto. The Company is not aware that any
employee is obligated under any contract (including any license,
covenant or commitment of any nature) or other agreement, or subject to
any judgment, decree or order of any court or administrative agency,
that would conflict or interfere with: (i) the performance of such
employee's duties as an officer, employee or director of the Company;
(ii) the use of such employee's best efforts to promote the interests
of the Company; or (iii) the Company's business as conducted.
4.15 Compliance. The Company has, in all material respects, complied with
all laws, regulations and orders applicable to its business and has all
material permits and licenses required thereby. To the Company's
knowledge, no employee of the Company is in violation in any material
respect of any contract or covenant (either with the Company or with
another entity) relating to employment, patent, other proprietary
information disclosure, non-competition, or non-solicitation.
4.16 Employees. All employees of the Company who have access to confidential
or proprietary information of the Company have executed and delivered
nondisclosure agreements, and all of such agreements are in full force
and effect. Except as set forth on Schedule 4.16, the Company is not
aware that any employee of the Company has plans to terminate his or
her employment relationship with the Company. The Company has complied
in all material respects with all applicable laws relating to wages,
hours, equal opportunity, collective bargaining, workers' compensation
insurance and the payment of social security and other taxes. None of
the employees of the Company is represented by any labor union, and
there is no labor strike or other labor trouble (including, without
limitation, any organizational drive) pending or, to the knowledge of
the Company, threatened with respect to the Company.
4.17 Environmental and Safety Matters. To the Company's knowledge, the
Company is not in material violation of any applicable environmental
law, and to its knowledge, no material expenditures are or will be
required in order to comply with any such environmental law.
4.18 Books and Records. The books of account, ledgers, order books, records
and documents of the Company accurately and completely reflect all
material information relating to the business of the Company, the
location and collection of its assets, and the nature of all
transactions giving rise to the obligations or accounts receivable of
the Company.
4.19 Brokers or Finders. The Company has not agreed to incur, directly or
indirectly, any liability for brokerage or finders' fees, agents'
commissions or other similar charges in connection with the Transaction
Documents or any of the transactions contemplated hereby or thereby,
except as set forth on Schedule 4.19.
4.20 Disclosures. The Company has provided the Purchaser with all
information requested by the Purchaser in connection with its decision
to purchase the Shares. None of the information provided to the
Purchaser or its agents by the Company pursuant to this Agreement, any
Exhibit hereto, the Transaction Documents, or any report, certificate
or instrument furnished to the Purchaser or its agents in connection
with the transactions contemplated by this Agreement, when read
together, contains or will contain any material misstatement of fact or
omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE 5
REGISTRATION RIGHTS
5.1 Piggy-Back Registrations. If at any time after the first anniversary of
the purchase of the Shares, the Company shall determine to register for
its own account or the account of others under the Securities Act
(including pursuant to a demand for registration of any stockholder of
the Company) any of its equity securities, other than on Form S-4 or
Form S-8 or their then equivalents relating to shares of Common Stock
to be issued solely in connection with any acquisition of any entity or
business or shares of Common Stock issuable in connection with stock
option or other employee benefit plans, it shall send to each holder of
Registrable Shares who is entitled to registration rights under this
Section 5.1 written notice of such determination and, if within fifteen
(15) days after such notice, such holder shall so request in writing,
the Company shall use its best efforts to include in such registration
statement all or any part of the Registrable Shares such holder
requests to be registered, except that if in connection with a public
offering of the Company, the managing underwriter shall impose a
limitation on the number of shares of such Common Stock which may be
included in the registration statement because, in its judgment, such
limitation is necessary to effect an orderly public distribution, then
the Company shall be obligated to include in such registration
statement only such limited portion of the Registrable Shares with
respect to which such holder has requested inclusion hereunder on a pro
rata basis.
"Registrable Shares" shall mean and include the Shares; provided,
however, that shares of Common Stock which are Registrable Shares shall
cease to be Registrable Shares upon the first to occur of (i) the
consummation of any sale pursuant to a registration statement or Rule
144 under the Securities Act, (ii) 90 days after the effectiveness of a
registration statement that includes such Registrable Shares, (iii) the
date when such Registrable Shares may be sold without registration
under the Securities Act pursuant to Rule 144(k) thereunder, or (iv)
following the notice contemplated by Section 5.1, fifteen (15) days
after further notice to any holder of Registrable Shares requesting
each holder to furnish to the Company any information reasonably
requested by the Company in connection with the preparation or filing
of a registration statement if such holder fails to provide such
information within such 15-day period.
5.2 Effectiveness. The Company will use its best efforts to maintain the
effectiveness for up to 90 days (or such shorter period of time as the
underwriters, if any, need to complete the distribution of the
registered offering) of any registration statement pursuant to which
any of the Registrable Shares are being offered, and from time to time
will amend or supplement such registration statement and the prospectus
contained therein to the extent necessary to comply with the Securities
Act and any applicable state securities statute or regulation. The
Company will also provide each holder of Registrable Shares with as
many copies of the prospectus contained in any such registration
statement as it may reasonably request.
5.3 Indemnification by the Company.
a. In the event that the Company registers any of the Registrable
Shares under the Securities Act, the Company will indemnify
and hold harmless each holder and each underwriter of the
Registrable Shares (including their officers, directors,
affiliates and partners) so registered (including any broker
or dealer through whom such shares may be sold) and each
person, if any, who controls such holder or any such
underwriter within the meaning of Section 15 of the Securities
Act (each, an "Indemnified Person") from and against any and
all losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them become subject under the
Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and,
except as hereinafter provided, will reimburse each such
holder, each such underwriter and each such controlling
person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with
investigating or defending any actions whether or not
resulting in any liability, as incurred, insofar as such
losses, claims, damages, expenses, liabilities or actions
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the
registration statement by which such Indemnified Person's
Registrable Securities are registered, in any related
preliminary or amended preliminary prospectus or in the
related final prospectus (or such registration statement or
prospectus as from time to time amended or supplemented by the
Company in connection with offers or resales of such
Indemnified Person's Registrable Securities) or arise out of
or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary in order to make the statements therein not
misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state
securities laws applicable to the Company and relating to
action or inaction required of the Company in connection with
such registration, unless (i) such untrue statement or alleged
untrue statement or omission or alleged omission was made in
such registration statement, preliminary or amended
preliminary prospectus or final prospectus in reliance upon
and in conformity with information furnished in writing to the
Company in connection therewith by, or on behalf of, any such
holder of Registrable Shares (in the case of indemnification
of such holder), any such underwriter (in the case of
indemnification of such underwriter) or any such controlling
person (in the case of indemnification of such controlling
person) expressly for use therein, or unless (ii) in the case
of a sale directly by such holder of Registrable Shares
(including a sale of such Registrable Shares through any
underwriter retained by such holder of Registrable Shares to
engage in a distribution solely on behalf of such holder of
Registrable Shares), such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a
preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of
Registrable Shares or such underwriter on a timely basis, and
such holder of Registrable Shares failed to deliver a copy of
the final or amended prospectus at or prior to the
confirmation for the sale of the Registrable Shares to the
person asserting any such loss, claim, damage or liability in
any case where such delivery is required by the Securities
Act.
b. Promptly after receipt by any holder of Registrable Shares,
any underwriter or any controlling person of notice of the
commencement of any action in respect of which indemnity may
be sought against the Company, such holder of Registrable
Shares, or such underwriter or such controlling person, as the
case may be, will notify the Company in writing of the
commencement thereof (provided, that failure by any such
person to so notify the Company shall not relieve the Company
from any liability it may have hereunder to any other person
entitled to claim indemnity or contribution hereunder unless
(and solely to the extent) the Company is thereby prejudiced)
and, subject to the provisions hereinafter stated, the Company
shall be entitled to assume the defense of such action
(including the employment of counsel, who shall be counsel
reasonably satisfactory to such holder of Registrable Shares,
such underwriter or such controlling person, as the case may
be), and the payment of expenses insofar as such action shall
relate to any alleged liability in respect of which indemnity
may be sought against the Company.
c. In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which
any holder of Registrable Shares exercising rights under this
Article V or any controlling person of any such holder, makes
a claim for indemnification pursuant to this Section 5.3 but
it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right
of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that this Section 5.3
provides for indemnification in such case, then, the Company
and such holder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on
the one hand and of the holder of Registrable Shares on the
other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the
holder of Registrable Shares on the other shall be determined
by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by, or
on behalf of, the holder of Registrable Shares on the other,
and each party's relative intent, knowledge, access to
information and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such
case, (A) no such holder will be required to contribute any
amount in excess of the public offering price of all such
Registrable Shares offered by it pursuant to such registration
statement, net of any underwriting discounts or commissions
paid by such holder; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such
fraudulent misrepresentation.
5.4 Indemnification by Holders of Registrable Shares.
a. In the event that the Company registers any of the Registrable
Shares under the Securities Act, each holder of the
Registrable Shares so registered will, as a condition to
registration of the Registrable Shares, agree to indemnify and
hold harmless the Company, each of its directors, each of its
officers who have signed or otherwise participated in the
preparation of the registration statement, each underwriter of
the Registrable Shares so registered (including any broker or
dealer through whom such of the shares may be sold) and each
person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act from and against any and all
losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them may become subject under
the Securities Act, applicable state securities laws or under
any other statute or at common law or otherwise, and, except
as hereinafter provided, will reimburse the Company and each
such director, officer, underwriter or controlling person for
any legal or other expenses reasonably incurred by them or any
of them in connection with investigating or defending any
actions whether or not resulting in any liability, insofar as
such losses, claims, damages, expenses, liabilities or actions
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the
registration statement, in any preliminary or amended
preliminary prospectus or in the final prospectus (or in the
registration statement or prospectus as from time to time
amended or supplemented) or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make
the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the
Company in connection therewith by such holder of Registrable
Shares expressly for use therein; provided, however, that such
holder's obligations hereunder shall be limited to an amount
equal to the aggregate public offering price of the
Registrable Shares sold by such holder in such registration,
net of any underwriting discounts or commissions paid by such
holder.
b. In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which
the Company or another person entitled to indemnification
pursuant to this Section 5.4 makes a claim for indemnification
pursuant to this Section 5.4, but it is judicially determined
(by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such
indemnification may not be enforced in such case
notwithstanding that this Section 5.4 provides for
indemnification in such case, then, the Company and such
holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after
contribution from others) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand
and of the holder of Registrable Shares on the other in
connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of
the Company on the one hand and of the holder of Registrable
Shares on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company
on the one hand or by the holder of Registrable Shares on the
other, and each party's relative intent, knowledge, access to
information and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such
case, (A) no such holder will be required to contribute any
amount in excess of the public offering price of all such
Registrable Shares offered by it pursuant to such registration
statement, net of any underwriting discounts or commissions
paid by such holder; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such
fraudulent misrepresentation.
5.5 Exchange Act Reports. The Company will use its best efforts to timely
file with the Commission such information as the Commission may require
under the Exchange Act and shall use its best efforts to take all
action as may be required as a condition to the availability of Rule
144 under the Securities Act (or any successor exemptive rule hereafter
in effect) with respect to its Common Stock. The Company shall furnish
to any holder of Registrable Shares forthwith upon request (i) a
written statement by the Company as to its compliance with the
reporting requirements of Rule 144, (ii) a copy of the most recent
annual or quarterly report of the Company as filed with the Commission,
and (iii) such other reports and documents as a holder may reasonably
request in availing itself of any rule or regulation of the Commission
allowing a holder to sell any such Registrable Shares without
registration. The Company agrees to use its commercially reasonable
efforts to facilitate and expedite transfers of the Shares pursuant to
Rule 144 under the Securities Act, which efforts shall include timely
notice to its transfer agent to expedite such transfers of Shares.
5.6 Expenses. In the case of each registration effected under Section 5.1,
the Company shall bear all reasonable costs and expenses of each such
registration on behalf of the selling holders of Registrable Shares,
including, but not limited to, the Company's printing, legal and
accounting fees and expenses, Commission and NASD filing fees and "Blue
Sky" fees; provided, however, that the Company shall have no obligation
to pay or otherwise bear any portion of the underwriters' commissions
or discounts attributable to the Registrable Shares being offered and
sold by the holders of the Registrable Shares, or the fees and expenses
of counsel for the selling holders of Registrable Shares in connection
with the registration of the Registrable Shares.
5.7 Transferability. For all purposes of Article V of this Agreement,
Purchaser or an assignee thereof who agrees to be bound by the
provisions of this Article V shall be deemed at any particular time to
be the holder of all Registrable Shares of which such person shall at
such time be the "beneficial owner," determined in accordance with Rule
13d-3 under the Exchange Act.
ARTICLE 6
MISCELLANEOUS
6.1 No Waiver; Cumulative Remedies. No failure or delay on the part of any
party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power
or remedy hereunder. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
6.2 Amendments, Waivers and Consents. Any provision in this Agreement to
the contrary notwithstanding, and except as hereinafter provided,
changes in, termination or amendments of or additions to this Agreement
may be made, and compliance with any covenant or provision set forth
herein may be omitted or waived, if the Company shall obtain consent
thereto in writing from the Purchaser. Any waiver or consent may be
given subject to satisfaction of conditions stated therein and any
waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
6.3 Notices. All notices, requests, demands and other communications
provided for hereunder to any person other than the Company shall be in
writing, shall be sent by courier or registered or certified mail or by
facsimile to the Purchaser or its authorized representative, A-Street
Capital Corp., at the following address: 00 Xxxx Xxxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxx 00000, facsimile: (000) 000-0000. All such
notices, requests, demands and other communications shall be deemed
delivered and effective five (5) days after such notice is sent to the
Purchaser or to its authorized representative, A-Street Capital Corp.
All notices, requests, demands and other communications provided for
hereunder to the Company shall be sent by courier or registered or
certified mail or by facsimile to the Company at the following address:
Attention: Chief Executive Officer, 000 Xxxxx Xxxx, Xxxx Xxxxxx,
Xxxxxxxxxxxx 00000, facsimile number: (000) 000-0000. All such notices,
requests, demands and other communications to the Company shall be
deemed delivered and effective upon receipt by the Chief Executive
Officer of the Company.
6.4 Costs, Expenses and Taxes. All parties shall bear their own expenses.
6.5 Effectiveness; Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the Company, the Purchaser and
their respective successors and assigns; provided, that, the Company
may not assign any of its rights or obligations under this Agreement
without the prior written consent of the Purchaser. The Purchaser may
assign all or any part of its rights and obligations, except for it's
right to Purchase shares from the Company, hereunder to any person who
acquires any Shares owned by the Purchaser subject to the conditions of
this Agreement. The Purchaser must assign its obligations as described
in Sections 2.9, 2.10, 2.11, 5.4 and 7.3 to all transferees.
6.6 Transfer of Shares. In connection with each transfer of any of the
Shares during the two-year period from the date of the last Purchase
Notice, the Purchaser (or any subsequent transferee of any Shares)
shall, prior to such transfer, obtain the written agreement of each
transferee to assent to and become bound by the terms of Sections 2.9,
2.10, 2.11, 5.4, 6.6 and 7.3 as to all Shares to be transferred to such
transferee. A copy of such agreement shall be delivered to the Company
prior to any transfer. Any purported transfer of Shares in violation of
this Section 6.6 shall be null and void.
6.7 Prior Agreements. The Transaction Documents executed and delivered in
connection herewith constitute the entire agreement between the parties
and supersede any prior understandings or agreements concerning the
subject matter hereof.
6.8 Severability. The provisions of the Transaction Documents are severable
and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of a provision
contained therein shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a
provision of such Transaction Document and the terms of such
Transaction Documents shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of a provision,
had never been contained therein, and such provisions or part reformed
so that it would be valid, legal and enforceable to the maximum extent
possible.
6.9 Governing Law; Venue.
a. This Agreement shall be enforced, governed and construed in
accordance with the commercial laws of the State of New York,
the corporate law of Nevada or U.S. federal securities law, as
applicable, without giving effect to choice of laws principles
or conflict of laws provisions. Any dispute arising out of
this agreement shall first be submitted to arbitration before
a single arbitrator sitting in New York, New York said
arbitration to be conducted in accordance with the commercial
rules of the American Arbitration Association. Any discovery
permitted by the arbitrator shall be conducted in accordance
with the Federal Rules of Civil Procedure relating to the
conduct of written and oral discovery. Judgment may be entered
upon the award of the arbitrator in any state or federal
having jurisdiction. The arbitrator shall render his or her
findings and award within 30 days of the completion of the
hearing. The award shall be in writing and shall state the
reasons for the award. The arbitrator may award costs and
expenses at his or her discretion. Notwithstanding the
foregoing, any party shall be entitled to seek injunctive
relief from a state or federal court having jurisdiction and
in any case where such relief may be available.
b. Purchaser hereby waives, and agrees not to assert against the
Company, or any successor assignee thereof, by way of motion,
as a defense, or otherwise, in any suit, action or proceeding,
(i) any claim that the Purchaser is not personally subject to
the jurisdiction of the above-named courts, and (ii) to the
extent permitted by applicable law, any claim that such suit,
action or proceeding is brought in an inconvenient forum or
that the venue of any such suit, action or proceeding is
improper or that this Agreement may not be enforced in or by
such courts.
6.10 Headings. Article, section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
6.12 Further Assurances. From and after the date of this Agreement, upon the
request of the Purchaser or the Company, the Company and the Purchaser
shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of the
Transaction Documents and the Shares.
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
7.1 Survival of Representations and Warranties. All of the representations
and warranties of the Company and Purchaser contained herein shall
survive the Closing and continue in full force and effect for two years
(subject to any applicable statutes of limitations).
7.2 Indemnification Provisions for Benefit of the Purchaser. In the event
the Company breaches any of its representations, warranties, and
covenants contained herein, and, if there is an applicable survival
period pursuant to Section 7.1, provided that the Purchaser makes a
written claim for indemnification against the Company within the
applicable survival period stated in Section 7.1, then the Company
agrees to indemnify, defend and hold harmless the Purchaser and its
directors, officers, and each person, if any, who controls the
Purchaser within the meaning of Section 15 of the Securities Act, from
and against the entirety of any Adverse Consequences (as defined by
Section 7.5) the Purchaser or any such persons may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences the Purchaser or any such persons may suffer after the end
of the applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged
breach).
7.3 Indemnification Provisions for Benefit of the Company. In the event the
Purchaser breaches any of its representations, warranties, and
covenants contained herein, and, if there is an applicable survival
period pursuant to Section 7.1, provided that the Company makes a
written claim for indemnification against the Purchaser within the
applicable survival period stated in Section 7.1, then the Purchaser
agrees to indemnify, defend and hold harmless the Company and its
directors, officers, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, from and
against the entirety of any Adverse Consequences the Company or any
such persons may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Company or any
such persons may suffer after the end of the applicable survival
period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
7.4 Matters Involving Third Parties.
a. If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any
other Party (the "Indemnifying Party") under this Article VII,
then each Indemnified Party shall promptly notify the
Indemnifying Party thereof in writing; provided, however, that
no delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
b. Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party
so long as (i) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party
has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party
Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill
its indemnification obligations hereunder, (iii) the Third
Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (iv) settlement of, or
an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party,
likely to establish a precedential custom or practice adverse
to the continuing business interests of the Indemnified Party,
and (v) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
c. So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 7.4(b), (i)
the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the
Third Party Claim, (ii) the Indemnified Party will not consent
to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be
withheld unreasonably).
d. In the event any of the conditions in Section 7.4(b) is or
becomes unsatisfied, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or
enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate (and
the Indemnified Parties need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith),
(ii) the Indemnifying Parties will reimburse the Indemnified
Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys'
fees and expenses), and (iii) the Indemnifying Party will
remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Article VII.
7.5 Adverse Consequences. As used in this Article VII, "Adverse
Consequences" means all proceedings, charges, complaints, claims,
causes of action, demands, injunctions, judgments, orders, decrees,
rulings, damages, investigation and/or remediation costs, dues,
penalties, fines, costs of defense and other costs, amounts paid in
settlement, liabilities, obligations, responsibilities, taxes, liens,
losses, expenses, and fees, including court costs and reasonable
attorneys' fees and expenses.
IN WITNESS WHEREOF, the parties hereto have caused this Regulation S
Stock Purchase Agreement to be executed as of the date first above written.
LaserLock Technologies, Inc. Californian Securities S.A.
By Xxxxxx Xxxxxxx By Xxxxxx Xxxxx
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President and CEO President
Annex 2.10
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Form of Representation Letter
[Brokerage Letterhead]
Date: May ___, 2003
To: Californian Securities S.A.
You have asked us to provide you with information regarding our ability to
comply with all laws applicable to our business of selling securities to persons
or entities in [list jurisdictions]. This letter confirms the following:
1. We, [Name of Brokerage], are duly registered with [Appropriate
Authority] for the transaction of securities business in [list
jurisdictions where Brokerage is licensed to transact securities
business] including, without limitation, dealing in shares as agent.
2. We, [Name of Brokerage], are regularly examined by [Name of Oversight
agency] as part of the regulatory scheme applicable to our business.
This examination includes an audit of sales practices for securities
issued by companies domiciled in the United States of which such
securities are exempt from registration in the United States pursuant
to an exemption for "offshore transactions" as defined by Regulation S
("Regulation S"), promulgated by the Securities and Exchange Commission
pursuant to the Securities Act of 1933.
3. We, [Name of Brokerage], have in the past and will continue in the
future to offer such Regulation S securities to our clients in full
compliance with all applicable securities laws of the United States and
any other applicable local or foreign laws, rules and regulations which
govern or relate to such sales transactions.
You may provide this letter to any company with which you are dealing with
regard to the purchase and sale of such Regulation S securities and such company
may rely upon the representations made by us in this letter.
[Name of Brokerage]
-------------------------------
[Signature of authorized person]
-------------------------------
[Name of authorized person]
