PURCHASE AND OPTION AGREEMENT
PURCHASE AND OPTION AGREEMENT, dated March 10, 2000, by and between
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Chrust").
WHEREAS, Chrust desires to purchase concurrently with the execution of
this Agreement certain shares of the common stock ("Common Stock") of ▇▇▇▇▇▇.▇▇▇
Inc. ("Company") owned by ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ desires to sell to Chrust such
shares; and
WHEREAS, ▇▇▇▇▇▇▇▇▇ also desires to ▇▇▇▇▇ ▇▇▇▇▇▇ an option to purchase
certain additional shares of the Common Stock owned by ▇▇▇▇▇▇▇▇▇ and Chrust
desires to acquire the option on the terms and conditions set forth in this
Agreement.
IT IS AGREED:
1. Stock Purchase. Chrust hereby purchases from ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ hereby sells to Chrust 302,939 shares of the Common Stock owned by
▇▇▇▇▇▇▇▇▇ ("Purchased Shares") at a price of $3.301 per share. Accordingly,
concurrently with the execution of this Agreement, Chrust is wiring to an
account designated by ▇▇▇▇▇▇▇▇▇ the sum of $1,000,001.64 in immediately
available funds in consideration for the Purchased Shares, and ▇▇▇▇▇▇▇▇▇ is
causing certificates representing the Purchased Shares, together with stock
powers, with signatures guaranteed, to be delivered to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
("GMM"). Promptly thereafter, GMM shall arrange to have the Purchased Shares
transferred into Chrust's name and certificates representing such shares to be
delivered to Chrust.
2. Grant of Stock Option. ▇▇▇▇▇▇▇▇▇ hereby grants to Chrust the
right and option ("Option ") to purchase up to an aggregate of 1,363,342
additional shares of the Common Stock owned by ▇▇▇▇▇▇▇▇▇ ("Option Shares"), all
on the terms and conditions set forth herein.
3. Exercise Price. The exercise price ("Exercise Price") of the
Option shall be $3.301 per share, subject to adjustment as hereinafter provided.
4. Exercisability. The Option shall be exercisable from time to
time, in whole or in part, during the "Option Period," which shall be the period
commencing on the date of this Agreement and ending on June 4, 2000, unless
extended until July 4, 2000 in accordance with Section 5(ii) hereof. The last
day of the Option Period, as it may be extended, is referred to as the
"Termination Date." Notwithstanding the foregoing, except as set forth in
Section 5(ii) hereof, the Option may not be exercised for less than an aggregate
of 605,877 Option Shares (inclusive of the 75,735 Option Shares which may be
purchased under Section 5(ii), below) (the "Minimum Option Exercise").
5. Consideration for the Option.
(i) Simultaneously with the execution of this Agreement, Chrust
is wiring to the account designated by ▇▇▇▇▇▇▇▇▇ pursuant to Section 1
above the sum of $10,000 ("Option Purchase Price") as payment for the grant
of the Option by ▇▇▇▇▇▇▇▇▇ to Chrust.
(ii) If Chrust desires to extend the Option Period beyond June 4,
2000, then on or prior to the close of business on June 4, 2000, Chrust
must wire, or have wired, an additional $250,001.24 ("Extension Payment")
to the account designated pursuant to Section 5(i) in order to exercise the
Option with respect to 75,735 Option Shares ("Extension Exercise"). If the
Extension Exercise is made on or prior to June 4, 2000, the Termination
Date shall be extended to July 4, 2000, and (ii) the Escrow Agent shall
deliver a certificate for such 75,735 Option Shares as directed by Chrust.
(iii) If the Option is exercised in accordance with the terms
hereof and of the Escrow Agreement (as defined in Section 7 below), then
the Option Purchase Price (less $1) will be applied as a credit against the
aggregate amount payable to ▇▇▇▇▇▇▇▇▇ upon satisfaction of the Minimum
Option Exercise. If the Option is not so exercised, ▇▇▇▇▇▇▇▇▇ will be
entitled to retain the full amount of the Option Purchase Price.
6. Adjustments. In the event of any change in the number of
outstanding shares of the Common Stock occurring as the result of a stock split,
reverse stock split or stock dividend, combination or reclassification of the
outstanding Common Stock, or similar event after the date hereof, the number of
Option Shares and the Exercise Price of the Option shall each be proportionately
adjusted. Any right to acquire a fractional Option Share resulting from
adjustments will be rounded to the nearest whole Option Share.
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7. Method of Exercise. The Option may be exercised in whole or in
part (subject to the Minimum Option Exercise described in Section 4, above,
and/or the Extension Exercise described in Section 5(ii), above) by written
notice directed to ▇▇▇▇▇▇▇▇▇ and the Escrow Agent in accordance with the terms
of the Escrow Agreement among ▇▇▇▇▇▇▇▇▇, Chrust and Continental Stock Transfer &
Trust Company ("Escrow Agent"), executed simultaneously herewith ("Escrow
Agreement").
8. Voting Rights. Chrust hereby acknowledges and agrees that during
the Voting Proxy Period (as defined in this paragraph 8), ▇▇▇▇▇▇▇▇▇ shall have
the right to vote all of the Purchased Shares with respect to any matter put to
a vote of the stockholders of the Company. The "Voting Proxy Period" shall be
the period commencing on the date hereof and ending on the earlier of (i)
September 10, 2001 or (ii) the date the Minimum Option Exercise is made.
Notwithstanding anything contained herein to the contrary, the foregoing shall
not in any way limit or otherwise modify ▇▇▇▇▇▇▇▇▇'▇ obligations to vote his
shares, including the Purchased Shares, in accordance with the terms of the
Consent (defined in Section 11, below) and the letter, dated April 13, 1999,
from ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ to Chrust and the Company.
9. ▇▇▇▇▇▇▇▇▇'▇ Representations. ▇▇▇▇▇▇▇▇▇ represents and warrants
to Chrust that:
(i) he owns the Purchased Shares and the Option Shares
(together, the "Shares") free of any lien, restriction or encumbrance of
any kind, and he has owned all of the Shares since December 31, 1997;
(ii) the sale by him of the Purchased Shares is, and the sale by
him of the Option Shares upon exercise of the Option will be, exempt from
the registration requirements of the Securities Act of 1933, as amended
("1933 Act");
(iii) he has not granted anyone an option, warrant, subscription
or other right with respect to the Shares or any right to vote the Shares;
(iv) his execution, delivery and performance of this Agreement
and the Escrow Agreement does not and will not conflict with or violate any
law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to him, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, any note, bond, mortgage, indenture, contract, agreement or other
instrument or obligation to which he is a party or by which he is bound.
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(v) he has received a copy of all reports and documents filed by
the Company with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, within the last 24 months and
all reports issued by the Company to its stockholders; and
(vi) he has had both the opportunity to ask questions and receive
answers from the officers and directors of the Company and persons acting
on its behalf concerning the Company's operations and to obtain any
additional information he requested.
10. Chrust's Representations. Chrust represents and warrants to
▇▇▇▇▇▇▇▇▇ that:
(i) he understands that he must bear the economic risk of the
investment in the Shares, which cannot be sold by him unless they are
registered under the 1933 Act or an exemption therefrom is available
thereunder; and
(ii) he is aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Shares in the
absence of registration under the 1933 Act or an exemption therefrom as
provided herein;
(iii) he understands that the certificates evidencing the
Shares shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
the securities laws of any State. The shares may not be sold,
transferred or otherwise disposed of in the absence of such
registration or an exemption therefrom under said Act."
(iv) he understands that, during the Voting Proxy Period the
Purchased Shares shall bear the following additional legend:
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"The shares represented by this certificate are subject to
certain voting rights granted to a person other than the
registered holder hereof, in accordance with a certain Purchase
and Option Agreement, dated March 10, 2000, a copy of which is on
file at the principal offices of the Company."
(v) as Chairman of the Company's board of directors, he is aware
of all information regarding the Company's operations, including the
Company's proposed plans and business risks.
(vi) his execution, delivery and performance of this Agreement
and the Escrow Agreement does not and will not conflict with or violate any
law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to him, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, any note, bond, mortgage, indenture, contract, agreement or other
instrument or obligation to which he is a party or by which he is bound.
11. Releases; Consent. Simultaneously herewith, (i) each of ▇▇▇▇▇▇▇▇▇
and the Company are executing mutual general releases in the other's favor
("Releases"), and (ii) ▇▇▇▇▇▇▇▇▇ is executing a shareholder consent with respect
to certain matters ("Consent").
12. Miscellaneous.
12.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be deemed given if given in writing, by hand, or
delivered by nationally recognized overnight courier, or by telecopier and
confirmed by mail (registered or certified mail, postage prepaid, return receipt
requested) at their respective addresses set forth herein, or to such other
address as either shall have specified by notice in writing to the other.
12.2 Survival of Representations. The representations and
warranties made by the parties shall survive the delivery of the Purchased
Shares and the partial, full or non-exercise of the Option (and the delivery of
the Option Shares).
12.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
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12.4 Entire Agreement. This Agreement, the Escrow Agreement, the
Releases and the Consent constitute the entire agreement between the parties
with respect to the subject matter hereof. This Agreement may not be amended
except by writing executed by ▇▇▇▇▇▇▇▇▇ and Chrust.
12.5 Binding Effect; Successors. Chrust shall be entitled to
designate persons to purchase Option Shares along with him and such persons
shall be deemed to be assignees of his rights hereunder. If a portion of the
Option is exercised by such a designee, such designee must deliver to ▇▇▇▇▇▇▇▇▇
simultaneously with such exercise a certificate containing representations and
warranties substantially similar to the representations and warranties made by
Chrust in Section 10 above. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and, to the extent not prohibited herein, their
respective heirs, successors, assigns and representatives. Nothing in this
Agreement, expressed or implied, is intended to confer any rights, remedies,
obligations or liabilities on any person other than the parties hereto and as
provided above, their respective heirs, successors, assigns and representatives.
12.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without regard to choice of law provisions). Each party (i) agrees that any
legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted exclusively in New York State Supreme Court, County of New
York, or in the United States District Court for the Southern District of New
York, (ii) waives any objection to the venue of any such suit, action or
proceeding and the right to assert that such forum is not a convenient forum,
and (iii) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Each party further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon him mailed
by registered mail to his address shall be deemed in every respect effective
service of process upon him in any such suit, action or proceeding.
12.7 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
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injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
12.8 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
12.9 SEC Filings. Each party agrees to provide the other with
copies of any filings they make with the Securities and Exchange Commission to
reflect the sale of the Purchased Shares and the grant and exercise of the
Option prior to the time the filing is required to be made and to give the other
party reasonable opportunity to comment on same.
12.10 Severability. The invalidity or unenforceability of any
term or provision of this Agreement in any situation or jurisdiction shall not
affect the validity or enforceability of the other terms or provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction and the remaining terms and provisions
shall remain in full force and effect, unless doing so would result in an
interpretation of this Agreement which is manifestly unjust.
12.11 Fees and Expenses. Except as otherwise expressly set forth
herein or in the Escrow Agreement, all costs and expenses (including, without
limitation, legal and financial advisory fees and expenses) incurred in
connection with, or in anticipation of, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
12.12 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original instrument and
all of which together shall constitute a single agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement on
the day and year first above:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ -- ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Address: SGC Advisory Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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