EXHIBIT 10.7
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SECURITIES PURCHASE AGREEMENT
BY AND AMONG
PALWEB CORPORATION
AS SELLER
AND
THE PURCHASERS NAMED HEREIN
JANUARY 4, 2002
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.......................................................5
ARTICLE II PURCHASE AND SALE OF THE SECURITIES...............................7
Section 2.01 Purchase and Sale...................................7
Section 2.02 Closing.............................................7
Section 2.03 Issuance and Delivery of Securities.................7
Section 2.04 Purchase Price; Closing Payment.....................7
Section 2.05 Other Closing Actions and Deliveries................8
Section 2.06 Further Assurances..................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................8
Section 3.01 Organization and Authority..........................8
Section 3.02 Authority; Binding Effect...........................8
Section 3.03 Absence of Conflicts................................8
Section 3.04 Capitalization; Ownership of Shares.................9
Section 3.05 Issuance of Securities.............................10
Section 3.06 Financial Statements...............................10
Section 3.07 Absence of Undisclosed Liabilities.................10
Section 3.08 Litigation.........................................10
Section 3.09 Books and Records..................................10
Section 3.10 Solvency...........................................11
Section 3.11 Disclosure.........................................11
Section 3.12 Brokers, Finders, etc..............................11
Section 3.13 Registration Rights................................11
Section 3.14 Use of Proceeds....................................11
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EACH OF THE PURCHASERS.........12
Section 4.01 Organization.......................................12
Section 4.02 Authority; Binding Effect..........................12
Section 4.03 Investment Intent; Status of Investor..............12
Section 4.04 Disclosure of Information..........................12
Section 4.05 Investment Experience..............................13
Section 4.06 Restricted Securities..............................13
Section 4.07 Brokers, Finders, etc..............................13
ARTICLE V CONDITIONS TO THE CLOSING.........................................13
Section 5.01 Conditions to the Obligations of Each Party........13
Section 5.02 Conditions to the Purchasers' Obligations..........14
Section 5.03 Conditions to the Company's Obligations............15
ARTICLE VI CERTAIN COVENANTS AND AGREEMENTS.................................15
Section 6.01 Covenants and Agreements to the Closing............15
Section 6.02 Covenants and Agreements that Survive the Closing..16
Section 6.03 Corporate Authorizations...........................18
ARTICLE VII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS, INDEMNIFICATION..................................................18
Section 7.01 Survival of Representations and Agreements.........18
Section 7.02 Indemnification by the Company.....................19
Section 7.03 Indemnification by the Purchaser...................19
Section 7.04 Defense of Third-Party Claims......................19
Section 7.05 Direct Claims......................................20
ARTICLE VIII MISCELLANEOUS..................................................20
Section 8.01 Publicity..........................................20
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Section 8.02 Termination........................................21
Section 8.03 Fees and Expenses..................................21
Section 8.04 Legends............................................22
Section 8.05 Notices............................................22
Section 8.06 Amendment; Waivers.................................23
Section 8.07 Parties in Interest; Assignment....................23
Section 8.08 No Third-Party Beneficiaries.......................23
Section 8.09 Exhibits and Schedules.............................24
Section 8.10 Severability.......................................24
Section 8.11 Headings...........................................24
Section 8.12 Rules of Construction..............................24
Section 8.13 Entire Agreement...................................24
Section 8.14 Governing Law......................................24
Section 8.15 Specific Performance...............................24
Section 8.16 Counterparts.......................................25
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EXHIBITS
Exhibit A...............Purchase and Sale of Securities
Exhibit B...............Certificate of Designation
Exhibit C...............Form of Stockholders Agreement
Exhibit D...............Form of Warrant
SCHEDULES
See Disclosure Schedule
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of January 4, 2002 by and between PalWeb Corporation, a Delaware
corporation (the "Company") and the persons named as Purchasers on Exhibit "A"
(collectively "Purchaser") (collectively, the "Parties" and each, a "Party").
WITNESSETH:
WHEREAS, the Company desires to issue and sell to the Purchaser, and
the Purchaser is willing to acquire from the Company, (i) an aggregate of up to
700,000 shares of Convertible Preferred Shares (as hereinafter defined) and (ii)
warrants for up to an additional two hundred ten million (210,000,000) shares of
Common Stock; and subject to the conditions hereinafter set forth;
WHEREAS, in connection with the purchase and sale of the Securities
(the "Securities Purchase"), the Company intends to submit to its shareholders a
proposal to alter its capital structure to result in the capitalization
sufficient to have authorized shares of Common Stock to issue upon conversion or
exercise of the Securities being issued (the "Recapitalization"); and
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, covenants, representations and warranties set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and accepted, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the terms set forth below shall have
the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly Controlling or Controlled by, or under direct or indirect
common Control with, such Person.
"Building" means the land and building located in Dallas, Texas
currently occupied by the Company and leased from Onward, L.L.C. ("Onward")
which is to be conveyed to the Company in partial consideration for the issuance
of Securities as indicated on Exhibit A.
"Capital Stock" means all shares, interests, participations or
other equivalents of capital stock of a corporation, however designated, and any
warrants, options or other rights to purchase or acquire any such capital stock
and any securities convertible into or exchangeable or exercisable for any such
capital stock.
"Common Stock" means the Common Stock, par value $.10 per share, of
the Company.
"Contract" means any contract, agreement, arrangement, understanding
or other instrument or obligation (whether oral or written, pending or
executory).
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"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, seats on the board of
directors, by contract or otherwise.
"Convertible Preferred Shares" means the shares of Series 2001
Convertible Preferred Stock having the terms as set forth in the Certificate of
Designation attached as Exhibit "B", par value $.0001 per share to be issued and
sold by the Company pursuant to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any nation or government, any state
or political subdivision thereof, any federal or state court and any other
agency, body, authority or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Lien" means, with respect to any properties or assets, (i) any
mortgage, pledge, hypothecation, assignment, security interest, lien or
encumbrance or any preference, priority or other security agreement or
preferential arrangement of any kind or character whatsoever in respect of such
properties or assets, including, but not limited to, (A) any conditional sale or
other title retention agreement, (B) any financing lease having substantially
the same economic effect as any of the foregoing, and (C) the filing of, or
agreement to give, any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction, and (ii) any net profits interest, royalty
interest or other similar ownership interest in such assets or the revenues
derived therefrom.
"Person" means any individual, corporation, limited liability
company, partnership, association, trust or any other entity or organization of
any kind or character, including any Governmental Authority.
"Securities" means the Convertible Preferred Shares and the
Warrants.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders' Agreement" means the Stockholders Agreement, in the
form of Exhibit C hereto, to be entered into by and among the Company, the
Purchaser and the other shareholders of the Company that are signatories thereto
at the Closing.
"Subsidiary" means, with respect to any Person, (i) any corporation,
partnership or other entity of which shares of capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other similar managing body of such corporation, partnership or
other entity are at the time owned by such Person, or (ii) the management of
which is otherwise Controlled, directly or indirectly, through one or more
intermediaries by such Person.
"Transaction" means the issuance and sale of the securities and the
other transactions contemplated in the Transaction Documents.
"Transaction Documents" means this Agreement, the Warrant Agreement
and the Stockholders Agreement.
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"Uniform Commercial Code" means the Uniform Commercial Code as
enacted in the State of Delaware or other applicable jurisdiction, as amended
from time to time.
"Warrants" means the warrants issued by PalWeb Corporation to the
Purchaser in the form of Exhibit D hereto regarding the purchase of up to an
aggregate 210,000,000 shares of Common Stock pursuant to the terms thereof.
ARTICLE II
PURCHASE AND SALE OF THE SECURITIES
Section 2.01 Purchase and Sale. In accordance with and subject to terms and
conditions set forth herein, at the Closing, the Company shall
sell to the Purchaser, and the Purchaser shall purchase from the
Company, the Securities set on Exhibit A hereto.
Section 2.02 Closing. Closing hereunder shall occur simultaneously with the
exception of this Agreement. The Closing shall take place at the
offices of Hall, Estill, Hardwick, Gable, Golden and ▇▇▇▇▇▇,
P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, or at such other place and time or on such other
date as the Parties shall mutually agree (the "Closing Date").
Section 2.03 Issuance and Delivery of Securities. At the Closing, the Company
shall issue and deliver to each Purchaser, against payment by
such Purchaser of the purchase price therefor specified in
Section 2.04 one or more certificates evidencing the number of
Convertible Preferred Shares and Warrants set forth opposite the
name of such Purchaser on Exhibit A, being purchased duly issued
and registered in the name of such Purchaser and in a form
sufficient to vest title thereto fully in such Purchaser.
Section 2.04 Purchase Price; Closing Payment. The purchase price to be paid
by each Purchaser in exchange for the Securities to be issued to
them pursuant to this Agreement shall be in the form of the
consideration in the amount specified in Exhibit A. At the
Closing, each Purchaser shall deliver to the Company such
documents as the Company may reasonably request to evidence
payment of the consideration in the amounts set forth opposite
the name of the Purchaser on Exhibit A, including in the case of
the Building, a special warranty deed from Onward to the
Company's subsidiary Plastic Pallet Production, Inc. subject to
the existing first mortgage in favor of Texas Capital Bank which
the Company will assume. If Texas Capital Bank fails to consent
to such transfer, Onward will take such action as may be
necessary to repay or refinance the indebtedness owed to Texas
Capital Bank and the Company will execute a note and mortgage to
Onward to repay Onward in accordance with the terms of the
existing indebtedness to Texas Capital Bank. Onward and the
Company will use their best efforts to obtain the consent of
Texas Capital Bank and to negotiate a more favorable repayment
schedule for the existing debt being assumed. If the appraised
value of the Building is less than $1,350,000, the amount of
Securities issuable to Onward in exchange therefor will be
appropriately adjusted.
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Section 2.05 Other Closing Actions and Deliveries. To effect the Transaction,
at or prior to the Closing, the Parties shall enter into the
agreements and take the necessary actions set forth in this
Section 2.05.
(a) Stockholders Agreement. The Company and the Purchaser shall
execute and deliver, and the Company shall cause all other
persons that are named as parties therein to execute and
deliver, the Stockholders Agreement, stock certificates,
requisite board resolutions, certificates of good standing
and related agreements as set forth in the Exhibits.
Section 2.06 Further Assurances. Each of the Parties hereby agrees that from
time to time after Closing each of them shall execute, deliver,
acknowledge, file and record, or cause to be executed,
delivered, acknowledged, filed and recorded, such further
agreements, instruments, certificates and other documents as may
be reasonably required in order to consummate and make effective
the Transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the date
hereof, and as of the Closing Date, except as set forth in the disclosure
schedule attached hereto ("Disclosure Schedule") as follows:
Section 3.01 Organization and Authority. 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 own and operate its assets and properties and
conduct its business and operations as presently being
conducted.
Section 3.02 Authority; Binding Effect. The Company has all requisite
corporate power and authority to enter into this Agreement and
the other Transaction Documents (collectively, the "Company
Agreements"), to perform its obligations hereunder and
thereunder and to consummate the Transaction contemplated hereby
and thereby. The execution and delivery by the Company of this
Agreement and each of the other Company Agreements, the
performance by the Company of its obligations hereunder and
thereunder and the consummation by the Company of the
Transaction contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part
of the Company. This Agreement and the other Company Agreements
have been, or will be, duly executed and delivered by the
Company and constitute, or will constitute upon execution and
delivery, legal, valid and binding agreements of the Company,
enforceable against the Company in accordance with each of their
respective terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting
creditors' rights generally or by general principles of equity.
Section 3.03 Absence of Conflicts. Except as set forth on Schedule 3.3
attached hereto, the execution and delivery by the Company of
this Agreement and the other Company Agreements, the performance
by the Company of its obligations hereunder and thereunder and
the consummation of the Transaction will not
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(i) conflict with, or result in any violation or breach of, any
provision of the certificate of incorporation or bylaws of the
Company, (ii) conflict with, or result in any violation or
breach of, constitute a default under, give rise to any right of
termination or acceleration (with or without notice or the lapse
of time or both) pursuant to, or result in being declared void,
voidable or without further effect, any term or provision of any
material note, bond, mortgage, indenture, lease, franchise,
permit, license, Contract or other agreement, instrument or
document to which the Company is a party or by which the
property or assets of the Company may be bound, (iii) require
the Company to obtain any consent, approval, permit, notice,
action, authorization or waiver (each a "Consent") of or file
with or give notice to any Governmental Authority or any other
Person not a party to this Agreement, (iv) conflict with, or
result in any violation of, any material law, ordinance,
statute, rule or regulation of any Governmental Authority known
to be applicable to the business, assets or operations of the
Company, or (v) result in the creation of, or impose on the
Company the obligation to create, any Lien upon the property or
assets of the Company.
Section 3.04 Capitalization; Ownership of Shares. The authorized Capital
Stock of the Company consists of (i) 250,000,000 shares of
Common Stock, par value $0.10 per share, of which prior to
giving effect to the Transaction 232,473,244 shares are issued
and outstanding of which 34,650,000 shares are held by a trustee
for the benefit of creditors of a subsidiary of the Company and
are classified as treasury stock and (ii) 20,000,000 shares of
Preferred Stock, par value $0.0001 per share, of which prior to
giving effect to the Transaction 1,980,000 shares are issued and
outstanding and no shares are held in the treasury. All of the
issued and outstanding shares of Capital Stock of the Company
have been duly authorized, validly issued, fully paid and
nonassessable. None of the issued and outstanding shares of
Capital Stock of the Company has been issued in violation of, or
subject to, any preemptive rights or similar rights of
subscription. All offers, issuances and sales by the Company of
any shares of its Capital Stock or other equity securities have
been and will be made in compliance with the requirements of the
Securities Act and all other applicable federal and state
securities laws. Except as set forth on Schedule 3.4 or as
contemplated by this Agreement, there are, and, as of the
Closing Date there will be, no other outstanding options,
warrants, calls, rights, convertible securities or other
agreements or commitments of any character pursuant to which the
Company is or may be obligated to issue or sell any issued or
unissued shares of its Capital Stock or other equity securities
or to purchase or redeem any shares of its Capital Stock or
other equity securities or make any other payments in respect
thereof, and there are not shares of its Capital Stock or other
equity securities reserved for issuance for any purpose.
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Section 3.05 Issuance of Securities.
(a) The Convertible Preferred Shares have been duly and validly
authorized for issuance by the Company. Upon the issuance of
the Convertible Preferred Shares pursuant to this Agreement,
the Convertible Preferred Shares will be validly issued and
fully paid and nonassessable. The shares of Common Stock
issuable upon exercise of the Warrant when duly authorized
and validly reserved, will be upon issuance in accordance
with the terms of the Warrant and the terms hereof, validly
issued, fully paid and non-assessable.
(b) The issuance and sale by the Company of the Securities will
not violate, or be subject to, any preemptive rights or
similar rights of subscription.
(c) Assuming the accuracy of the representations and warranties
of the Purchaser in Article IV hereof, all offers by the
Company with respect to, and the issuance and sale by the
Company of, the Securities have been and will be made in
compliance with the requirements of the Securities Act and
all other applicable federal and state securities laws, and
the offer, issuance and sale by the Company of the Securities
is not required to be registered under the Securities Act.
Section 3.06 Financial Statements. The balance sheet of the Company as of
August 31, 2001 (the "Latest Balance Sheet") and the audited
statement of income and statement of cash flows of the Company
for the period ending May 31, 2001 as filed with the SEC, fairly
present the financial position, results of operations and cash
flows of the Company for such period and contain no material
inaccuracies. Such statements were prepared in conformity with
United States generally accepted accounting principles, except
as noted therein.
Section 3.07 Absence of Undisclosed Liabilities. As of the Closing Date, the
Company will not have any debts, liabilities or obligations of
any kind or character (whether fixed or contingent, existing or
inchoate), except for (i) debts, liabilities and obligations
reflected on the Latest Balance Sheet and (ii) other debts,
liabilities and obligations that are specifically identified in
Schedule 3.7.
Section 3.08 Litigation. There is no action, suit, inquiry, investigation or
other proceeding pending against or, to the knowledge of the
Company, threatened against or affecting the Company or any of
its properties or assets, at law or in equity, or in any court
or before any arbitrator or any foreign or United States
federal, state or local Governmental Authority (i) in which an
adverse decision could, either in any single case or in the
aggregate, have a material adverse effect on the business,
operations or financial condition of the Company or (ii) which
in any manner draws into question the validity of or otherwise
affects the Transaction or the Company Agreements.
Section 3.09 Books and Records. The books and records of the Company fairly
reflect in all material respects the transactions referred to
therein, and such books and records are and have been properly
kept and maintained, with the revenues, expenses, assets and
liabilities of the Company accurately recorded in all material
respects therein on the accrual basis of accounting prepared in
accordance with United
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States generally accepted accounting principles. True, complete
and correct copies of such books and records have been made
available by the Company for review by the Purchaser.
Section 3.10 Solvency. The Company will not be rendered insolvent by the
consummation of the Transaction, and following the consummation
of such Transaction, the Company will be able to pay its
respective debts as they become due, will have capital
sufficient to carry on its business as then conducted and
proposed to be conducted, and will own property which has a fair
value and a fair saleable value in excess of the amount required
to pay its respective debts as they become due.
Section 3.11 Disclosure. Neither this Agreement nor any certificate,
instrument or written statement furnished to any of the other
Parties hereto by or on behalf of the Company contains an untrue
statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or
therein not misleading. To the Company's knowledge, there is no
fact which the Company has not disclosed to each of the other
Parties hereto which materially and adversely affects or which
could reasonably be expected to materially and adversely affect
the business, financial condition, prospects, operations,
property or affairs of the Company or the ability of the Company
to perform its obligations hereunder or under the other Company
Agreements.
Section 3.12 Brokers, Finders, etc. All negotiations relating to the
Transaction Documents and the Transaction contemplated hereby
and thereby, have been carried on without the intervention of
any Person acting on behalf of the Company in such manner as to
give rise to a valid claim against any of the Parties hereto for
any broker's or finder's commission. The Company shall indemnify
the Purchaser from and against any and all liabilities and
obligations arising as a result of anyone claiming a commission,
finder's fee or other payment for services rendered as a broker
or finder on behalf of the Company in connection with the
Transaction contemplated hereby.
Section 3.13 Registration Rights. Until such time as the Securities are fully
transferable without registration, the Company will give the
Purchaser unlimited piggyback rights to include the Securities
or underlying securities related thereto in any public offering
of the Company of shares of common securities for cash other
than pursuant to employee benefit plans. All expenses incurred
in connection with the registration under this Section
(including all registration, filing, qualification, legal
printing and accounting fees, but excluding underwriting
commissions and discounts, if any), shall be borne by the
Company in connection with registration under this Section. In
connection with any such piggyback registration, the Company
will use its best efforts to register or qualify the Securities
and do any and all other acts and things which may be reasonably
necessary to assist the Purchaser to consummate the disposition
of the Securities.
Section 3.14 Use of Proceeds. The Company has used the proceeds from the
indebtedness being converted into the Securities for the
following: For the manufacturing of new pallet production
equipment, working capital and related operating expenses.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH OF THE PURCHASERS
Each Purchaser represents and warrants to the Company as of the date
hereof, and as of the Closing Date, as follows:
Section 4.01 Organization. The Purchaser has all requisite power and
authority to own and operate its assets and properties and
conduct its business and operations as presently being
conducted.
Section 4.02 Authority; Binding Effect. The Purchaser has all requisite power
and authority to enter into the Transaction Documents, to
perform its obligations hereunder and thereunder and to
consummate the Transaction contemplated hereby and thereby. The
execution and delivery by the Purchaser of each of the
Transaction Documents, the performance by the Purchaser of its
obligations hereunder and thereunder and the consummation by the
Purchaser of the Transaction contemplated hereby and thereby
have been duly and validly authorized by the Purchaser. This
Agreement has been, and at the Closing the other Transaction
Documents will be, duly executed and delivered by the Purchaser
and constitute legal, valid and binding agreements of the
Purchaser, enforceable against the Purchaser in accordance with
the respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting
creditors' rights generally or by general principles of equity.
Section 4.03 Investment Intent; Status of Investor.
(a) The Purchaser is acquiring the Securities for its own account
for investment, and not with a view to any distribution
thereof in violation of the Securities Act or any applicable
state securities laws.
(b) The Purchaser qualifies as an "accredited investor" within
the meaning of Rule 501 of Regulation D under the Securities
Act.
(c) If the Purchaser was organized for the specific purpose of
making this investment, each investor in the Purchaser is an
"accredited investor" within the meaning of Section 501 of
Regulation D.
Section 4.04 Disclosure of Information. The Purchaser has received or has had
full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect
to the Securities to be purchased by the Purchaser under this
Agreement. The Purchaser further has had an opportunity to ask
questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities and to
obtain additional information (to the extent the Company
possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any
information furnished to such Purchaser or to which such
Purchaser had access.
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Section 4.05 Investment Experience. The Purchaser understands that the
purchase of the Securities involves substantial risk. The
Purchaser has experience as an investor in securities of
companies in the development stage and acknowledges that the
Purchaser is able to fend for itself, can bear the economic risk
of its investment in the Securities and has such knowledge and
experience in financial or business matters that the Purchaser
is capable of evaluating the merits and risks of this investment
in the Securities and protecting its own interests in connection
with this investment.
Section 4.06 Restricted Securities. The Purchaser understands that the
Securities are characterized as "restricted securities" under
the Securities Act inasmuch as they are being acquired from the
Company in a transaction not involving a public offering or
registration, and that under the Securities Act and applicable
regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited
circumstances. Further, the Purchaser represents that it is
familiar with Rule 144 of the U.S. Securities and Exchange
Commission, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act. The
Purchaser understands that the Company's obligation to register
the underlying Common Stock or the Securities sold hereunder is
limited as set forth in Section 3.14.
Section 4.07 Brokers, Finders, etc. All negotiations relating to the
Transaction Documents, and the Transaction contemplated hereby
and thereby, have been carried on without the intervention of
any Person acting on behalf of the Purchaser in such manner as
to give rise to a valid claim against any of the Parties hereto
for any broker's or finder's commission. The Purchaser shall
indemnify the Company from and against any and all liabilities
and obligations arising as a result of anyone claiming a
commission, finder's fee or other payment for services rendered
as a broker or finder on behalf of the Purchaser in connection
with the Transaction contemplated hereby.
Section 4.08 Securities Laws. Purchaser has complied with all applicable
federal and state securities laws in connection with raising the
funds for making the investment contemplated by this Agreement.
ARTICLE V
CONDITIONS TO THE CLOSING
Section 5.01 Conditions to the Obligations of Each Party. The obligations of
each of the Parties hereto at the Closing are subject to the
satisfaction on or prior to the Closing Date of the conditions
set forth below:
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(a) Other than suits to enforce any of the Transaction Documents,
no action or proceeding shall have been instituted, and no
injunction, writ, temporary restraining order or any other
order of any nature issued by a court or other Governmental
Authority of competent jurisdiction shall have been issued,
for the purpose or with the possible effect of enjoining or
preventing the consummation of the Transaction or the
performance by each of the Parties hereto of its respective
obligations under the other Transaction Documents.
Section 5.02 Conditions to the Purchaser's Obligations. The obligations of
the Purchaser at the Closing are subject to the satisfaction on
or prior to the Closing Date of the conditions set forth below:
(a) The Company shall have performed and complied in all material
respects with all agreements required by this Agreement to be
performed and complied with by the Company at or prior to the
Closing Date, and the Purchaser shall have received a
certificate from an appropriate duly authorized officer of
the Company dated as of the Closing Date, certifying to the
foregoing effect.
(b) The representations and warranties of the Company set forth
in Article III hereof shall be true and correct in all
material respects as of the Closing Date, with the same
effect as though such representations and warranties had been
made by the Company on and as of the Closing Date, and the
Purchaser shall have received a certificate from an
appropriate duly authorized officer of the Company, dated as
of the Closing Date, certifying to the foregoing effect.
(c) The Company and all other parties shall have executed and
entered into the Stockholders Agreement.
(d) All required notices shall have been given and filings made,
and, as the case may be, applicable waiting periods shall
have expired without adverse action by, or favorable orders,
consents, and approvals in the form required to consummate
the Transaction contemplated hereby shall have been received
from, all necessary Governmental Authorities and third
parties.
(e) The due diligence conducted by the Purchaser and its
advisors, accountants and legal counsel in connection with
the Transaction shall not have caused the Purchaser to become
aware of any facts relating to the business, liabilities,
financial condition, results of operations, or affairs of the
Company which in the good faith judgment of the Purchaser
makes it inadvisable for the Purchaser to proceed with the
Transaction contemplated hereby.
(f) The due diligence conducted by the Purchaser and its advisors
and legal counsel in connection with the Transaction
contemplated hereby shall not have caused the Purchaser to
become aware of any violation or alleged violation by the
Company, or any act, omission, event, or circumstance which,
in the good faith judgment of the Purchaser, may constitute
or serve as a basis for a material violation by the Company,
of any applicable federal or state law, rule, or regulation
pertaining to health or the environment which, in the good
faith judgment of the Purchaser,
14
could cause a material adverse effect on the business,
operations or performance of the Company.
(g) The Transaction shall have been effectuated in compliance
with all applicable federal and state securities laws and the
issuance of the Securities to the Purchaser shall have been
exempt from registration under the Securities Act, and shall
have been exempt from registration or qualification under
state securities or Blue Sky laws where applicable.
Section 5.03 Conditions to the Company's Obligations. The obligations of the
Company at the Closing are subject to the satisfaction on or
prior to the Closing Date of the conditions set forth below:
(a) The Purchaser shall have performed and complied in all
material respects with all agreements required by this
Agreement to be performed and complied with by the Purchaser
at or prior to the Closing Date, and the Company shall have
received a certificate from the General Partner of the
Purchaser dated as of the Closing Date, certifying to the
foregoing effect.
(b) The representations and warranties of the Purchaser set forth
in Article IV hereof shall be true and correct in all
material respects as of the Closing Date, with the same
effect as though such representations and warranties had been
made by the Purchaser on and as of the Closing Date, and the
Company shall have received a certificate from an appropriate
duly authorized officer of the or appropriate representative
of each Purchase of the Purchaser, dated as of the Closing
Date, certifying to the foregoing effect.
(c) The Purchaser shall have executed and entered into the
Stockholders Agreement.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
Section 6.01 Covenants and Agreements prior to the Closing. From the date
hereof to the Closing:
(a) PURCHASER INSPECTION. The Company shall give the Purchaser
and its attorneys, accountants, and representatives free,
full, and complete access during reasonable business hours to
the Company as Purchaser may deem necessary or appropriate;
provided, however, that such due diligence review shall not
unreasonably interfere with the operations by the Company.
The Company shall provide the Purchaser and its officers,
attorneys, accountants and representatives with any
information reasonably requested by them pertaining to the
financial position and operations of, the income derived from
and the expenses associated with the Company. Purchaser will
treat all information in accordance with any confidentiality
agreements which are binding as of the date hereof between
Seller and Purchaser.
(b) COMPLIANCE. Each of the Parties hereto shall not take or fail
to take any action which action or failure to take such
action shall cause the representations and
15
warranties made by each such Party herein to be untrue or
incorrect as of the Closing Date.
(c) SATISFACTION OF ALL CLOSING CONDITIONS. Each of the Parties
hereto shall use its reasonable best efforts to cause all
closing conditions set forth in Article V hereof to be
satisfied by the Closing.
(d) MATERIAL DEVELOPMENTS. The Company shall notify the Purchaser
of any material problems or developments with respect to the
business of the Company of which the Company shall have or
obtain knowledge.
(e) NOTICE OF BREACH. Each of the Parties hereto, immediately
upon becoming aware thereof, shall give detailed written
notice to each of the other Parties hereto of the occurrence
of, or the impending or threatened occurrence of, any event
which would cause or constitute a breach, or would have
caused or constituted a breach had such event occurred or
been known to any such Party prior to the date of this
Agreement, of any of its respective covenants, agreements,
representations, or warranties contained or referred to
herein or in any document delivered in accordance with the
terms hereof.
(f) NOTICE OF LITIGATION. Immediately upon becoming aware
thereof, each of the Parties hereto shall notify each of the
other Parties hereto of (i) any suit, action, or proceeding
to which any such Party is named as a party or which is
threatened against any such Party in writing to the extent
such suit, action or proceeding relates to any of the Company
Agreements or affects the consummation of the Transaction,
(ii) any order or decree or any complaint praying for an
order or decree restraining or enjoining the consummation of
any of the Company Agreements or consummation of the
Transaction, or (iii) any notice from any tribunal of its
intention to institute an investigation into, or to institute
a suit or proceeding to restrain or enjoin the consummation
of, any of the Company Agreements or the Transaction, or to
nullify or render ineffective any of the Company Agreements
or Transaction Documents.
Section 6.02 Covenants and Agreements that Survive the Closing. The following
covenants and agreements shall survive according to or until the
satisfaction of their terms:
(a) FINANCIAL STATEMENTS. From the date hereof so long as the
Purchaser owns, in the aggregate, of record or beneficially
at least 5% (directly or indirectly) of the Common Stock (on
a fully diluted basis):
(i) QUARTERLY OPERATING STATEMENTS. The Company shall
maintain a standard system of accounting and shall
furnish to the Purchaser as soon as practicable after the
end of each quarter, commencing with the fiscal quarter
ending after the date of the closing, and in any event
within 45 days after the end of each said quarter,
consolidated operating statements for the Company which
shall be certified on behalf of the Company by the
President or the chief financial officer of the Company
to have been prepared in accordance with United States
generally accepted accounting principles, except as noted
therein, to fairly present the financial condition
16
of the Company for such period on a consolidated basis,
and shall include at least a balance sheet as at the end
of such period, a statement of income and statements of
cash flows and key operating statistics, all in
reasonable detail.
(ii) ANNUAL FINANCIAL STATEMENTS. As soon as practicable after
the end of each fiscal year of the Company ending after
the date of the Closing and in any event within 120 days
thereafter, the Company shall furnish to the Purchaser
the following financial statements on a consolidated
basis, prepared in accordance with United States
generally accepted accounting principles, except as noted
therein, together with a report thereon on, unqualified
as to scope, of reputable independent certified public
accountants selected by the Company and reasonably
acceptable to the Purchaser:
A. A consolidated balance sheet of the Company at the
end of such year;
B. A consolidated statement of income of the Company for
such year;
C. A consolidated statement of cash flows of the Company
for such year; and
D. A statement of changes in stockholders' equity for
such year;
setting forth in each case in comparative form the
figures for the previous fiscal year, if applicable, all
in reasonable detail.
Each of the financial statements referred to in this Section
6.02 shall fairly and accurately reflect the financial
condition and operating results of the Company as of the
dates and for the periods stated therein, subject in the case
of the unaudited financial statements to changes resulting
from normal year-end adjustments.
(b) MATERIAL BREACH NOTICE. The Company shall deliver promptly
(but in any event within five business days) after the
discovery or receipt of notice of any default under any
material agreement to which the Company and/or any of its
Subsidiaries is a party, which default could have a material
adverse effect on the Company or any Subsidiary, an officer's
certificate specifying the nature and period of existence
thereof and what actions the Company has taken and proposes
to take with respect thereto.
(c) FURTHER ASSURANCES/ACQUISITION OF COMMON SHARES. At any time
or from time to time after the Closing, the Company agrees to
cooperate with the Purchaser and, at the request of the
Purchaser, to execute and deliver any instruments, documents
or consents, and to take all action as the Purchaser may
reasonably request in order to evidence or effectuate the
consummation of: (i) the Transaction and to otherwise carry
out the intent of the Parties hereunder.
17
(d) ADDITIONAL INFORMATION. The Company shall deliver with
reasonable promptness, such other information and financial
data concerning the Company as the Purchaser may reasonably
request.
Section 6.03 Corporate Authorizations. The Purchaser acknowledges that the
Company does not currently have sufficient authorized shares of
Common Stock with a par value low enough to permit shares of
Common Stock to be issued upon conversion of the Preferred Stock
or exercise of the Warrants. As promptly as practical after the
Closing, the Company shall take all necessary corporate actions
to submit to the shareholders appropriate amendments to its
Certificate of Incorporation to authorize additional shares of
Common Stock and reduce the par value so that the Preferred
Stock and Warrants can be converted or exercised in accordance
with their respective terms.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS; INDEMNIFICATION
Section 7.01 Survival of Representations and Agreements.
(a) Those representations and warranties contained in any of the
Transaction Documents or in any agreement, instrument,
certificate or other document delivered pursuant to this
Agreement and referred to below shall survive the Closing and
the consummation of the Transaction contemplated hereby and
thereby and shall continue in full force and effect:
(i) until the expiration of the latest statute of limitations
applicable to claims, damages or liabilities that may be
asserted against or incurred by the Company in connection
with the subject matter thereof, in the case of the
representations and warranties set forth in Sections 3.05
and 3.11;
(ii) for a period of two (2) years in the case of all other
representations and warranties set forth in Article III
hereof;
(iii) for a period of two (2) years in the case of all
representations and warranties set forth in Article IV
hereof; and
(iv) for the comparable periods of time set forth above in
this Section 7.01 in the case of each representation and
warranty (but not covenants) set forth in any of the
Transaction Documents or any other agreement, instrument,
certificate or other document delivered pursuant to this
Agreement, based upon the nature of such representation
and warranty when compared to the most analogous
representation and warranty set forth herein.
(b) Each covenant and agreement set forth in any of the
Transaction Documents to be performed after the Closing shall
survive the Closing in accordance with its terms.
18
(c) All representations, warranties, covenants and agreements
made or contained in any of the Transaction Documents or any
other agreement, instrument, certificate or other document
delivered in accordance with this Agreement shall be deemed
to be material and to have been relied upon by the Parties
hereto.
Section 7.02 Indemnification by the Company. From and after the Closing, the
Company shall indemnify and hold the Purchaser and its
respective general and limited partners, officers, employees,
agents and affiliates, harmless against any and all damages,
losses, deficiencies, liabilities, obligations, commitments,
costs or expenses, including legal and other expenses reasonably
incurred in investigating and defending against the same
(collectively, "Liabilities" and each a "Liability") incurred by
the Purchaser resulting from (i) the material breach of any
representation or warranty of the Company contained in Article
III hereof or in any Transaction Document, (ii) any material
breach of any agreement or covenant of the Company to be
performed prior to Closing contained in this Agreement or in any
Transaction Document and of which the Purchaser was not aware
and (iii) Third-Party Claims against Purchaser arising with
respect to periods prior to the Closing, whether as a result of
actions or omissions of the Company.
Section 7.03 Indemnification by the Purchaser. From and after the Closing,
the Purchaser shall indemnify and hold the Company and its
directors, officers, employees, agents and affiliates harmless
against any and all Liabilities incurred by the Company, its
directors, officers, employees, agents and affiliates resulting
from (i) the breach of any representation or warranty of the
Purchaser contained in Article IV hereof or in any Transaction
Documents and (ii) any breach of any agreement or covenant of
the Purchaser to be performed prior to Closing contained in this
Agreement or in any Transaction Document.
Section 7.04 Defense of Third-Party Claims. An indemnified Party shall give
prompt written notice to an indemnifying Party of the
commencement or assertion of any action, proceeding, demand or
claim by a third party (collectively, a "Third-Party Claim") in
respect of which such indemnified Party shall seek
indemnification hereunder. Any failure so to notify an
indemnifying Party shall not relieve such indemnifying Party
from any liability that it, he or she may have to such
indemnified Party under this Section 7.04 unless the failure to
give such notice materially and adversely prejudices such
indemnifying Party. The indemnifying Party shall have the right
to assume control of the defense or, settle or otherwise dispose
of such Third-Party Claim on such terms as they deem
appropriate; provided, however, that:
(a) The indemnified Party shall be entitled, at his, her or its
own expense, to participate in the defense of such
Third-Party Claim (provided, however, that the indemnifying
Parties shall pay the attorneys' fees of the indemnified
Party if (A) the employment of separate counsel shall have
been authorized in writing by any such indemnifying Party in
connection with the defense of such Third-Party Claim, (B)
the indemnifying Parties shall not have employed counsel
reasonably satisfactory to the indemnified Party to have
charge of such Third-Party Claim, or (C) the indemnified
Party's counsel shall have advised the indemnified Party in
19
writing, with a copy to the indemnifying Party, that there is
a conflict of interest that could make it inappropriate under
applicable standards of professional conduct to have common
counsel);
(b) The indemnifying Party shall obtain the prior written
approval of the indemnified Party before entering into or
making any settlement, compromise, admission or
acknowledgment of the validity of such Third-Party Claim or
any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission or
acknowledgment, injunctive or other equitable relief would be
imposed against the indemnified Party;
(c) No indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by each claimant
or plaintiff to each indemnified Party of a release from all
liability in respect of such Third-Party Claim; and
(d) The indemnifying Party shall not be entitled to control (but
shall be entitled to participate at their own expense in the
defense of), and the indemnified Party shall be entitled to
have sole control over, the defense or settlement,
compromise, admission, or acknowledgment of any Third-Party
Claim (A) as to which the indemnifying Party fails to assume
the defense within a reasonable length of time or (B) to the
extent the Third-Party Claim seeks an order, injunction, or
other equitable relief against the indemnified Party which,
if successful, would materially adversely affect the
business, operations, assets, or financial condition of the
indemnified Party; provided, however, that the indemnified
Party shall make no settlement, compromise, admission, or
acknowledgment that would give rise to liability on the part
of any indemnifying Party without the prior written consent
of such indemnifying Party.
The parties hereto shall extend reasonable cooperation in
connection with the defense of any Third-Party Claim pursuant
to this Section 7.04 and, in connection therewith, shall
furnish such records, information, and testimony and attend
such conferences, discovery proceedings, hearings, trials and
appeals as may be reasonably requested.
Section 7.05 Direct Claims. In any case in which an indemnified Party seeks
indemnification hereunder which is not subject to Section 7.04
because no Third-Party Claim is involved, the indemnified Party
shall notify the indemnifying Party in writing of any
Liabilities which such indemnified Party claims are subject to
indemnification under the terms hereof. The failure of the
indemnified Party to exercise promptness in such notification
shall not amount to a waiver of such claim unless the resulting
delay materially prejudices the position of the indemnifying
Party with respect to such claim.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Publicity. The Company and the Purchaser shall promptly advise
and cooperate with each other prior to issuing, or permitting
any of its general or limited
20
partners, officers, directors, partners, stockholders, employees
or agents to issue, any press release or other form of public
announcement with respect to the Transaction Documents or the
Transaction. The Company and the Purchaser agree that all such
press releases or other forms of public announcement with
respect to the Transaction Documents or the Transaction are
subject to the approval of each other, which approval shall not
be unreasonably withheld; provided, however, that the Company or
the Purchaser shall be entitled to issue a press release or make
a public announcement with respect to the Transaction Documents
or the Transaction, after consulting with each other, if the
Company or the Purchaser, as the issuer of such press release or
other form of public announcement, has received advice from its
counsel to the effect that such press release is required by
law. The Parties acknowledge that any press release concerning
the Company, its business and operations issued after the
Closing shall be subject to the confidentiality provisions set
forth in the Stockholders Agreement.
Section 8.02 Termination. This Agreement may be terminated at any time prior
to the Closing by:
(a) the mutual consent of the Company and the Purchaser;
(b) the Purchaser (i) upon the failure of the Company to perform
or comply in all material respects with any of its respective
covenants or agreements contained herein prior to or (ii) at
the Closing or if any representation or warranty of the
Company shall not have been true and correct in all material
respects as of the time at which such was made or any future
time in each if the Company failed to cure such breach within
ten (10) days after written notice thereof by the Purchaser.
(c) the Company (i) upon the failure of the Purchaser to perform
or comply in all material respects with any of its respective
covenants or agreements contained herein prior to or (ii) at
the Closing or if any representation or warranty of the
Purchaser shall not have been true and correct in all
material respects as of the time at which such was made or
any future time in each if the Purchaser failed to cure such
breach within ten (10) days after written notice thereof by
the Company.
(d) either the Company or the Purchaser if the Closing does not
occur one hundred and twenty (120) days after execution;
provided, however, that no Party may terminate this Agreement
pursuant to subsection (d) above if such party is, at the
time of any such attempted termination, in breach of any term
or provision hereof.
Section 8.03 Fees and Expenses. All fees and expenses incurred by each Party
in connection with the pursuit of the Transaction contemplated
hereunder, including the preparation, negotiation and execution
of the Transaction Documents and all documents ancillary thereto
("Transaction Fees") shall be borne solely and entirely by the
Company. Transaction Fees shall include all fees and expenses of
21
each such Party's legal counsel, accountants and all other
third-party consultants and advisors engaged by each such Party
to assist with the Transaction Documents and the Transaction
contemplated hereunder and thereunder and all direct out of
pocket expenses for travel and similar matters.
Section 8.04 Legends.
(a) In addition to any other legend that may be required by this
Agreement or applicable law, each certificate representing
the Securities, unless such Securities have been registered
under the Securities Act or may be sold in accordance with
the provisions of Rule 144(k) thereunder, shall be stamped or
otherwise imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"). THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS (A) REGISTERED UNDER THE ACT
OR (B) AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE (AND, IN SUCH CASE, AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO PalWeb
CORPORATION (THE "COMPANY"), SHALL HAVE BEEN DELIVERED TO
THE COMPANY TO THE EFFECT THAT THE OFFER, SALE, TRANSFER
OR OTHER DISPOSITION THEREOF IS EXEMPT FROM REGISTRATION
UNDER THE ACT).
Section 8.05 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered by hand, by
telex or telecopier, or by certified or registered mail, postage
prepaid and return receipt requested. Notices shall be deemed to
have been given upon delivery, if delivered by hand, three days
after mailing, if mailed, one business day after delivery to the
courier, if delivered by overnight courier service, and upon
receipt of an appropriate electronic confirmation, if by telex
or telecopier. Notices shall be delivered to the Company and the
Purchaser at the addresses set forth below:
If to the Company:
PalWeb Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
22
CC:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
If to the Purchaser:
Westgate Investments, L.P.
c/o: Hall, Estill, Hardwick, Gable, Golden
& ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
Any Party may from time to time change its address or designee
for notification purposes by giving the other Parties prior
notice in the manner specified above of the new address or the
new designee and the subsequent date upon which the change shall
be effective.
Section 8.06 Amendment; Waivers. This Agreement may be amended only by a
written instrument duly executed and delivered on behalf of each
of the Company and the Purchasers holding a majority of the
outstanding Convertible Preferred Stock. Compliance with any
term or provision hereof may be waived only by a written
instrument executed by each of the Company and the Purchaser. No
failure to exercise any right, power or privilege granted
hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege granted hereunder.
Section 8.07 Parties in Interest; Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their
respective successors, assigns and legal representatives.
Neither this Agreement nor any rights or obligations hereunder
may be assigned by any Party without the prior written consent
of the other Parties. Such consent shall be not unreasonably
withheld.
Section 8.08 No Third-Party Beneficiaries. Nothing in this Agreement is
intended or shall be construed to give any person, other than
the Parties hereto, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision
contained herein.
23
Section 8.09 Exhibits and Schedules. The Exhibits and Schedules to this
Agreement are a part of this Agreement as if fully set forth
herein. All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
Section 8.10 Severability. In the event that any one or more of the terms or
provisions contained in the Transaction Documents or in any
other agreement, instrument or document referred to herein shall
be held to be invalid, illegal or unenforceable for any reason,
the validity, legality or enforceability of all other terms and
provisions of the Transaction Documents or any other such
agreement, instrument or other documents referred to herein
shall not be affected.
Section 8.11 Headings. The Article and Section headings in this Agreement are
for convenience of reference only, do not constitute a part of
this Agreement and shall not limit, extend or otherwise affect
the meaning or interpretation of the terms and provisions of
this Agreement.
Section 8.12 Rules of Construction.
(a) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall
each include the singular number and the plural number.
(b) All references herein to dollar amounts are in United States
dollars.
(c) The terms "herein," "hereunder," "hereto" and similar terms
refer to this Agreement generally and not to any one Article
or Section of this Agreement.
Section 8.13 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto which are incorporated by reference herein, and
the other Transaction Documents and other documents referred to
therein, constitute the entire agreement and understanding
between the Parties with respect to the Transaction contemplated
hereby and thereby and cancel, merge and supersede all prior
oral or written agreements, representations and warranties,
arrangements and understandings relating to the subject matter
hereof and thereof.
Section 8.14 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF OKLAHOMA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAWS OF ANOTHER JURISDICTION. The venue of any legal action or
claim arising herefrom shall be Tulsa, Oklahoma.
Section 8.15 Specific Performance. The Parties hereto agree that irreparable
damage would occur in the event that any of the Transaction
Documents were not performed in accordance with the terms
thereof. Accordingly, the Parties agree that each of them shall
be entitled to injunctive relief to prevent breaches of the
terms and provisions of the Transaction Documents and to obtain
specific performance of such terms, in addition to any other
remedy now or hereafter available at law or in equity or
otherwise.
24
Section 8.16 Counterparts. This Agreement may be executed by the Parties in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
shall together constitute one and the same instrument.
[SIGNATURE PAGE - NEXT PAGE]
25
IN WITNESS WHEREOF, the parties set forth below have caused this
Securities Purchase Agreement to be duly executed as of the date first above
written.
THE COMPANY:
PALWEB CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
THE PURCHASER:
WESTGATE INVESTMENTS, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
General Partner: Westgate Capital
Company, L.L.C.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Manager
▇▇▇▇▇▇▇ TRADING COMPANY, LC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Manager
ONWARD, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Manager
26
EXHIBIT A
PURCHASE AND SALE OF SECURITIES
PURCHASER PURCHASE PRICE SECURITIES TO BE PURCHASED
--------- -------------- --------------------------
FROM THE COMPANY
----------------
Westgate Investments, L.P. $5,214,297 521,430 Shares of Convertible
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ of debt conversion, Preferred Stock Warrants for
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ principal only 156,429,000 Shares of Common Stock
▇▇▇▇▇▇▇ Trading Company, LC $950,200 of debt conversion, 95,020 Shares of Convertible
principal only Preferred Stock Warrants for
28,506,000 Shares of Common Stock
Onward, LLC $276,082 of debt 27,608 Shares of Convertible
conversion, principal only Preferred Stock Warrants for
8,282,460 shares of Common Stock
Onward, LLC $536,745 equity in Building based on 53,674 Shares of Convertible
$1,350,000 agreed value less Preferred Stock Warrants for
$813,255.18 in indebtedness 16,102,200 shares of Common Stock
($808,393.18 in principal and $4,862 for each $10 in Purchase Price
in accrued interest) owed to Texas
Capital Bank
------------------------------------------------------------------------------------------------------------
TOTALS $6,977,324 consisting of 697,732 Shares of Convertible
$6,440,579 of debt Preferred Stock Warrants for
conversion and $536,745 209,319,660 Shares of Common Stock
of Building equity
i
