Exhibit 6.06
DEBENTURE PURCHASE AGREEMENT
BY AND BETWEEN
ID TECHNOLOGIES CORPORATION
AND
THOSE CERTAIN PURCHASERS LISTED ON SCHEDULE 1.2 ATTACHED
DATED AS OF SEPTEMBER 24, 1999
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ID TECHNOLOGIES CORPORATION
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DEBENTURE PURCHASE AGREEMENT
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SEPTEMBER 24, 1999
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Table of Contents
EXHIBITS:
Exhibit A Form of Debentures
Exhibit B Articles of Amendment
Exhibit C Form of Debenture Conversion Warrants
Exhibit D Form of $0.01 Warrants
Exhibit E Form of $0.50 Warrants
Exhibit F Form of Exercise Event Warrants
Exhibit G Form of Investor Rights Agreement
Exhibit H Form of Shareholders Agreement
Exhibit I Form of Opinion
SCHEDULES:
Schedule 1.2 Schedule of Purchasers
Schedule 3.1 Certified Articles of Incorporation and Bylaws
Schedule 3.2 Stockholders' List
Schedule 3.3 Subsidiaries and Joint Ventures
Schedule 3.6 Changes Since July 31, 1999
Schedule 3.7 Material Agreements
Schedule 3.8 Encumbrances
Schedule 3.9 Material Liabilities
Schedule 3.10 Related Party Transactions
Schedule 3.11 Stock Option Plans
Schedule 3.12 Officers, Directors and Key Employees
Schedule 3.14 Litigation
Schedule 3.15 Permits and Licenses
Schedule 3.16 Intellectual Property
Schedule 3.18 Distribution Agreements
Schedule 3.20 Insurance
Schedule 3.25 Employee Benefit Plans
DEBENTURE PURCHASE AGREEMENT
This Debenture Purchase Agreement (the "AGREEMENT") is entered
into as of the 24th day of September, 1999, by and among ID Technologies
Corporation, a North Carolina corporation (the "COMPANY"); Xxxxxxx X. Xxxx, a
resident of North Carolina (the "FOUNDER"); and those investors listed on
Schedule 1.2, attached hereto and made a part hereof (individually a "PURCHASER"
and collectively, the "PURCHASERS").
WHEREAS, Purchasers wish to purchase from Company, and Company
wishes to sell, Convertible Debentures in an aggregate original principal amount
of up to Three Hundred Thousand Dollars ($300,000.00), which Convertible
Debentures are convertible into shares of Series A Preferred stock of Company.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties to this Agreement mutually agree as follows:
1. Authorization and Sale of Series A Preferred Stock; Use of
Proceeds.
1.1 Authorization. Company has authorized the issuance and
sale of Convertible Debentures in the form set forth on Exhibit A attached
hereto (the "DEBENTURES") in an aggregate original principal amount of up to
Three Hundred Thousand Dollars ($300,000.00), which Debentures are convertible
into shares of Company's Series A Preferred stock, $0.001 par value (the "SERIES
A STOCK"), having the rights, preferences, privileges and restrictions set forth
in Company's Articles of Amendment, a copy of which is attached hereto as
Exhibit B (the "ARTICLES").
1.2 Sale. Subject to the terms and conditions of this
Agreement, Purchasers agree to purchase from Company and Company agrees to sell
and issue to Purchasers, Debentures in an aggregate original principal amount of
up to Three Hundred Thousand Dollars ($300,000.00), with the original principal
amount of Debentures to be purchased by and sold to each Purchaser being set
forth opposite such Purchaser's name on Schedule 1.2.
1.3 Use of Proceeds. Company shall use the consideration
received hereunder for the Debentures for general working capital purposes.
2. Closing; Delivery.
2.1 Closing. The closing of the purchase and sale of the
Debentures under this Agreement (the "CLOSING") shall take place at 2:00 p.m.
(Raleigh, North Carolina time) on September 24, 1999 at the offices of Xxxxxx &
Xxxxxxx, L.L.P., or at such other time and place as Company and Purchasers may
agree. At the Closing, Company shall sell to Purchasers, and Purchasers shall
purchase from Company, Debentures in an aggregate original principal amount of
up to Three Hundred Thousand Dollars ($300,000.00), with each Purchaser to
purchase the original principal amount of Debentures set forth opposite such
Purchaser's name on Schedule
1.2 attached hereto. Such Debentures purchased shall be considered "DEBENTURES"
for all purposes of this Agreement.
2.2 Delivery of Debentures. At the Closing, subject to the
terms and conditions hereof, Company shall deliver to each Purchaser a Debenture
in the original principal amount to be purchased by such Purchaser from Company,
dated the date of Closing, against payment of the purchase price therefor by
wire transfer, or by such other means as shall be mutually agreeable to such
Purchaser and Company.
2.3 Delivery of Warrants at Closing.
a. Debenture Conversion Warrant. At the Closing, upon
payment of the purchase price for the Debentures to be purchased
hereunder by each Purchaser in accordance with the terms hereof,
Company shall execute and deliver to each such Purchaser a detachable
Common Stock Warrant, dated as of the date of Closing, pursuant to
which each such Purchaser is entitled to purchase up to three (3)
shares of Common stock of Company for every one (1) share of Series A
Stock issuable upon conversion of the Debentures being purchased by
each such Purchaser hereunder, in the form attached hereto as Exhibit C
(the "DEBENTURE CONVERSION WARRANT"), for the purchase price and on
such other terms as set forth in the Debenture Conversion Warrant.
b. $0.01 Warrants. At the Closing, upon payment of
the purchase price for the Debentures to be purchased hereunder by each
Purchaser in accordance with the terms hereof, Company shall execute
and deliver to each such Purchaser a detachable Common Stock Warrant,
dated as of the date of Closing, pursuant to which each such Purchaser
is entitled to purchase its Pro Rata Share (as defined below) of up to
One Hundred Fifty Thousand (150,000) shares of Common stock of Company,
in the form attached hereto as Exhibit D (the "$0.01 WARRANTS"), for
the purchase price of $0.01 per share and on such other terms as set
forth in the $0.01 Warrants. As used herein, "PRO RATA SHARE" means the
proportion of the original principal amount of all Debentures held by a
Purchaser to the aggregate original principal amount of all Debentures
held by all Purchasers.
c. $0.50 Warrants. At the Closing, upon payment of
the purchase price for the Debentures to be purchased hereunder by each
Purchaser in accordance with the terms hereof, Company shall execute
and deliver to each such Purchaser a detachable Common Stock Warrant,
dated as of the date of Closing, pursuant to which each such Purchaser
is entitled to purchase its Pro Rata Share of up to Two Hundred
Thousand (200,000) shares of Common stock of Company, in the form
attached hereto as Exhibit E (the "$0.50 WARRANTS"), for the purchase
price of $0.50 per share and on such other terms as set forth in the
$0.50 Warrants.
d. Exercise Event Warrants. At the Closing, upon
payment of the purchase price for the Debentures to be purchased
hereunder by each Purchaser in accordance with the terms hereof,
Company shall execute and deliver to each such Purchaser a detachable
Common Stock Warrant, dated as of the date of Closing, pursuant
to which each such Purchaser is entitled to purchase its Pro Rata Share
of shares of Common stock of Company, up to an amount of Five Hundred
Thousand Dollars ($500,000.00), in the form attached of Company hereto
as Exhibit F (the "EXERCISE EVENT WARRANTS"), for the purchase price
and on such other terms as set forth in the Exercise Event Warrants.
The Debenture Conversion Warrants, the $0.01 Warrants, the $0.50
Warrants and the Exercise Event Warrants are collectively referred to
herein as the "WARRANTS".
2.4 Exchangeable Demand Promissory Note. Pursuant to the terms
of that certain Exchangeable Demand Promissory Note in the original principal
amount of Eighty Thousand Dollars ($80,000) executed by Company in favor of
Centennial Venture Partners, LLC ("CENTENNIAL") dated as of April 13, 1999 (the
"EXCHANGEABLE NOTE"), Centennial shall be entitled to receive and Company shall
issue to Centennial at the Closing the Debentures issuable upon exchange by
Centennial of the Exchangeable Note in accordance with its terms. All such
Debentures shall be considered "DEBENTURES" for all purposes of this Agreement.
2.5 Wu Agreement. The parties hereto acknowledge the existence
of the Agreement by and between Company and Li-Xxx Xx ("WU") dated as of
September 15, 1999 (the "WU AGREEMENT"), pursuant to which Wu is entitled to
make a certain investment in Company. Company hereby agrees that it shall not
issue any debentures or other securities or otherwise close any of the
transactions contemplated in the Wu Agreement until such time as all requisite
approvals for such transactions are obtained, including, without limitation,
shareholder approval of an amendment to the Articles of Incorporation of Company
to increase the authorized number of shares of Series A Stock in an amount
sufficient to permit the conversion of all of the Debentures hereunder together
with any and all debentures and other securities issued pursuant to the Wu
Agreement. Company acknowledges that the terms of the transactions contemplated
in the Wu Agreement will be subject to the covenants of Company contained in the
Investor Rights Agreement (as defined below), including, without limitation, the
terms of Section 3.3 thereof, except that (for purposes of such Section 3.3)
Centennial hereby consents to (i) the transactions contemplated in the Wu
Agreement provided the investment thereunder by Wu is made on substantially
identical terms to the terms applicable to Centennial in the purchase of
Debentures hereunder (with the exception of the right to designate a member of
the Board of Directors of Company, the right to approve new management of
Company, and the right to receive reimbursement of attorneys' fees and expenses
and due diligence expenses, which rights shall not apply to the investment by
Wu); and (ii) an increase in the authorized number of shares of Series A Stock
as may be necessary in connection with the transactions contemplated in the Wu
Agreement; PROVIDED, HOWEVER, that the number of shares of Series A Stock
issuable in connection with the Wu Agreement shall be less than the number of
shares of Series A Stock issuable upon conversion of the original principal
amount of the Debentures issued hereunder (assuming full conversion by both
parties).
3. Representations and Warranties of Company.
Company, and with respect to the representations and
warranties contained in Sections 3.11, 3.13, 3.14, 3.16 and 3.17, Founder,
hereby represent and warrant to Purchaser(s)
that except as disclosed herein or on a schedule hereto (matters disclosed on a
particular schedule hereto are deemed to have been disclosed on all schedules
hereto):
3.1 Organization and Standing.
a. Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of North
Carolina and has all requisite corporate power and authority to own and
operate its properties and assets and to carry on its business as now
conducted and as currently proposed to be conducted. Company is duly
qualified and authorized to do business, and is in good standing as a
foreign corporation in each jurisdiction where due to the nature of its
activities and of its properties (both owned and leased), the failure
to so qualify would have a material adverse effect on Company.
b. A copy of Company's Articles of Incorporation, and
all amendments thereto, as certified by the Secretary of State of North
Carolina, and a copy of the Company's Bylaws, as amended to date and as
certified by Company's Secretary, are attached as Schedule 3.1 hereto,
and are true, complete and correct copies of the Articles of
Incorporation and Bylaws of Company as amended and presently in effect.
c. Company is engaged primarily in the business of
the development and exploitation of fingerprint identification
technology.
3.2 Capitalization.
a. The authorized capital of Company consists
of:
(1) Forty-Nine Million Seven Hundred
Thousand (49,700,000) shares of Common stock, no par value
(the "COMMON STOCK"), of which Eight Million Three Hundred
Seventy-Seven Thousand Five Hundred Eighty-Three (8,377,583)
shares are issued and outstanding as of July 31, 1999 (and no
shares of Common Stock have been issued or redeemed by Company
since July 31, 1999); and
(2) Three Hundred Thousand (300,000) shares
of Series A Stock, $0.001 par value, none of which are issued
and outstanding immediately prior to the Closing.
b. Schedule 3.2 hereto sets forth a complete list of
all stockholders of Company as of July 31, 1999, indicating the number
of shares of capital stock owned by each stockholder. To Company's
Knowledge (as defined below), and except as set forth in Schedule 3.2
hereto, each such stockholder owns and has good title to said number of
shares, free and clear of all liens or encumbrances of any kind.
c. All of the outstanding shares of capital stock of
Company have been duly authorized and validly issued, are fully paid
and nonassessable and were issued in compliance with all applicable
federal and state securities laws.
d. Company has duly and validly reserved (i) Three
Hundred Thousand (300,000) shares of Series A Stock for issuance upon
conversion of the Debentures; (ii) Three Hundred Thousand (300,000)
shares of Common Stock for issuance upon conversion of the Series A
Stock; and (iii) Two Million (2,000,000) shares of Common Stock for
issuance upon exercise of the Warrants (the "WARRANT SHARES").
e. Except as set forth in Schedule 3.2 hereto and the
Articles, Company is not obligated (contingently or otherwise) to
purchase, redeem or otherwise acquire any shares of its capital stock
or any interest therein or to pay any dividends or make any other
distributions with respect to its capital stock.
f. Except as set forth in Schedule 3.2 hereto and
except for (i) the conversion rights associated with the Debentures and
the Series A Stock, (ii) the rights created under this Agreement, the
Articles and the Investor Rights Agreement (as defined in Section 5.6
below), (iii) the One Million Three Hundred Eighty-Three Thousand One
Hundred Forty-Eight (1,383,148) shares of Common Stock reserved for
issuance to directors, officers, employees, advisors or consultants of
Company (the "UNISSUED STOCK POOL"), and (iv) the Warrants, there are
no outstanding rights of first refusal, preemptive rights or other
rights, options, warrants, conversion rights or other agreements,
either directly or indirectly, for the purchase or acquisition from
Company of any shares of its capital stock.
3.3 Subsidiaries. Except as set forth on Schedule 3.3 hereto,
Company does not currently own or control, directly or indirectly, any other
corporation, association, partnership, or other business entity. Except as set
forth on Schedule 3.3 hereto, Company is not, directly or indirectly, a
participant in any joint venture or partnership.
3.4 Authorization. All corporate action on the part of Company
and its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Articles, the Investor Rights
Agreement, the Shareholders Agreement (as defined in Section 5.7 below) and the
Warrants, the performance of all Company's obligations hereunder and thereunder,
and the authorization, issuance, sale and delivery of the Debentures and the
Series A Stock issuable upon conversion thereof, and the Common Stock issuable
upon conversion of such Series A Stock (the "UNDERLYING COMMON STOCK"), and the
Warrant Shares to be issued upon exercise of the Warrants, has been taken or
will be taken prior to the Closing. This Agreement, the Investor Rights
Agreement, the Shareholders Agreement, the Debentures and the Warrants, when
executed and delivered by Company and the parties hereto and thereto shall
constitute valid and legally binding obligations of Company enforceable in
accordance with their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors, rules and laws
governing specific performance, injunctive relief and other equitable remedies
and, with respect to the indemnification agreements set forth in the Investor
Rights Agreement, principles of public policy.
3.5 Validity of the Debentures. Except as set forth in
Schedule 3.5, the Investor Rights Agreement and/or the Shareholders Agreement,
the sale of the Debentures and the subsequent conversion of the Debentures into
Series A Stock, and the subsequent conversion of such Series A Stock into the
Underlying Common Stock, and the issuance of the Warrant Shares upon exercise of
the Warrants, are not and will not be subject to any preemptive rights, rights
of first refusal or other preferential rights that have not been waived, and the
Debentures when issued, sold and delivered in accordance with the terms of this
Agreement, the Series A Stock when issued upon conversion of the Debentures, the
Underlying Common Stock when issued upon conversion of the Series A Stock, and
the Warrant Shares when issued, sold and delivered upon exercise of the
Warrants, will be validly issued, fully paid and nonassessable and will be free
of any liens or encumbrances; PROVIDED, HOWEVER, that the Debentures, the Series
A Stock, the Underlying Common Stock and the Warrant Shares may be subject to
restrictions on transfer under state and/or federal securities laws and as set
forth in the Investor Rights Agreement and the Shareholders Agreement.
3.6 Financial Statements; Changes.
a. Company has delivered to Purchasers copies of
Company's audited consolidated financial statements for the fiscal
years ended December 31, 1997 and December 31, 1998 (such December 31,
1998 statements in draft form), together with the notes thereto, and
copies of Company's balance sheet as of July 31, 1999, statement of
operations for the seven months ended July 31, 1999, statement of
changes in shareholders' equity for the seven months ended July 31,
1999, and statement of cash flows for the seven months ended July 31,
1999 (the "FINANCIAL STATEMENTS"). The Financial Statements were
prepared in accordance with generally accepted accounting principles
consistently applied throughout the period indicated, are correct and
complete and fairly present the financial position and condition of
Company at the date thereof and the results of operations of Company
for the period covered thereby, and contain no material misstatements
or omissions.
b. Since July 31, 1999, except as disclosed in
Schedule 3.6 hereto, and/or except as anticipated by this Agreement,
there has not been:
(1) any change in the assets, liabilities,
financial condition or operating results of Company from that
reflected in the Financial Statements, except changes in the
ordinary course of business which have not been, in the
aggregate, materially adverse;
(2) any damage, destruction or loss, whether
or not covered by insurance, materially and adversely
affecting the assets, properties, financial condition,
operating results, prospects or business of Company (as such
business is presently conducted and as it is currently
proposed to be conducted);
(3) any waiver or compromise by Company of a
valuable right or of a material debt owed to it;
(4) any satisfaction or discharge of any
lien, claim or encumbrance or payment of any obligation by
Company, except in the ordinary course of business and which
is not material to the assets, properties, financial
condition, operating results, prospects or business of Company
(as such business is presently conducted and as it is
currently proposed to be conducted);
(5) any change or amendment to a material
contract or arrangement by which Company or any of its assets
or properties is bound or subject;
(6) any declaration or payment of any
dividend or other distribution of the assets of Company;
(7) any material change in any compensation
arrangement or agreement with any employee; or
(8) to the "Company's Knowledge" (as defined
below), any other event or condition of any character which
might materially and adversely affect the assets, properties,
financial condition, operating results, prospects or business
of Company (as such business is presently conducted and as it
is currently proposed to be conducted).
c. As used herein, "COMPANY'S KNOWLEDGE" means
Company's actual knowledge after inquiry and a signed certificate from
Company's President. As used herein "FOUNDER'S KNOWLEDGE" means
Founder's actual knowledge after inquiry.
3.7 Material Agreements.
a. Schedule 3.7 hereto contains a complete list of
all of the following agreements to which Company is a party, other than
those which are anticipated by this Agreement (collectively, the
"MATERIAL AGREEMENTS"): (1) contracts, agreements and instruments which
involve a commitment by Company in excess of Ten Thousand Dollars
($10,000) per year; (2) leases for real property; (3) equipment leases;
(4) stock purchase agreements; (5) loan or debt agreements; (6)
employment agreements; (7) licenses of any patent, trade secret or
other proprietary right to or from Company; (8) agreements or contracts
under which Company agrees to indemnify any party or to share the tax
liability of any party; (9) contracts or agreements with any labor
union or association representing any employee; (10) joint venture
contracts or agreements; (11) contracts or agreements containing (i)
covenants of Company not to compete in any line of business or with any
person in any geographical area or (ii) covenants of any person not to
compete with Company in any line of business or in any geographical
area; and (12) contracts or agreements which contain restrictions with
respect to payment of dividends or on any other distribution in respect
of Company's capital stock.
b. Company has delivered to Purchasers true, correct
and complete copies of: all Material Agreements, and the most current
draft or proposed terms of each contract, agreement or instrument
currently contemplated or anticipated by Company to be executed which
(if executed) would be a Material Agreement.
c. All the Material Agreements are valid and binding
obligations of Company, in full force and effect in all material
respects.
d. Company is not in default and not aware of any
default by another party, either pending or threatened, with respect to
the Material Agreements. Further, except as set forth on Schedule 3.7,
Company is current on all debt, accounts payable, leases and other
similar obligations of Company over Fifty Thousand Dollars ($50,000).
e. Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under
its Articles of Incorporation or Bylaws, which adversely affects its
assets, properties, financial condition, operating results, properties
or business presently conducted or as currently proposed to be
conducted.
f. There are no "informal" or "side agreements"
(whether written or verbal) with any Person (as defined in Section 3.12
below) whereby Company or its management has agreed to do anything
beyond the requirements of a formal written contract executed by
Company.
3.8 Title to Properties and Assets. Company has good and
marketable title to its properties and assets as reflected in the Financial
Statements and any properties and assets acquired after the date of the
Financial Statements until the date of Closing (except properties and assets
held under capitalized leases) and has good title to all its leasehold
interests, in each case, except as set forth on Schedule 3.8 hereto, subject to
no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) the lien
of current taxes not yet due and payable, and (b) possible minor liens and
encumbrances which do not in any case, either individually or in the aggregate,
materially detract from the value of the property subject thereto or materially
impair the operations of Company, and which have not arisen other than in the
ordinary course of business. The tangible property and assets held under any
material lease by Company are held by it under leases which remain in force, and
there exists no default or other occurrence or condition which could result in a
material default or termination thereunder.
3.9 Material Liabilities. Except as set forth in Schedule 3.9,
Company has no material liability or obligation, absolute or contingent
(individually or in the aggregate), which is not disclosed in the Financial
Statements, except obligations and liabilities incurred after the date of the
Financial Statements in the ordinary course of business which are not
individually or in the aggregate material. Company after reasonable
investigation has no knowledge of any basis for any other claim against or
liability or obligation of Company.
3.10 Obligations to Related Parties. Schedule 3.10 hereto sets
forth (a) all of the obligations of Company to all current or former officers,
directors, shareholders and
employees of Company, including any member of their immediate families (other
than normal accrued wages and travel expense vouchers), and (b) all of the
obligations of Company's current officers, directors, shareholders and
employees, including any member of their immediate families (other than expense
advances made in the ordinary course of Company's business) to Company, which
are not otherwise contemplated under this Agreement or other agreements and
transactions to be entered into incident to the Closing, which schedule is
complete and correct in all material respects as of the date of this Agreement.
3.11 Employees.
a. To Company's and Founder's Knowledge, no employee
of Company is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency
that would conflict with such employee's obligation to use his best
efforts to promote the interests of Company or that would conflict with
Company's business as conducted or as proposed to be conducted.
b. To Company's and Founder's Knowledge, no employee
of Company is in violation of any term of (1) any proprietary
information and inventions agreement or non-competition agreement of
any kind; or (2) any other employment contract or agreement relating to
the relationship of any such employee with Company or any previous
employer to the extent such violation would have a material adverse
effect on Company or the employee's ability to perform services for
Company.
c. Company has no collective bargaining agreements
with any of its employees, and to Company's and Founder's Knowledge
there is no labor-union-organizing activity pending or threatened with
respect to Company.
d. Except as set forth in Schedule 3.11, and except
for such matters which are contemplated under this Agreement or other
agreements and transactions to be entered into incident to the Closing,
there is no, and has never been any, pension, health, profit sharing,
bonus, stock purchase, stock option, hospitalization, insurance,
severance or any other employee benefit or welfare benefit plan with
respect to any officer or employee of Company.
3.12 Officers, Directors and Key Employees.
a. Set forth on Schedule 3.12 hereto is a list of
Company's officers, directors and Key Employees (as defined below),
which list is full, complete and correct.
b. To Company's Knowledge, except as set forth on
Schedule 3.12, during the past five (5) years, none of Company's
officers, directors or Key Employees have been arrested or convicted of
any material crime, nor have any of them been bankrupt or affiliated as
an officer, director, partner or member of a bankrupt Person.
c. To Company's Knowledge, no officer of Company, nor
any Key Employee, the termination of whose employment, either
individually or in the aggregate, would have an adverse effect on
Company, has any present intention of terminating his or her employment
with Company.
d. As used herein, "KEY EMPLOYEE" means and includes
the President, any Vice President and the Treasurer of Company, any
chief financial officer, supervisor, manager or vice president of
operations, financial planning, sales, marketing, research and
development or other functional area of Company, the head of any
division or subsidiary of Company, or any other individual so
designated by the Board of Directors of Company.
e. As used herein, "PERSON" means and includes
natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, and
trusts, business trusts or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions
thereof.
3.13 Compliance with Other Instruments. Company is not in
violation of any provisions of its Articles of Incorporation or its Bylaws as
amended and in effect on and as of the Closing, or of any provisions of any
material instrument or contract to which it is a party or any judgment, decree
or order by which it is bound or any material statute, rule or regulation
applicable to Company. The execution, delivery and performance of this
Agreement, and the issuance and sale of the Debentures pursuant hereto, the
Series A Stock upon conversion of the Debentures, and the Underlying Common
Stock upon conversion of such Series A Stock, and the issuance, sale and
delivery of the Warrant Shares upon exercise of the Warrants, will not result in
any such violation or be in conflict with or constitute a default under any such
provisions or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of Company.
3.14 Litigation. Except as set forth in Schedule 3.14
hereto:
a. There is no action, proceeding or investigation
pending or (to Company's and Founder's Knowledge) currently threatened
against Company before any court or administrative agency (or any basis
therefor known to Company or Founder).
b. To Company's and Founder's Knowledge, there is no
action, proceeding or investigation pending or currently threatened
against any director, officer or Key Employee of Company related to
Company's activities, business or assets or which could materially
adversely affect Company.
c. The foregoing representations include, without
limiting their generality, actions pending or threatened (or any basis
therefor known to Company or Founder) involving the prior employment of
any of Company's employees or their use in connection with Company's
business of any information or techniques allegedly proprietary to any
of their former employers.
3.15 Permits and Licenses. Company has obtained and complied
with all governmental permits, licenses, and consents necessary for the conduct
of Company's business as it is presently conducted; all such permits, licenses
and consents are listed on Schedule 3.15, which list is full, complete and
correct; all such permits, licenses and consents are in full force and effect;
and to Company's Knowledge there is no investigation or other matter that may
materially adversely impair or affect any such permit, license, or consent.
3.16 Patents and Trademarks.
a. Company has sufficient title and ownership of or
is licensed under all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and
processes necessary for its business as now conducted and as currently
proposed to be conducted without any conflict with or without
infringement of the rights of others.
b. Schedule 3.16 hereto contains a complete list of
patents, service marks, trademarks and copyrights, and pending patent,
service xxxx, trademark and copyright applications of Company. Except
as set forth on Schedule 3.16, or as contemplated under this Agreement
or other agreements and transactions to be entered into incident to the
Closing, there are no outstanding options, licenses or agreements of
any kind relating to the foregoing, nor is Company bound by or a party
to any options, licenses or agreements of any kind with respect to the
patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, proprietary rights and processes of any
other person or entity.
c. Company has not received any communications
alleging that Company has violated or, by conducting its business as
currently proposed, would violate, any of the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses or
other proprietary rights or processes of any other person or entity.
d. To Company's and Founder's Knowledge, no third
party has violated any of the patents, trademarks, service marks, trade
names, copyrights, trade secrets, licenses or other proprietary rights
or processes owned by the Company or to which the Company has rights.
e. None of Company's officers, directors or employees
is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that
would interfere with the use of his or her best efforts to promote the
interests of Company or that would conflict with Company's business as
currently proposed to be conducted.
f. Neither the execution nor delivery of this
Agreement, nor the carrying on of Company's business by the employees
of Company, nor the conduct of Company's business as currently
proposed, will 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.
3.17 Proprietary Information. Company has done nothing to
materially adversely compromise the secrecy, confidentiality or value of any of
its trade secrets, know-how, inventions, prototypes, designs, processes or
technical data required to conduct its business as now conducted or as proposed
to be conducted.
3.18 Distribution Rights. Except as shown on Schedule
3.18, Company has not granted rights to distribute or sell its products to any
other person.
3.19 Taxes.
a. Company has accurately prepared and timely filed
all United States Tax returns and all state and municipal Tax returns
that are required to be filed by it and has paid or made provision for
the payment of all Taxes that have become due pursuant to such returns.
No deficiency assessment or proposed adjustment of Company's United
States Taxes or state or municipal Taxes is pending and Company has no
knowledge of any liability as of the date hereof for any Tax for which
there is not an adequate reserve reflected in the Financial Statements.
b. Company has provided Purchasers with true and
complete copies of all federal and state income tax returns listed on
Schedule 3.19.
c. As used herein, "TAX" or "TAXES" means all taxes
(including income tax, payroll tax, sales tax, use tax, property tax),
assessments, fees, levies, imposts, duties, penalties, deductions,
withholdings or other charges of any nature whatsoever from time to
time or at any time imposed by any law or any federal, state, local or
foreign jurisdiction.
3.20 Insurance. Company has fire, casualty and liability
insurance pursuant to policies described on Schedule 3.20 hereto, all of which
shall remain in effect after the Closing.
3.21 Registration Rights. Except as required by the Investor
Rights Agreement (as hereinafter defined), and as described on Schedule 3.21,
Company is not under any obligation to register (as defined in the Investor
Rights Agreement) any of its presently outstanding securities or any of its
securities which may hereafter be issued.
3.22 Voting Agreements. Except as set forth in the Articles
and the Investor Rights Agreement, and except as set forth on Schedule 3.22,
Company has no agreement, obligation or commitment with respect to the election
of any individual or individuals to the Board of Directors, and there is no
voting agreement or other arrangement among its shareholders with respect to the
election of any individual or individuals to the Board of Directors.
3.23 Governmental Consents. All consents, approvals, orders or
authorization of, and registrations, qualifications, designations, declarations
and filings with any federal or state governmental authority on the part of
Company required in connection with the valid execution and delivery of this
Agreement, the Investor Rights Agreement, the Shareholders Agreement and the
Warrants, the offer, sale and issuance of the Debentures hereunder, the Series A
Stock upon conversion of the Debentures, the Underlying Common Stock, and the
Warrant Shares, and the consummation of any other transaction contemplated
hereby have been obtained, or will be obtained prior to the Closing, except for
notices required or permitted to be filed with certain state and federal
securities commissions after the Closing, which notices will be filed on a
timely basis.
3.24 Offering. Assuming the accuracy of the representations
and warranties of Purchasers contained in Section 4 hereof, the offer, issuance
and sale of the Debentures hereunder, the Series A Stock issued upon conversion
of the Debentures, the Underlying Common Stock, the Warrants and the Warrant
Shares, are and will be exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 (the "1933 ACT") and have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.
3.25 ERISA.
a. Definitions. As used herein -
(1) "CODE" means the Internal Revenue Code
of 1986, as amended, or any successor statute.
(2) "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended from time to time, or
any successor statute.
(3) "EMPLOYEE BENEFIT PLAN" means any
employee benefit plan within the meaning of Section 3(3) of
ERISA maintained or contributed to by Company, other than a
Multiemployer Plan.
(4) "MULTIEMPLOYER PLAN" means a Pension
Plan which is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
(5) "PENSION PLAN" means an employee pension
benefit plan maintained or contributed to by Company for its
employees, and which is subject to the provisions of Title IV
of ERISA.
b. Benefit Plans and Multiemployer Plans. Company
does not maintain or contribute to any Employee Benefit Plan or
Multiemployer Plan other than those identified on Schedule 3.25 hereto.
c. Compliance with Laws. Company is in compliance in
all material respects with all applicable provisions of ERISA and the
Code with respect to all Employee Benefit Plans.
d. No Actions or Investigations. No material
proceeding, claim, lawsuit and/or investigation is existing or, to
Company's Knowledge, threatened against Company, concerning or
involving any Employee Benefit Plan or Multiemployer Plan.
3.26 Environmental Matters. Company has not caused or allowed,
nor has it contracted with any party for, the generation, use, transportation,
treatment, storage or disposal of any Hazardous Substance (as defined below) in
connection with the operations of its business or otherwise, other than in
compliance with applicable Environmental Laws (as defined below). To Company's
Knowledge, Company, together with any real property that it owns, leases, or
otherwise occupies or uses and the operations of its business (the "PREMISES"),
are in compliance with all applicable Environmental Laws and orders or
directives of any governmental authorities having jurisdiction under such
Environmental Laws, including, without limitation, any Environmental Laws or
orders or directives with respect to any cleanup or remediation of any release
or threat of release of Hazardous Substances. Company has not received any
citation, directive, letter or other communication, written or oral, or any
notice of any proceedings, claims or lawsuits, from any person, entity or
governmental authority arising out of the ownership or occupation of the
Premises or the conduct of its operations, nor is it aware of any basis
therefor. Company has obtained and is maintaining in full force and effect all
necessary permits, licenses and approvals required by any Environmental Laws
applicable to the Premises and the business operations conducted thereon and is
in compliance with all such permits, licenses and approvals. Company has not
caused or allowed a release, or a threat of release, of any Hazardous Substance
unto, at or near the Premises nor, to Company's Knowledge, has the Premises or
any property at or near the Premises ever been subject to a release, or a threat
of release, of any Hazardous Substance. For purposes of this Agreement, the term
"ENVIRONMENTAL LAWS" shall mean any federal, state or local law, ordinance or
regulation pertaining to the protection of human health or the environment,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. xx.xx. 9601 et seq., Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. xx.xx. 11001 et seq., and
the Resource Conservation and Recovery Act, 42 U.S.C. xx.xx. 6901 et seq. For
purposes of this Agreement, the term "HAZARDOUS SUBSTANCES" shall include oil
and petroleum products, asbestos, polychlorinated biphenyls and urea
formaldehyde, and any other materials classified as hazardous or toxic under any
Environmental Laws.
3.27 Disclosure. No representation or warranty by Company or
Founder in this Agreement, or in any written statement or certificate furnished
or to be furnished to Purchasers pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement (when read together)
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein in the light of the context in which they were made
not misleading.
4. Representations and Warranties of Purchaser.
Each Purchaser, for itself but not for any other Purchaser,
hereby represents and warrants to Company as follows:
4.1 Power and Authority. It has the requisite power and
authority to enter into this Agreement, to purchase the Debentures hereunder, to
convert the Debentures into Series A Stock, to convert the Series A Stock into
Underlying Common Stock, and to carry out and perform its obligations under the
terms of this Agreement.
4.2 Due Execution. This Agreement has been duly authorized,
executed and delivered by it, and, upon due execution and delivery by Company,
this Agreement will be a valid and binding agreement of it, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, rules and laws governing specific performance, injunctive relief and
other equitable remedies and, with respect to the indemnification agreements set
forth in the Investor Rights Agreement, principles of public policy.
4.3 Investment Representations.
a. This Agreement is made by Company with Purchasers
in reliance upon each Purchaser's representation to Company, which by
its acceptance hereof each Purchaser hereby confirms, that the
Debentures to be received by it, the Series A Stock issued on
conversion thereof, the Underlying Common Stock, the Warrants and
Warrant Shares will be acquired for investment for its own account, not
as a nominee or agent, and not with a view to the sale or distribution
of any part thereof.
b. Each Purchaser understands that the Debentures,
the Series A Stock issued upon conversion thereof and the Underlying
Common Stock, the Warrants and the Warrant Shares have not been
registered under the 1933 Act or any state securities laws on the
grounds that the sale provided for in this Agreement and the issuance
of securities hereunder are exempt from registration under the 1933
Act, and that Company's reliance on such exemption is predicated in
part on such Purchaser's representations set forth herein.
c. Each Purchaser recognizes that the investment in
the Debentures involves special risks, and represents that it has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment, and has
the ability to bear the economic risks of its investment. Prior to
making a decision to enter into this Agreement, each Purchaser has been
provided the opportunity to ask questions of, and receive answers from,
the executive officers of Company concerning Company, and to obtain
from Company information requested from Company. Each Purchaser has
conducted an investigation to its satisfaction of the investment and
has received all information requested from Company; PROVIDED, HOWEVER,
that any investigation conducted by any Purchaser shall not be deemed
to release Company from any breach of representation or warranty
contained in this Agreement. On the basis of the foregoing, and on the
basis of the representations, warranties and covenants of Company
contained in this Agreement and the other documents and instruments
delivered in connection herewith, each Purchaser
acknowledges that it possesses sufficient information and has,
individually or through advisers, such knowledge or experience in
financial, tax and business matters to enable it to understand and
evaluate the merits and risks associated with an investment in the
Debentures.
d. Each Purchaser understands that each certificate
representing the Series A Stock, the Underlying Common Stock and the
Warrant Shares will be endorsed with the following legend:
"The Securities represented by this
Certificate have not been registered under the
Securities Act of 1933 or applicable state securities
laws. These securities have been acquired for
investment and not with a view to distribution or
resale, and may not be sold, mortgaged, pledged,
hypothecated or otherwise transferred without an
effective registration statement for such securities
under the Securities Act of 1933, any applicable
state securities laws, or the availability of an
exemption from the registration provisions of the
Securities Act of 1933 and applicable state
securities laws."
e. All information which each Purchaser has provided
to Company herein is complete and correct as of the date hereof, and if
there should be any material change in such information prior to
Closing, each Purchaser will immediately provide Company with such
information.
f. Each Purchaser is an "accredited investor" within
the meaning of Rule 501(a) of Regulation D of the Securities and
Exchange Commission.
g. Each Purchaser is domiciled in and maintains its
principal place of business in the jurisdiction shown on Schedule 1.2
hereto.
4.4 No Public Market. Each Purchaser understands that no
public market now exists for any of the securities issued by Company and that
there is no assurance that a public market will ever exist for the Debentures
(or the Series A Stock, Underlying Common Stock or the Warrant Shares).
4.5 Government Consents. No consent, approval or authorization
of or designation, declaration or filing with any state, federal, or foreign
governmental authority on the part of a Purchaser, because of any special
characteristic of such Purchaser, is required in connection with the valid
execution and delivery of this Agreement, the Investor Rights Agreement, or the
Shareholders Agreement by such Purchaser, and the consummation by each Purchaser
of the transactions contemplated hereby and thereby; PROVIDED, HOWEVER, that
each Purchaser make no representations as to compliance by Company with
applicable securities laws.
5. Conditions to Purchasers' Obligations at Closing.
The obligations of Purchasers to purchase the Debentures at
Closing are subject to the fulfillment on or before Closing of each of the
following conditions:
5.1 Representations and Warranties; Certificate from Company
and President. The representations and warranties of Company and Founder
contained in Section 3 shall be true on and as of Closing with the same force
and effect as if they had been made as of such date, and Purchasers shall have
received a certificate (in form and substance satisfactory to Purchasers)
executed by each of Company and its President and by Founder certifying that
such representations and warranties are true and correct as of Closing.
5.2 Performance. Company and Founder shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it on or before the Closing, and Purchasers
shall have received a certificate to that effect dated as of Closing, signed by
Company's President and by Founder (in form and substance satisfactory to
Purchasers).
5.3 Qualifications. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required prior to and in connection with the lawful
issuance and sale of the Debentures pursuant to this Agreement shall have been
duly obtained and shall be effective on and as of Closing.
5.4 Legal Investment. At the time of the Closing, the purchase
of the Debentures by Purchasers hereunder shall be legally permitted by all laws
and regulations to which it or Company are subject.
5.5 Articles. Company shall have duly filed the Articles with
the North Carolina Secretary of State, which Articles shall be in full force and
effect at Closing.
5.6 Investor Rights Agreement. Company and the stockholders
named therein shall have executed and delivered an Investor Rights Agreement
substantially in the form of that which is attached hereto as Exhibit G (the
"INVESTOR RIGHTS AGREEMENT").
5.7 Shareholders Agreement. Company and the stockholders named
therein shall have executed and delivered a Shareholders Agreement substantially
in the form of that which is attached hereto as Exhibit H (the "SHAREHOLDERS
AGREEMENT").
5.8 Opinion of Company's Counsel. Purchasers shall have
received from Xxxxxx & Xxxxxxx, L.L.P., counsel to the Company, an opinion
letter addressed to Purchasers, dated the date of the Closing, substantially in
the form attached hereto as Exhibit I or such other form as may be approved by
counsel to Purchaser.
5.9 Noncompetition, Confidentiality and Inventions
Agreements.
a. Each Key Employee and the chief executive officer,
president, chief operating officer, chief financial officer, vice
president of research and development, and vice president of marketing
and sales of Company (to the extent such positions are filled) shall
have executed and delivered to Company a Noncompetition, Inventions and
Confidentiality Agreement in form and substance satisfactory to
Purchasers.
b. Any patents, trademarks, know-how or similar
assets used in the conduct of Company's business and personally held by
any stockholder or Key Employee shall have been assigned to Company and
evidence thereof delivered at Closing.
5.10 Secretary's Certificate. There shall have been delivered
to Purchasers a certificate, dated as of the Closing, signed by Company's
Secretary or an Assistant Secretary and in form and substance satisfactory to
Purchasers, which shall certify (i) the names of its officers authorized to sign
this Agreement, the Debentures, the Warrants and the other documents,
instruments or certificates to be delivered pursuant to this Agreement by
Company or any of its officers, together with true signatures of such officers;
(ii) that the copy of the Bylaws attached thereto are true, correct and complete
in every respect; (iii) that the attached copy of resolutions of Company's Board
of Directors' and, if applicable, Stockholders, evidencing the approval of this
Agreement, the issuance of the purchased Debentures, the Investor Rights
Agreement, the Shareholders Agreement, the Warrants, and the other matters
contemplated hereby and thereby, were duly adopted or ratified by unanimous
written consent or at a duly called and held meeting in accordance with the
Bylaws and applicable law and are in full force and effect.
5.11 Certificate of Existence; Tax Clearance Letter. There
shall have been delivered to each Purchaser a Certificate of Existence for
Company from the Secretary of State of the State of North Carolina, and a tax
clearance letter from the Department of Revenue of the State of North Carolina.
5.12 Payment of Fees and Expenses. All fees, costs and
expenses specified in Section 7.12 hereof shall have been paid.
5.13 Insurance. Company shall have delivered copies of the
policies of insurance required by the Investor Rights Agreement accompanied by
evidence of payment of the premiums therefor.
5.14 Key Man Insurance. Company shall have delivered evidence
of life insurance required by the Investor Rights Agreement accompanied by
evidence of payment of the premiums therefor.
5.15 Debentures. Company shall have executed and delivered to
each Purchaser the Debentures to be purchased by each Purchaser as required by
Section 2.2 hereof.
5.16 Warrants. Company shall have executed and delivered to
each Purchaser the Warrants required to be executed and delivered by Company to
such Purchaser pursuant to Section 2.3 hereof.
5.17 Exchangeable Note. Company shall have issued to
Centennial at the Closing the Debentures issuable to Centennial upon exchange of
the Exchangeable Note by Centennial in accordance with its terms.
5.18 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to Purchasers and their counsel,
and Purchasers and their counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
6. Conditions to Company's Obligations at Closing.
The obligations of Company to issue and sell the Debentures at
Closing are subject to the fulfillment on or before Closing of each of the
following conditions:
6.1 Representations and Warranties. The representations and
warranties made by each Purchaser in Section 4 shall be true on and as of the
Closing with the same force and effect as if they had been made at the Closing.
6.2 Performance. Purchasers shall have performed and complied
with all agreements and conditions contained in this Agreement required to be
performed or complied with by them on or before the Closing.
6.3 Qualifications. All authorizations, approvals or permits,
if any, to be obtained by Purchasers from any governmental authority or
regulatory body of the United States, any state, or any foreign jurisdiction
that are required prior to and in connection with the lawful issuance and sale
of the Debentures pursuant to this Agreement shall have been duly obtained and
shall be effective on and as of the Closing.
6.4 Legal Investment. At the time of the Closing, the purchase
of the Debentures by Purchasers hereunder shall be legally permitted by all laws
and regulations to which it or Company are subject.
6.5 Investor Rights Agreement. Purchasers at Closing shall
have executed and delivered the Investor Rights Agreement.
6.6 Shareholders Agreement. Purchasers at Closing shall have
executed and delivered the Shareholders Agreement.
7. Miscellaneous.
7.1 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement between the parties with
respect to the subject matter hereof, and no party shall be liable or bound to
any other party in any manner by, any warranties,
representations or covenants with respect to such subject matter, except as
specifically set forth herein or therein. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any third party any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
7.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of North Carolina as applied to agreements
among North Carolina residents made and to be performed entirely within the
State of North Carolina, and without regard to the conflicts of law principles
as may otherwise be applicable.
7.3 Jurisdiction and Venue. Each party to this Agreement
hereby irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereunder may be
brought in the courts of Wake County in the State of North Carolina or of the
United States of America for the Eastern District of North Carolina, and hereby
expressly submits to the personal jurisdiction and venue of such courts for the
purposes thereof and expressly waives any claim of improper venue and any claim
that such courts are an inconvenient forum. Each party hereby irrevocably
consents to the service of process of any of the aforementioned courts in any
such suit, action or proceeding, by the mailing of copies thereof by registered
or certified mail, postage prepaid, to its address set forth in this Agreement,
such service to become effective ten (10) days after such mailing.
7.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.6 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or upon confirmed delivery by facsimile or telecopy, or
on the fifth day (or the tenth day if to a party with a foreign address)
following mailing by registered or certified mail, return receipt requested,
postage prepaid, addressed: (a) if to a Purchaser or the Purchasers, at such
Purchaser's or Purchasers' address as set forth on Schedule 1.2 attached hereto,
or at such other address as such Purchaser or Purchasers shall have furnished to
the other parties hereto in writing, with copies to:
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.
Attn: Xxxxxx X. Xxxxxx, Esq.
Two Hannover Square
Xxxxx 0000
Xxxx Xxxxxx Xxx 0000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to Company, at the address noted below, or at such other address as
Company shall have furnished to the other parties hereto in writing:
ID Technologies Corporation
Attn: X. Xxxxxxxx X. Xxxxxxxx
NCSU Centennial Campus
000 Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx, L.L.P.
Attn: Xxxxx X. X'Xxxxx III
0000 Xxxxxxxx Xxxxxx
Post Office Xxx 00000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or (c) if to Founder, at the address noted below, or at such other address as
Founder shall have furnished to the other parties hereto in writing:
Xxxxxxx X. Xxxx
c/o ID Technologies Corporation
0000 Xxxx Xxxx Xxxxxx, Xxxxx X
Xxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
7.7 Attorneys' Fees. Should any litigation or arbitration be
commenced between the parties hereto concerning this Agreement, the party
prevailing in such litigation or arbitration shall be entitled, in addition to
such other relief as may be granted, to a reasonable sum for attorneys' fees and
costs in such litigation or arbitration, which shall be determined by the court
or arbitrator, as the case may be.
7.8 Survival. The representations, warranties, covenants and
agreements made by Company, Founder or by any Purchaser herein shall survive any
investigation made by Company, Purchasers and the Closing. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of Company, Founder or any Purchaser pursuant hereto or in connection
with the transactions contemplated hereby shall be deemed to be representations
and warranties made by Company, Founder and such Purchaser, as applicable,
hereunder as of the date of such certificate or instrument. Notwithstanding the
foregoing, to the
extent a party closes the purchase and sale of the Debentures with knowledge of
a breach of warranty by another party, such breach of warranty is waived as to
the party with knowledge thereof.
7.9 Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall to the extent practicable,
be modified so as to make it valid, legal and enforceable and to retain as
nearly as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
7.10 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to Company or Purchasers or any subsequent
holder of any Debentures upon any breach, default or noncompliance of Purchaser,
any subsequent holder of any Debentures or Company or Founder under this
Agreement or under the Articles, shall impair any such right, power or remedy,
nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind or character on the part of Company or
Purchasers of any breach, default or noncompliance under this Agreement or under
the Articles or any waiver on Company's or any Purchaser's part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing and that all
remedies, either under this Agreement or the Articles, by law, or otherwise
afforded to Company and Purchaser, shall be cumulative and not alternative.
7.11 Finder's Fees.
a. Company (i) represents and warrants that it has
retained no finder or broker in connection with the transactions
contemplated by this Agreement and (ii) hereby agrees to indemnify and
to hold Purchasers harmless of and from any liability for any
commission or compensation in the nature of a finder's fee to any
broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which Company or any
of its employees or representatives is responsible.
b. Purchasers (i) represent and warrant that none has
retained any finder or broker in connection with the transactions
contemplated for this Agreement, and (ii) hereby agree to indemnify and
to hold Company harmless of and from any liability for any commission
or compensation in the nature of a finder's fee to any broker or other
person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which any Purchaser or any of its
employees or representatives are responsible.
7.12 Fees and Expenses. Company shall pay at the Closing all
reasonable fees, costs and expenses of Purchasers relating to the negotiation
and execution of this Agreement, the Articles, the Investor Rights Agreement,
the Shareholders Agreement, the Debentures, the Warrants and the closing of the
transactions contemplated by such agreements, subject to maximum fees of counsel
to Purchasers of Eighteen Thousand Dollars ($18,000.00), plus
expenses of counsel. In addition, Company shall pay at the Closing all expenses
incurred by Centennial Venture Partners, LLC in the conduct of its due diligence
investigation and completion of the investment described herein, subject to
maximum expenses of Five Thousand Dollars ($5,000.00).
7.13 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of Company and the holders of at least
fifty percent (50%) of the outstanding principal amount of all Debentures
(including, for such purposes, on a proportional basis, any shares of Series A
Stock into which any Debentures have been converted and any shares of Underlying
Common Stock into which any such shares of Series A Stock have been converted
that have not been disposed of by any Purchaser or its transferees pursuant to
one or more registration statements under the 1933 Act, or pursuant to Rule
144). Any amendment or waiver effected in accordance with this Section shall be
binding upon the holder of any securities purchased under this Agreement at the
time outstanding (including securities into which such securities have been
converted), each future holder of all such securities, and Company.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
SIGNATURE PAGE FOR
COMPANY
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal as of the date first above written.
ID TECHNOLOGIES CORPORATION
ATTEST:
By: /s/ X. Xxxxxxxx X. Xxxxxxxx
----------------------------------
X. Xxxxxxxx X. Xxxxxxxx, President
/s/ Xxxxxxx X. Xxxx
---------------------
(Assistant) Secretary
[AFFIX CORPORATE SEAL]
SIGNATURE PAGE FOR FOUNDER
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal as of the date first above written.
FOUNDER:
By: /s/ Xxxxxxx X. Xxxx (SEAL)
----------------------------
Xxxxxxx X. Xxxx
SIGNATURE PAGE FOR
CENTENNIAL VENTURE PARTNERS, LLC
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal as of the date first above written.
CENTENNIAL VENTURE PARTNERS, LLC (SEAL)
By: Centennial Venture Management, LLC,
Manager (SEAL)
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx, Managing Director and
Manager
SIGNATURE PAGE FOR ADDITIONAL PURCHASER
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal as of the date first above written.
[For entity purchasers]
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Name of Purchaser
By:
Name:
Title:
[For individual purchasers]
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Name:
Address and Facsimile Number of Purchaser:
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Domicile and Principal Place of Business
of Purchaser:
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Amount of Investment:
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Original Principal Amount of Debentures:
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SCHEDULE 1.2
SCHEDULE OF PURCHASERS
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NAME AND ADDRESS ORIGINAL PURCHASE PRICE PERCENTAGE OF
PRINCIPAL FOR DEBENTURES ORIGINAL
AMOUNT OF PRINCIPAL
DEBENTURES AMOUNT OF
DEBENTURES
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Centennial Venture Partners, LLC
0 Xxxxx Xxxxx $300,000 $300,000 100%
Xxxxxxxx Xxxxxxxx Xxxx, Xxxxx Xxxxxxxx 00000
Facsimile Number (000) 000-0000
Attn: Xxxxx X. Xxxxx
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Total $300,000 $300,000 100%
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