Exhibit 4(u)
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
September 30, 1997, by and between MEDCROSS, INC., a Florida corporation (the
"Company"), and WINTER HARBOR, L.L.C., a Delaware limited liability company (the
"Investor").
WITNESSETH:
WHEREAS, subject to the terms and conditions set forth herein, the
Company desires to issue and sell to the Investor, and the Investor desires to
purchase from the Company, 4,400 shares (as such number may be adjusted as
provided herein) of the Company's Series M Participating Convertible Preferred
Stock (the "Series M Preferred"), par value $10.00 per share, and warrants to
purchase up to 10,000,000 shares (as such number may be adjusted as provided
herein) of the Company's common stock, par value $.007 per share (the "Common
Stock"), for an aggregate purchase price of $12,100,000;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
Section 1.1 Conversion of Notes; Purchase and Sale of Shares of Series
M Preferred Stock and Warrants.
(a) Subject to the terms and conditions set forth herein, on
the Closing Date (as that term is defined in Section 1.2), the Company shall
issue and sell to the Investor, and the Investor shall purchase from the
Company, (i) that number of shares of Series M Preferred (the "Acquired Shares")
equal to the excess of 4,400 over the number of Converted Shares issued pursuant
to Section 1.1(b), having the rights, privileges and preferences set forth in
the Articles of Amendment attached hereto as Exhibit A (the "Series M
Amendment"), and (ii) warrants to purchase (A) 2,500,000 shares (as such number
may be adjusted as provided herein) of Common Stock at an exercise price of
$2.75 per share (as such price per share may be adjusted as provided herein)
(the "Series A Warrants"), (B) 2,500,000 shares (as such number may be adjusted
as provided herein) of Common Stock at an exercise price
of $4.00 per share (as such price per share may be adjusted as provided herein)
(the "Series B Warrants"), and (C) 5,000,000 shares (as such number may be
adjusted as provided herein) of the Common Stock at an exercise price of $4.69
per share (as such price per share may be adjusted as provided herein) (the
"Series C Warrants" and together with the Series A Warrants and the Series B
Warrants, collectively, the "Warrants"), which Warrants shall be subject to the
terms and conditions set forth in a Warrant Agreement in substantially the form
attached hereto as Exhibit F (the "Warrant Agreement"). The purchase price to be
paid by Investor for the Acquired Shares and the Warrants shall equal the excess
of (i) $12,100,000 over (ii) the outstanding principal balance and all unpaid
interest accrued thereon as of the Closing Date under those certain promissory
notes executed by the Company in favor of the Investor and dated June 6, 1997,
and August 18, 1997 (the "Notes"). The aggregate purchase price for the Acquired
Shares and the Warrants shall be allocated (i) 80% to the Purchased Shares, (ii)
7% to the Series A Warrants, (iii) 5% to the Series B Warrants, and (iv) 8% to
the Series C Warrants.
(b) Subject to the terms and conditions set forth herein, on
the Closing Date, the outstanding principal balance and all unpaid interest
accrued as of the Closing Date under the Notes (together, the "Note Amount")
shall be converted into shares (the "Converted Shares", and together with the
Acquired Shares, the "Purchased Shares") of Series M Preferred. The number of
Converted Shares shall equal (i) the product of (A) 12,100,000, and (B) a
fraction, the numerator of which is the Note Amount, and the denominator of
which is the sum of the Note Amount and the purchase price allocable to the
Acquired Shares, divided by (ii) 2,750. Upon issuance of the Converted Shares,
the Notes shall be surrendered by the Investor and cancelled by the Company.
(c) The parties agree that the number of Purchased Shares and
Warrants (together, the "Securities") to be issued by the Company to the
Investor on the Closing Date, and the exercise price of the Warrants, shall be
equitably adjusted, subject to the agreement of each party, to reflect any
spin-off, split-up, reclassification, combination of shares, recapitalization or
similar corporate reorganization, or any consolidation or merger under which the
surviving entity is or becomes the "Company" as defined in this Agreement, in
any such case which occurs between the effective date of this Agreement and the
Closing Date.
Section 1.2 Closing.
(a) Subject to the satisfaction or, to the extent permissible
by law, waiver by the parties hereto on the Closing Date of the conditions
described in Article 4 of this Agreement, and to the provisions of Article 5
hereof, the closing of the
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issuance and sale of the Securities (the "Closing") shall occur on such date as
the Company and the Investor may mutually agree in writing, or on a date
selected by the Company, by written notice to the Investor, on which the Company
has determined that the condition precedent to the obligations of the Investor
to consummate the Closing set forth in Section 4.1(j) is reasonably likely to be
satisfied, which date so selected shall not, in any event, be earlier than three
business days after the date of such notice; provided, however, that, if such
condition precedent is not actually satisfied or waived in writing by such date,
then either the Company or the Investor may elect, by written notice to the
other party, to postpone the date of the Closing, in which event the date of the
Closing shall be a subsequent date, as shall be designated by the Company by
written notice to the Investor, which is at least five business days after the
date on which the Company gives the Investor written notice of the actual
satisfaction (or, if applicable, the prior waiver in writing by the Investor) of
the condition precedent set forth in said Section 4.1(j) (such date on which the
Closing takes place being the "Closing Date"). The Closing shall take place at
the offices of Dow, Xxxxxx & Xxxxxxxxx, PLLC, 1200 New Hampshire Avenue, N.W.,
Suite 800, Washington, D.C., or at such other place as the Company and the
Investor may mutually agree upon in writing.
(b) At the Closing, the Company shall deliver to the Investor
certificates representing the Purchased Shares and the Warrants and the Warrant
Agreement against payment of the Purchase Price by certified check payable to
the Company or by wire transfer of immediately available federal funds to such
account as the Company may designate in writing to the Investor and by
cancellation of the Notes, as provided in Section 1.1(c).
Section 1.3 Proxy Statement; Special Shareholders Meeting to
Approve Amendment to Articles of Incorporation. The Company has prepared and
filed with the Securities and Exchange Commission (the "SEC") proxy statement
materials for the purpose of soliciting proxies from the holders of the
Company's Common Stock in order to approve, at a meeting of the Company's
shareholders (which meeting, in any event shall be scheduled to occur not later
than thirty days after the date hereof), (i) the adoption of an amendment to the
Company's Articles of Incorporation in the form attached hereto as Exhibit B
(the "Authorized Shares Amendment" and, together with the Series M Amendment,
collectively the "Amendments"), which is necessary in order, among other things,
to permit the issuance of shares of Common Stock upon conversion of shares of
Series M Preferred, and (ii) to approve all actions or agreements to consummate
the transactions contemplated herein. The Company shall use its commercially
reasonable efforts to obtain the approval of its shareholders to the adoption of
the Authorized Shares Amendment and the approval of the other matters described
in this Section
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1.3. The Company shall promptly file with the Secretary of State of the State of
Florida the Amendments in the forms attached hereto as Exhibits A and B.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to, and covenants with, the
Investor as follows:
Section 2.1 Organization, Qualifications and Corporate Power.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Florida, and it has
the requisite corporate power and authority to own and hold its properties and
to carry on its business as conducted or presently proposed to be conducted. The
Company has requisite corporate power and authority to execute, deliver and
perform this Agreement and to sell, issue and deliver to the Investor the
Securities, and the Company has, or will have within thirty days of the date
hereof, requisite corporate power and authority to issue and deliver to the
Investor the shares of Common Stock issuable upon conversion of the Series M
Preferred or exercise of the Warrants (collectively, the "Underlying Shares").
The Company is duly qualified to conduct business as a foreign corporation in
good standing under the laws of the State of Utah and each other jurisdiction
where the failure to so qualify could have a material adverse effect on the
financial condition, results of operations, properties, assets, prospects or
business of the Company or any of its subsidiaries (a "Material Adverse
Effect"). The Company has delivered to the Investor complete and correct copies
of the Company's Articles of Incorporation (including all amendments thereto)
and Bylaws, in each case in effect as of the date hereof (the "Company Existing
Articles" and "Company Existing Bylaws," respectively).
(b) The Company does not own, directly or indirectly, any
shares of capital stock, partnership interests or other participation rights or
other interests in the nature of an equity interest in any corporation,
partnership, company, trust or other entity, or any option, warrant or other
security convertible into or exchangeable for any of the foregoing, other than
(a) the shares of capital stock of I-Link Systems, Inc., a Utah corporation
("I-Link Systems"), (b) the shares of capital stock of I-Link Communications,
Inc. (formerly known as "Family Telecommunications, Inc."), a Utah corporation
("I-Link Communications"), (c) the shares of capital stock of MiBridge, Inc., a
Utah corporation ("MiBridge"), and (d) the membership interests of I-Link
Worldwide,
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L.L.C., a Delaware limited liability company ("Worldwide"). Each of I-Link
Systems, I-Link Communications and MiBridge is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Utah, and
Worldwide is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of I-Link Systems,
I-Link Communications, MiBridge and Worldwide has the requisite corporate or
limited liability company (as appropriate) power and authority to own and hold
its properties and to carry on its business as conducted or presently proposed
to be conducted. Each of I-Link Systems, I-Link Communications, MiBridge and
Worldwide is duly qualified to conduct business as a foreign corporation or
limited liability company (as appropriate) in good standing under the laws of
each jurisdiction where the failure to so qualify could have a Material Adverse
Effect. The Company has delivered to the Investor complete and correct copies of
the Articles of Incorporation (including all amendments thereto), Bylaws and
operating agreement (as appropriate) of each of I-Link Systems, I-Link
Communications, MiBridge and Worldwide, in each case in effect as of the date
hereof (the "Subsidiary Existing Articles", "Subsidiary Existing Bylaws" and
"Subsidiary Operating Agreement", respectively; the Existing Articles and
Existing Bylaws are sometimes referred to herein, together with the Company
Existing Articles and the Company Existing Bylaws, as the "Existing Articles"
and the "Existing Bylaws", respectively).
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Section 2.2 Authorization of Agreements.
(a) (i) Except as set forth in Schedule 2.2, each of the
execution, delivery and performance by the Company of this Agreement, the
Warrant Agreement, the Shareholders Agreement (as that term is defined in
Section 4.1(f)) and the Registration Rights Agreement (as that term is defined
in Section 4.1(e)) and the other agreements, documents and instruments to be
entered into pursuant hereto (collectively, the "Transaction Documents") and the
issuance, sale and delivery of the Securities and the Underlying Shares to the
Investor have been, or, prior to the Closing Date, will have been (in the case
only of approval or consent of the Company's shareholders), duly authorized by
all requisite corporate action of the Company, including, but not limited to,
the requisite action by the Board of Directors of the Company and the requisite
approval or consent of the Company's shareholders, and (ii) will not (with due
notice or lapse of time or both) violate, be in conflict with or constitute a
default under any provision of law, rule or regulation, any order of any court
or other governmental agency, the Articles of Incorporation or Bylaws of the
Company, or any provision of any indenture, mortgage, note, deed of trust,
agreement or other instrument to which the Company, any of its subsidiaries or
any of their respective properties or assets is bound, or conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, mortgage, note, deed of trust, agreement or
other instrument, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company or any of its subsidiaries.
(b) The Securities have been duly authorized and, when issued
in accordance with this Agreement, shall be validly issued, fully paid and
non-assessable, with the rights, powers and privileges as set forth herein, in
the Articles of Incorporation, as amended, and in the Warrant Agreement, and
will be free and clear of all liens, charges, restrictions, claims and
encumbrances other than restrictions on transfer under applicable state and
federal securities laws. The Underlying Shares issuable upon conversion of the
Purchased Shares and upon exercise of the Warrants have been, or, within thirty
days of the date hereof, will have been, duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Company's Articles of
Incorporation, as amended, and the Warrant Agreement, will be duly and validly
issued, fully paid and non-assessable, and will be free of restrictions on
transfer other than restrictions on transfer under applicable state and federal
securities laws. The issuance, sale and delivery of the Securities and the
Underlying Shares are not subject to any preemptive right of any shareholder of
the Company or to any right of first refusal or other right in favor of any
person.
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Section 2.3 Validity. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms, subject to the effect
of bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and except as the availability of
equitable remedies may be limited by general principles of equity. The other
Transaction Documents, when executed in accordance with the terms of this
Agreement, will be duly executed and delivered by the Company and will
constitute the legal, valid and binding obligation of the Company, enforceable
in accordance with their respective terms, subject to the effect of bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and except as the availability of equitable remedies
may be limited by general principles of equity.
Section 2.4 Capital Stock.
(a) The authorized capital stock of the Company consists of
(i) 20,000,000 shares of Common Stock, of which 11,627,597 shares were issued
and outstanding as of August 8, 1997, and (ii) 500,000 shares of Preferred
Stock, of which (A) 7,500 shares are designated as 12% Cumulative Convertible
Preferred Stock (of which no shares are outstanding), (B) 200,000 shares are
designated Class A Variable Rate Cumulative Convertible Preferred Stock (of
which no shares are outstanding), (C) 22,500 shares are designated Class B
Variable Rate Cumulative Convertible Preferred Stock (of which 7,500 shares are
outstanding), (D) 240,000 shares are designated as Class C Convertible
Cumulative Redeemable Preferred Stock (of which all 240,000 shares were
outstanding as of September 6, 1997), (E) 1,000 shares are designated as Series
D Convertible Preferred Stock (of which all 1,000 shares are outstanding) and
(F) 29,000 shares are designated as Series M Participating Convertible Preferred
Stock. All of the issued and outstanding shares of capital stock of the Company
have been validly issued, are fully paid and non-assessable and have been issued
pursuant to applicable exemptions from registration or qualification under
applicable federal and state securities laws and regulations.
(b) All of the issued and outstanding capital stock of each of
I-Link Systems, I-Link Communications and MiBridge is owned beneficially and of
record by the Company. All of the issued and outstanding membership interests of
Worldwide are owned beneficially and of record by the Company. All of the issued
and outstanding shares of capital stock of each of I-Link Systems, I-Link
Communications and MiBridge and all of the issued and outstanding membership
interests of Worldwide have been validly issued, are fully paid and
non-assessable and have been issued pursuant to applicable exemptions from
registration or
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qualification under applicable federal and state securities laws and
regulations.
(c) Except for the warrants and options listed on Schedule 2.4
attached hereto, no subscriptions, warrants, options, convertible debt,
participation rights or securities, or any commitments, agreements or rights of
any kind with respect to securities of the Company are outstanding as of the
date hereof or shall be outstanding as of the Closing Date. There are no
subscriptions, warrants, options, convertible debt, participation rights or
securities, or any commitments, agreements or rights of any kind with respect to
securities of any of I-Link Systems, I-Link Communications, MiBridge or
Worldwide outstanding.
Section 2.5 Litigation; Claims; Investigations. There is no action,
suit, proceeding or investigation pending or threatened against the Company or
any of its subsidiaries and there are no suits, actions or claims, or any
investigations or inquiries by any administrative agency or governmental body,
or legal, administrative or arbitration proceedings pending against or
threatened against the Company or any of its subsidiaries or affecting any of
the Company's or any of its subsidiaries' properties, rights, assets or
business, or to which the Company or any of its subsidiaries is a party or, in
the case of threatened proceedings, is reasonably likely to become a party. The
foregoing includes, without limitation, any action, suit, proceeding or
investigation pending or currently threatened involving the prior employment of
any of the Company's or any of its subsidiaries' employees, their use in
connection with the Company's or such subsidiary's business of any information
or techniques allegedly proprietary to any of their former employers, their
obligations under any agreements with prior employers, or negotiations by the
Company or any of its subsidiaries with potential backers of, or investors in,
the Company or its proposed business. There is no outstanding order, writ,
judgment, injunction or decree of any court, administrative agency, governmental
body or arbitration tribunal against or affecting the Company, any of its
subsidiaries or any of the properties, rights, assets or business of the Company
or any of its subsidiaries.
Section 2.6 Compliance. Neither the Company nor any of I-Link Systems,
I-Link Communications, MiBridge or Worldwide is in violation of or default under
any provision of its Articles of Incorporation or Bylaws or Subsidiary Operating
Agreement. Except as set forth on Schedule 2.6 attached hereto, neither the
Company nor any of its subsidiaries is in material violation of or default under
(i) any provision of any instrument, mortgage, deed of trust, loan, contract,
commitment, judgment, decree, order or obligation to which it is a party or by
which it or any of its properties or
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assets are bound or (ii) any provision of any federal, state or local law,
statute, rule, order or governmental regulation.
Section 2.7 Brokers. The Company does not have any contract,
arrangement or understanding with any broker, finder, investment or commercial
banker or similar agent with respect to the transactions contemplated by this
Agreement.
Section 2.8 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal or state governmental authority on the part of the
Company or any of its subsidiaries is required in connection with the offer,
sale or issuance of the Securities and the Underlying Shares, except for the
filing of the Amendments in the office of the Secretary of State of the State of
Florida, which shall be filed by the Company on or prior to the Closing.
Section 2.9 Employee Matters. Except as described on Schedule 2.9
attached hereto, neither the Company nor any of its subsidiaries is a party to
or bound by any employment contract, deferred compensation agreement, bonus
plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation or benefit agreement or arrangement, including without
limitation any multiemployer plan, and neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or any
arrangement with any collective bargaining agent. No employees of the Company or
any of its subsidiaries are represented by any labor union or covered by any
collective bargaining agreement. There is no pending or, to the Company's
knowledge, threatened labor disagreement involving the Company or any of its
subsidiaries and any group of their employees.
Section 2.10 Offerees; Regulation D. Neither the Company, nor any of
its subsidiaries nor any of their respective directors, officers, affiliates or
any person or entity acting as agent for or on behalf of any of the foregoing,
directly or indirectly, has sold, offered for sale, or solicited offers to
purchase any of the Securities or other securities of the Company by means of
any general advertising or general solicitation so as to bring the offer,
issuance or sale of the Securities or the Underlying Shares contemplated by this
Agreement within the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or within the registration or qualification
requirements of any "blue sky" or securities laws of any state or other
jurisdiction. Assuming the accuracy of the representations and warranties of the
Investor set forth in Article 3 of this Agreement, the offer, sale and issuance
of the Securities and the Underlying Shares to the Investor in conformity with
the terms of this Agreement are exempt
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from the registration requirements of Section 5 of the Securities Act.
Section 2.11 Registration Rights. Except as provided in the
Registration Rights Agreement in the form attached hereto as Exhibit C (the
"Registration Rights Agreement"), which is to be executed and delivered by the
parties at the Closing, and except as set forth on Schedule 2.11 attached
hereto, the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.
Section 2.12 Financial Statements. Attached hereto as Schedule 2.12 are
complete and correct copies of (i) audited consolidated financial statements of
the Company containing a balance sheet and a statement of income as at and for
the Company's fiscal year ending December 31, 1996 and (ii) an unaudited balance
sheet and statement of income of the Company as at and for the six-month period
ended June 30, 1997 (the items referred to in clauses (i) and (ii),
collectively, the "Financial Statements"). The Financial Statements have been
prepared from the books and records of the Company, have been prepared in
accordance with generally accepted accounting principles consistently applied
and maintained throughout the periods indicated, accurately reflect the books,
records and accounts of the Company, are complete and correct in all material
respects, and present fairly the financial condition of the Company and its
subsidiaries on a consolidated basis as at the respective dates and the results
of their operations for the periods then ended. None of the Financial Statements
understates the true costs and expenses of conducting the business or operations
of the Company and its subsidiaries, fails to disclose any material contingent
liabilities or inflates the revenues of the Company and its subsidiaries.
Section 2.13 Events Subsequent to the Date of the Financial Statements.
Except as set forth on Schedule 2.13 attached hereto, since the latest date of
the Financial Statements, neither the Company nor any of its subsidiaries has
(i) issued any stock, bond or other corporate security, (ii) borrowed any amount
or incurred or become subject to any liability (absolute, accrued or
contingent), except current liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary course of
business, (iii) discharged or satisfied any lien or encumbrances or incurred or
paid any obligation or liability (absolute, accrued or contingent) other than
current liabilities shown in the latest Financial Statements and current
liabilities incurred since the date of such Financial Statements in the ordinary
course of business, (iv) declared or made any payment or distribution to
shareholders or purchased or redeemed any share of its capital stock or other
security, (v) mortgaged, pledged or subjected to lien any of its assets,
tangible or intangible, (vi)
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sold, assigned or transferred any of its assets except in the ordinary course of
business, or cancelled any debt or claim, (vii) sold, assigned, transferred or
granted any license with respect to any patent, trademark, trade name, service
xxxx, copyright, trade secret or other intangible asset, (viii) suffered any
material loss of property or waived any right of substantial value whether or
not in the ordinary course of business, (ix) made any change in officer
compensation except in the ordinary course of business and consistent with past
practice, (x) made any material change in the manner of business or operations,
(xi) accelerated the payment terms of any note or account receivable or delayed
payment of any account payable or other liability beyond its due date, (xii)
instituted, amended or terminated any employee benefit plan, contract or written
agreement, (xiii) made any material change in the accounting policies applied in
the preparation of the Financial Statements, (xiv) entered into any material
transaction except in the ordinary course of business or as otherwise
contemplated hereby or (xv) entered into any commitment (contingent or
otherwise) to do any of the foregoing.
Section 2.14 Intellectual Property. Set forth on Schedule 2.14 attached
hereto is a list of all patents, pending patent applications, trademarks,
service marks, trade names, copyrights, licenses, computer codes or computer
software, proprietary rights, proprietary processes and other intellectual
property rights (collectively "Intellectual Property") owned by, or licensed to,
the Company or any of its subsidiaries, with an indication as to which of such
items are owned by the Company or any of its subsidiaries and which are licensed
to the Company or its subsidiaries. The Company's and its subsidiaries' legal
rights to such Intellectual Property is sufficient for their respective
businesses as now conducted and as presently proposed to be conducted. Except as
set forth on Schedule 2.14 attached hereto, neither the Company nor any of its
subsidiaries is infringing upon, or in conflict with, the right or claimed right
of any third party with respect to any of the Intellectual Property. Except for
the license agreements set forth in Schedule 2.14, neither the Company nor any
of its subsidiaries has licensed any of the listed Intellectual Property to any
other person or entity, nor does any other person or entity have any option or
other right to acquire any of the Intellectual Property which is owned by the
Company or any of its subsidiaries. Except as set forth on Schedule 2.14,
neither the Company nor any of its subsidiaries has received any communications
alleging that the Company or such subsidiary has violated or, by conducting its
business as proposed, would violate any patent, trademark, service xxxx, trade
name, copyright or trade secret or other proprietary right of any other person
or entity. The Company is not aware that any of its or its subsidiaries'
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or
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subject to any judgment, decree or order of any court or administrative agency,
that would interfere with the use of such employee's best efforts to promote the
interests of the Company or such subsidiary or that would conflict with the
Company's or such subsidiary's business as proposed to be conducted. Neither the
execution and delivery of this Agreement, nor the carrying on of the Company's
or any of its subsidiary's business by their respective employees, nor the
conduct of such business as presently proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. Except as set
forth on Schedule 2.14, the Company does not believe it is or will be necessary
to utilize any inventions of any of its or its subsidiaries' employees (or
people it currently intends to hire) made prior to their employment by the
Company or any subsidiary.
Section 2.15 Material Contracts. Schedule 2.15 lists each contract
relating to the Company or any of its subsidiaries that (a) represents a
contract upon which the Company or such subsidiary is substantially dependent or
which is otherwise material to the Company or such subsidiary, (b) provides for
borrowings or similar extensions of credit, (c) limits or restricts the ability
of the Company or such subsidiary to compete or otherwise to operate in any
manner or place, (d) provides for a guaranty or indemnity (other than customary
indemnities for infringement of Intellectual Property rights), (e) grants a
power of attorney, agency or similar authority to another person or entity, (f)
contains a right of first refusal with respect to the sale or acquisition of the
capital stock or assets of the Company or any of its subsidiaries, (g) contains
a right or obligation (other than in the ordinary course of business) of any
officer or director of the Company or any of its subsidiaries, or any of their
respective affiliates or associates, (h) is an employment or consulting
agreement to which the Company or any of its subsidiaries is a party, or (i) was
not made in the ordinary course of business (collectively, "Material
Contracts"). True copies of each Material Contract, including all amendments and
supplements thereto, have been made available to the Investor. Except as set
forth on Schedule 2.15, each Material Contract is valid and subsisting and no
breach or default, alleged breach or default, or event which would (with the
passage of time, notice or both) constitute a breach or default thereunder on
the part of the Company or any of its subsidiaries, or, to the knowledge of the
Company, on the part of any other party thereto, has occurred.
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Section 2.16 Title to and Sufficiency of Assets.
(a) Subject only to the encumbrances set forth in Schedule
2.16, the Company and each of its subsidiaries have good and marketable title
to, or ownership of, all of their respective assets. Such title or ownership is
sufficient for the Company and its subsidiaries to conduct their respective
businesses as currently conducted.
(b) The assets of the Company and its subsidiaries include all
properties (whether real or personal, tangible or intangible), Material
Contracts, licenses, permits, franchises and authorizations necessary for the
Company and its subsidiaries to continue to conduct their respective businesses
as currently conducted. All material tangible assets are in a reasonable state
of maintenance and repair (except for ordinary wear and tear) and are adequate
for the uses to which they are put. All assets constituting leasehold interests
are held under valid, binding and enforceable leases, subject only to the effect
of bankruptcy, insolvency or other similar laws affecting the enforcement rights
of creditors generally and such exceptions as are not, individually or in the
aggregate, material to the Company or any of its subsidiaries. There is no
pending or, to the knowledge of the Company, threatened action that would
materially interfere with the quiet enjoyment of any such leasehold by the
Company or any of its subsidiaries.
Section 2.17 Minute Books. Except as provided in Schedule 2.17 attached
hereto, the minute books of the Company and its subsidiaries (complete and
correct copies of which have been made available to the Investor) accurately
reflect all actions and proceedings taken to date by the shareholders, boards of
directors and committees of the Company and its subsidiaries, and such minute
books contain correct and complete copies of the charter documents of the
Company, its subsidiaries and all related amendments. The stock record books of
the Company and its subsidiaries (complete and correct copies of which have been
made available to the Investor) reflect accurately all transactions in their
respective capital stock of all classes.
Section 2.18 Insurance. Schedule 2.18 lists all insurance policies and
bonds that are material to the Company and its subsidiaries. All such insurance
policies and bonds are in full force and effect and, to the knowledge of the
Company, no defaults exist under any of them. In the past three years neither
the Company nor any of its subsidiaries has been refused insurance for which it
applied or had any policy of insurance terminated (except at its request).
-13-
Schedule 2.19 Licenses, Permits and Authorizations. Schedule 2.19 attached
hereto is a list of all licenses, permits, franchises and authorizations issued
by a governmental entity to the Company or any of its subsidiaries and which are
required or necessary in connection with the operation of the Company's or such
subsidiary's business (the "Licenses"). All such Licenses are valid and are in
full force and effect, and no suspension, cancellation or termination of any of
the Licenses is pending or, to the knowledge of the Company, threatened.
Section 2.20 Environmental Laws. The Company, its subsidiaries, the
operation of their respective businesses and any real property that they own,
lease or otherwise occupy or use are in compliance in all material respects with
all applicable Environmental Laws and orders or directives of any governmental
authorities having jurisdiction under such Environmental Laws. Neither the
Company nor any of its subsidiaries has received any citation, directive or
notice of any proceedings, claims or other actions from any governmental
authority arising out of the ownership or occupation of its properties or
premises or the conduct of its respective operations, nor is it aware of any
basis therefor. No material expenditure on behalf of the Company or any of its
subsidiaries will be required in order to comply with any Environmental Law. As
used herein, "Environmental Laws" means any federal, state, municipal, local or
foreign law, statute, ordinance, code, rule or regulation pertaining to land
use, air, soil, surface water, groundwater (including protection, cleanup,
removal, remediation or damage thereof), public or employee health or safety or
any other environmental matter, including, without limitation, the following
laws as the same may be amended from time to time: (i) Clean Air Act (42 U.S.C.
(S) 7401, et seq.), (ii) Clean Water Act (33 U.S.C. (S) 1251, et seq.), (iii)
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901, et seq.), (iv)
Comprehensive Environmental Response Compensation Liability Act, as amended (42
U.S.C. (S) 9601, et seq.) ("CERCLA"), (v) Safe Drinking Water Act (42 U.S.C. (S)
300f, et seq.), (vi) Toxic Substance Control Act (15 U.S.C. (S) 2601, et seq.),
(vii) Rivers and Harbors Act (33 U.S.C. (S) 401, et seq.), (viii) Endangered
Species Act (16 U.S.C. (S) 1531, et seq.), and (ix) Occupational Safety and
Health Act (29 U.S.C. (S) 651, et seq.), together with any other applicable
federal, state or local laws relating to emissions, discharges, releases or
threatened releases of any Hazardous Substance (as defined herein) into ambient
air, land, surface water, ground water, personal property or structures, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, discharge or handling of any Hazardous Substance.
As used herein, "Hazardous Substances" means any pollutant, contaminant,
hazardous or toxic substance, material, constituent or waste or any pollutant
that is labeled or regulated
-14-
as such terms are defined in any Environmental Law or that is labeled or
regulated as such by (i) The United States of America, (ii) any state,
commonwealth, territory or possession of the United States of America and (iii)
any political subdivision thereof (including counties, municipalities and the
like) or any agency, authority or instrumentality of any of the foregoing,
including any court, tribunal, department, bureau, commission or board,
including, without limitation, asbestos and asbestos-containing materials and
any material or substance that is: (i) designated as a "hazardous substance"
pursuant to Section 307 of the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251, et seq. (33 U.S.C. (S) 1317), (ii) defined as a "hazardous waste"
pursuant to Section 1004 of the Federal Solid Waste Disposal Act, 42 U.S.C.
Section 6901, et seq. (42 U.S.C. (S) 6903), (iii) defined as a "hazardous
substance" pursuant to Section 101 of CERCLA or (iv) is so designated or defined
under any other applicable Environmental Law.
Section 2.21 Taxes. The Company and its subsidiaries have accurately
prepared and filed all federal, state, local and foreign tax returns required to
be filed by them. All taxes shown to be due and payable on such returns, any
assessment received, and all other taxes due and payable by the Company or any
of its subsidiaries have been paid or will be paid prior to the time they become
delinquent. The federal income tax returns of the Company and its subsidiaries
have never been audited by the Internal Revenue Service. Except as specified in
Schedule 2.21, no deficiency assessment or proposed adjustment of the Company's
or any of its subsidiaries' income taxes is pending by any federal, state, local
or foreign taxation authority, and the Company has no knowledge of any proposed
liability for any tax to be imposed upon its or any of its subsidiaries'
properties for which the Company has not established adequate reserves which are
reflected on the Financial Statements.
Section 2.22 Conflicts of Interest. Except as specified in Schedule 2.22,
no director, officer or any affiliate thereof (as such term is defined in Rule
405 under the Securities Act) of any such person or, to the best of the
Company's knowledge, any shareholder of the Company or its affiliates has any
direct or indirect interest (i) in any entity which does business with the
Company or any of its subsidiaries, or (ii) in any property, asset or right
which is used by the Company or any of its subsidiaries in the conduct of their
respective businesses, or (iii) in any contractual relationship with the Company
or any of its subsidiaries other than as an employee. For the purpose of this
Section 2.22, there shall be disregarded any interest which arises solely from
the ownership of less than a 1% equity interest in a corporation whose stock is
regularly traded on any national securities exchange or in the over-the-counter
market.
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Section 2.23 Retirement Plans. Except as set forth on Schedule 2.23
attached hereto, neither the Company nor any of its subsidiaries has any
retirement plans in which any of their employees participate that are subject to
any provisions of the Employee Retirement Income Security Act of 1974 and of the
regulations adopted pursuant thereto ("ERISA").
Section 2.24 Disclosure. No representation or warranty made by the Company
contained in this Agreement or in any other Transaction Document or in any
certificate or instrument furnished or to be furnished pursuant hereto contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material fact known to the Company required to make the statements
herein or therein contained not misleading. The Company is not aware of any
impending or contemplated event or occurrence that would cause any of the
foregoing representations not to be true and complete on the date of such event
or occurrence as if made on that date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company as follows:
Section 3.1 Unregistered Securities. The Investor understands that the
Securities are not, and the Underlying Shares may not be, registered under the
Securities Act or under the Florida Securities and Investor Protection Act (the
"Florida Securities Laws") on the ground that the offer and sale of securities
provided for in this Agreement are exempt from (i) the registration requirements
of the Securities Act pursuant to Section 4(2) of the Securities Act and
Regulation D promulgated thereunder, and (ii) the registration requirements of
the Florida Securities Law pursuant to Section 517.061 thereunder. The Investor
hereby acknowledges that the Company's reliance on such exemptions is based, in
part, on the Investor's representations set forth herein.
Section 3.2 Authorization. The Investor has the limited liability company
power and authority to enter into and perform this Agreement and to purchase the
Securities; and this Agreement has been duly authorized, executed and delivered
by the Investor and constitutes the legal, valid and binding obligation of the
Investor, enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and except
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as the availability of equitable remedies may be limited by general principles
of equity.
Section 3.3 No Conflict With Other Agreements. The execution, delivery and
performance by the Investor of this Agreement will not (with due notice or lapse
of time or both) violate any provision of law, rule or regulation, any order of
any court or other agency of government, its operating agreement or any
provision of any indenture, mortgage, note, deed of trust, agreement or other
instrument to which it is bound, or conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any such
indenture, mortgage, note, deed of trust, agreement or other instrument, if such
violation could have a material adverse effect upon its ability to perform its
obligations hereunder.
Section 3.4 Investment Knowledge. The Investor has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the risks and merits of its investment in the Company; and it is capable of
bearing the economic risks of such investment, including a complete loss of its
investment.
Section 3.5 Distribution. The Securities are being acquired for the
Investor's own account for the purpose of investment and not with a view to or
for resale in connection with any distribution or public offering thereof or
interest therein.
ARTICLE 4
CONDITIONS PRECEDENT TO CLOSING
Section 4.1 Conditions Precedent to the Closing. The obligation of the
Investor to purchase the Securities is subject to the satisfaction of, or the
waiver by, the Investor of the following conditions prior to or
contemporaneously with the Closing, unless otherwise indicated:
(a) The representations and warranties of the Company
contained in this Agreement and in each other Transaction Document shall be true
and correct at and as of the Closing Date with the same force and effect as if
given as of such date, and the Company shall have complied with the covenants,
agreements and obligations set forth in this Agreement and each other
Transaction Document required to be performed by it at or prior to the Closing;
-17-
(b) The President of the Company shall have delivered to the
Investor at the Closing a certificate stating that the conditions specified in
paragraph (a) above been fulfilled;
(c) There shall not be any order, decree, injunction or
judgment enjoining the consummation of this Agreement;
(d) The Company shall have delivered to the Investor the
certificates described in Section 1.2(b) hereof;
(e) The Company shall have entered into the Registration
Rights Agreement in the form attached hereto as Exhibit C (the "Registration
Rights Agreement");
(f) The Company and each of the other parties identified
therein as signatories shall have entered into the Shareholders Agreement in the
form attached hereto as Exhibit D (the Shareholders Agreement");
(g) The Company shall have entered into the Warrant Agreement
in the form attached hereto as Exhibit F;
(h) The Company shall have delivered to the Investor the
opinions of Hardy and Xxxxx, counsel for the Company, and of Rutledge, Ecenia,
Xxxxxxxxx, Xxxxxxx & Xxxxxxx, Florida counsel for the Company, in each case
dated as of the Closing Date, in the forms attached hereto as Exhibits E-1 and
E-2;
(i) The Company shall have delivered to the Investor a copy of
the Series M Amendment, certified by the Secretary of State of the State of
Florida;
(j) The Company shall have received, and shall have delivered
copies thereof to the Investor, all shareholder, regulatory, governmental, third
party and other consents, permits and waivers necessary to consummate the
transactions contemplated by this Agreement, and the Company shall have
received, and shall have delivered copies thereof to the Investor, agreements
from shareholders holding at least 51% of the outstanding shares of Common Stock
to vote all of their shares of Common Stock in favor of the Authorized Shares
Amendment;
(k) All corporate and other proceedings in connection with the
transactions contemplated hereby and all documents and instruments incident to
such transactions shall have been approved by the Investor, and the Investor
shall have received a certificate of the Secretary of the Company as to the
resolutions authorizing the transactions contemplated by this Agreement and such
other documents as are specified by the Investor;
-18-
(l) Complete and correct copies of each written employment
agreement which the Company or any of its subsidiaries has entered into with any
of their respective employees shall have been provided to the Investor and each
such agreement shall be acceptable to the Investor in form and substance;
(m) Between the date of this Agreement and the Closing Date,
there shall have been no Material Adverse Effect; and
(n) The Company shall have delivered or caused to be delivered
to the Investor such additional instruments, documents, opinions, consents and
certificates as the Investor may reasonably request.
Section 4.2 Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Securities to the Investor
pursuant to this Agreement is subject to the satisfaction of or the waiver by
the Company of the condition that contemporaneously with the Closing the
representations and warranties made by the Investor in this Agreement shall be
true and correct as of the Closing as if made at and as of the Closing Date, and
the Investor shall have complied in all respects with all agreements hereunder
required to be performed by it at or prior to such Closing. If requested by the
Company, the Investor shall have delivered to the Company at the Closing a
certificate to the effect that the foregoing conditions have been satisfied in
all respects.
ARTICLE 5
ADDITIONAL COVENANTS
Section 5.1 Conduct of Business Prior to Closing. During the period from
the date of this Agreement to the Closing, except as expressly permitted by this
Agreement or as otherwise approved in writing by the Investor, the Company will
not enter into any agreement or take any action that is in conflict with the
terms of this Agreement. During the period from the date of this Agreement to
the Closing, the Company shall notify the Investor of any action it desires to
take or any transaction it desires to enter into which, pursuant to the terms of
the Shareholders Agreement, would require the consent of the Investor, if the
Shareholders Agreement were then in effect, and during such period, the Company
will not take such action or enter into such transaction without the prior
written consent of the Investor.
Section 5.2 Access to Information. From the date hereof until the Closing,
upon reasonable notice, the Company shall, and shall cause each of its officers,
directors, employees, auditors and agents to, (i) afford the officers, employees
and authorized
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agents and representatives of the Investor reasonable access, during normal
business hours, to the offices, properties, books and records of the Company and
(ii) furnish to the officers, employees and authorized agents and
representatives of the Investor such additional financial and operating data and
other information regarding the assets, properties, goodwill and business of the
Company and its subsidiaries as the Investor may from time to time reasonably
request, including, without limitation, monthly financial statements and
operating reports for the Company and its subsidiaries prepared in a manner
consistent with such financial statements and operating reports as have been
previously furnished to the Investor, copies of which financial statements and
operating reports shall be delivered by the Company to the Investor each month
as soon as they become available.
Section 5.3 Further Action. Each of the parties hereto shall cooperate
fully with each other and their respective counsel and other representatives in
connection with any action required to be taken as part of their respective
obligations under this Agreement or as may otherwise be required to consummate
the transactions contemplated hereby. Each of the parties shall use reasonable
efforts to consummate the transactions contemplated hereby, and shall execute
and deliver such documents and other papers and take such further actions as may
be reasonably required, or as may be reasonably requested by the other party, in
any case whether before or after the Closing, to carry out the provisions hereof
and give effect to the transactions contemplated hereby. Neither of the parties
shall take any action that is inconsistent with its obligations under the
Agreement.
Section 5.4 Key Man Life Insurance. By no later than December 1, 1997, the
Company shall acquire key man life insurance policies on the lives of Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx and Xxxx Xxxxxx in such amounts as the Investor may deem
reasonable.
ARTICLE 6
CONVERSION OF PREFERRED SHARES AND EXERCISE OF WARRANTS
Section 6.1 Conversion of Preferred Shares. The Investor may, at its
option, at any time and from time to time, convert all or any portion of the
Purchased Shares into Common Stock at the rate and upon the terms and conditions
and subject to the adjustments set forth in the Series M Amendment.
Section 6.2 Exercise of Warrants. The Investor may, at its option, exercise
any Warrant, or any portion thereof, in exchange for Common Stock at the rate
and upon the terms and conditions set forth in the Warrant Agreement.
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Section 6.3 Underlying Shares Fully Paid; Reservation of Common Stock.
The Company covenants and agrees that all Underlying Shares shall be issued upon
the exercise of the conversion privilege referred to in Section 6.1 and the
right of exercise referred to in Section 6.2 and shall, upon issuance in
accordance with the terms of the Company's Articles of Incorporation, as
amended, and the Warrant Agreement, respectively, be fully paid and non-
assessable, and that the issuance thereof shall not give rise to any preemptive
rights on the part of any person. The Company further covenants and agrees that
the Company will at all times from and after a date no later than thirty days
after the Closing have authorized and reserved a sufficient number of shares of
its Common Stock for the purpose of issuing the Underlying Shares.
Section 6.4 Adjustment of Number of Shares. The number of shares of
Common Stock issuable upon conversion of Series M Preferred as well as the
number of shares of Common Stock issuable upon exercise of any Warrant (and the
exercise price payable in connection with such exercise) shall be subject to
adjustment from time to time as set forth in the Series M Amendment and in the
Warrant Agreement.
ARTICLE 7
TERMINATION
Section 7.1 Termination.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by the mutual written consent of the Company and the
Investor;
(ii) by either party hereto, if the Closing has not occurred
prior to December 31, 1997; provided, however, that the right to terminate this
Agreement under this Section 7.1(a)(ii) shall not be available to a party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
has resulted in, the failure of the Closing to occur prior to such date;
(iii) by the Investor, by notice given to the Company if the
Company shall breach or fail to comply with any of its representations,
warranties, covenants or agreements contained in this Agreement, or any such
representation or warranty shall have become untrue, in any such case such that
the conditions precedent to the Investor's obligation to close specified in
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Section 4.2 will not be satisfied, and such breach has not been promptly cured
within ten days following receipt by the Company of notice of such breach;
provided, however, the Investor's right to terminate under this provision shall
not be available if the Investor shall then be in material breach or material
noncompliance with any of its representations, warranties, covenants or
agreements contained in this Agreement; and
(iv) by the Company, by notice given to the Investor if the
Investor shall breach or fail to comply with any of its representations,
warranties, covenants or agreements contained in this Agreement, or any such
representation or warranty shall have become untrue, in any such case such that
the conditions precedent to the Company's obligation to close specified in
Section 4.1 will not be satisfied, and such breach has not been promptly cured
within ten days following receipt by the Investor of notice of such breach;
provided, however, the Company's right to terminate under this provision shall
not be available if the Company shall then be in material breach or material
noncompliance with any of its representations, warranties, covenants or
agreements contained in this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Section 7, in the event this Agreement is terminated pursuant to
Section 7.1(a)(iii) or 7.1(a)(iv), then the Company or the Investor, as
appropriate, shall have the right to seek all appropriate legal and equitable
remedies available to it.
Section 7.2 Procedure and Effect of Termination or Failure to Close.
(a) In the event of termination of this Agreement and abandonment of
the transactions contemplated hereby by either party pursuant to Section 7.1,
prompt written notice thereof shall be given to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by either party hereto. If this Agreement is
terminated as permitted herein:
(i) neither of the parties hereto or their affiliates, nor
any of such parties' or their affiliates' directors, officers, shareholders,
employees or agents, shall have any liability or further obligation to the other
party or its affiliates, or to any of such party's or its affiliates' directors,
officers, shareholders, employees or agents, pursuant to this Agreement, except
as stated in Sections 7.1(b) and 8.2 hereof; and
(ii) all filings, applications and other submissions relating
to the transactions contemplated hereby shall,
-22-
to the extent practicable, be withdrawn from the agency or other person to which
made.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Arbitration. To the fullest extent not prohibited by law, any
controversy, claim or dispute arising out of or relating to this Agreement,
including the determination of the scope or applicability of this Agreement to
arbitrate, shall be settled by final and binding arbitration in accordance with
the rules then in effect of the American Arbitration Association ("AAA"), as
modified or supplemented under this section, and subject to the Federal
Arbitration Act, 9 U.S.C. (S)1-16. The decision of the arbitrators shall be
final and binding; provided, however, that where a remedy for breach is
prescribed hereunder or limitations on remedies are prescribed, the arbitrators
shall be bound by such restrictions, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
If any series of claims arising out of the same or related transactions
shall involve claims which are arbitrable under the preceding paragraph and
claims which are not, the arbitrable claims shall first be finally determined
before suit may be instituted upon the others and the parties will take such
action as may be necessary to toll any statutes of limitations, or defenses
based upon the passage of time, that are applicable to such non-arbitrable
claims during the period in which the arbitrable claims are being determined.
In the event of any controversy, claim or dispute that is subject to
arbitration under this Section 8.1, any party thereto may commence arbitration
hereunder by delivering notice to the other party or parties thereto. Within
five business days of delivery of a list of qualified potential arbitrators from
AAA, such parties shall attempt to agree on one arbitrator; provided that if
such parties cannot agree on one arbitrator within such time period, each party
to the controversy, claim or dispute shall within five business days thereafter
appoint one arbitrator, and the two arbitrators so appointed shall within five
business days of their appointment mutually agree upon and appoint one
additional arbitrator (or, if such arbitrators cannot agree on an additional
arbitrator, the additional arbitrator shall be appointed by the AAA as provided
under its rules); provided that persons eligible to be selected as arbitrators
shall be limited to attorneys at law who (i) are on the AAA's Large, Complex
Case Panel, (ii) have practiced law for at least fifteen years as an attorney
specializing in
-23-
either general commercial litigation or general corporate and commercial matters
and (iii) are experienced in matters involving the telecommunications industry.
The arbitration hearing shall commence no later than thirty business days
after the completion of the selection of the arbitrators or at such other time
as the parties shall reasonably agree. Consistent with the intent of the parties
hereto that the arbitration be conducted as expeditiously as possible, the
parties agree that (i) discovery shall be limited to the production of such
documents and the taking of such depositions as the arbitrator(s) determine are
reasonably necessary to the resolution of the controversy, claim or dispute and
(ii) the arbitrator(s) shall limit the presentation of evidence by each side in
such arbitration to not more than ten full days (or the equivalent thereof) or
such shorter period as the arbitrator(s) shall determine to be necessary in
order to resolve the controversy, claim or dispute. The arbitrator(s) shall be
instructed to render a decision within thirty calendar days of the close of the
arbitration hearing. If arbitration has not been completed within one hundred
and twenty days of the commencement of such arbitration hearing, any party to
the arbitration may initiate litigation upon ten days written notice to the
other party(ies); provided, however, that if one party has requested the other
to participate in an arbitration and the other has failed to participate, the
requesting party may initiate litigation before the expiration of such one
hundred twenty-day period; and provided, further, that if any party to the
arbitration fails to meet any of the time limits set forth in this Section 8.1
or set by the arbitrators in the arbitration, any other party may provide ten
days written notice of its intent to institute litigation with respect to the
controversy, claim or dispute without the need to continue or complete the
arbitration and without awaiting the expiration of such one hundred twenty-day
period. The parties hereto further agree that if any of the rules of the AAA are
contrary to or conflict with any of the time periods provided for hereunder, or
with any other aspect of the matters set forth in this Section 8.1, that such
rules shall be modified in all respects necessary to accord with the provisions
of this Section 8.1 (and the arbitrators shall be so instructed by the parties).
The arbitrators shall base their decision on the terms of this Agreement
and the law of the State of Delaware, regardless of the law that might be
applicable under conflicts of law principles, and shall render their decision in
writing and include in such decision a statement of the findings of fact and
conclusions of law upon which the decision is based. Each party agrees to
cooperate fully with the arbitrator(s) to resolve any controversy, claim or
dispute. The arbitrator(s) shall not be empowered to award punitive damages or
damages in excess of actual damages. The venue for all arbitration proceedings
shall be Washington, D.C.
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Section 8.2 Expenses. The Company shall pay all expenses of the Investor,
including but not limited to travel, legal and accounting fees and expenses,
incurred in connection with the transactions contemplated under this Agreement.
Section 8.3 Survival of Agreements. All covenants, agreements,
representations, and warranties made herein shall survive the execution and
delivery hereof and remain in full force and effect, notwithstanding any
investigation made at any time by or on behalf of any party hereto.
Section 8.4 Parties in Interest. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
permitted assigns of the parties hereto, whether so expressed or not.
Section 8.5 Notices. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed effectively
given and received upon delivery in person, or one business day after delivery
by national overnight courier service, or by telecopier transmission with
acknowledgment of transmission receipt, or three business days after deposit via
certified or registered mail, return receipt requested, in each case addressed
as follows:
(a) if to the Company, at
Medcross, Inc.
00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxx, President
Telecopier: 000-000-0000
with copy to:
Xxxxx X. Xxxxx, Esq.
00 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopier: (000) 000-0000
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(b) if to the Investor, at
Winter Harbor, L.L.C.
c/o First Media, L.P.
00000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Xx.
Telecopier: (000) 000-0000
with copy to:
Xxxxx X. Xxxxx, Xx., Esq.
Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopier: (000) 000-0000
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
Section 8.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
Section 8.7 Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, constitutes the sole and entire agreement of the parties
with respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference.
Section 8.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 8.9 No Waivers; Amendments.
(a) No failure or delay on the part of any party in exercising any
right, power or remedy hereunder shall operate as a waiver of 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. The remedies provided for herein are cumulative and are not exclusive of
any remedies that may be available to any party at law or in equity or
otherwise.
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(b) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Company and
the Investor.
Section 8.10 Severability. If any provision of this Agreement shall be
declared void or unenforceable by a judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
Section 8.11 Gender. All pronouns and all variations thereof shall be
deemed to refer to the masculine, feminine, or neuter, singular or plural, as
the identity of the person or persons, thing or entity may require.
Section 8.12 Headings. The Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Securities Purchase
Agreement as of the day and year first above written.
MEDCROSS, INC.
By: /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx, President
WINTER HARBOR, L.L.C.
By: First Media, L.P., its General Manager/Member
By: First Media Corporation, its sole General
Partner
By: /s/ Xxxxx X. Xxxxx, Xx.
Name: Xxxxx X. Xxxxx, Xx.
Title: Secretary
EXHIBITS AND SCHEDULES
Exhibit A - Series M Amendment
Exhibit B - Authorized Shares Amendment
Exhibit C - Registration Rights Agreement
Exhibit D - Shareholders Agreement
Exhibit E-1 - Form of Opinion of Counsel to the Company
Exhibit E-2 - Form of Opinion of Florida Counsel to the Company
Exhibit F - Warrant Agreement
SCHEDULES
Schedule 2.2 - Authorization of Agreements
Schedule 2.4 - Outstanding Options and Warrants
Schedule 2.6 - Default Under Other Instruments
Schedule 2.9 - Employee Matters
Schedule 2.11 - Existing Registration Rights
Schedule 2.12 - Financial Statements
Schedule 2.13 - Subsequent Events
Schedule 2.14 - Intellectual Property
Schedule 2.15 - Material Contracts
Schedule 2.16 - Title to and Sufficiency of Assets
Schedule 2.17 - Minute Books
Schedule 2.18 - Insurance
Schedule 2.19 - License, Permits and Authorizations
Schedule 2.21 - Tax Matters
Schedule 2.22 - Conflicts of Interest
Schedule 2.23 - Retirement Plans
