UNIT PURCHASE AGREEMENT dated as of July 2, 2003 (the "Agreement") by and
among DCAP GROUP, INC., a Delaware corporation (the "Company"), and those
persons and entities whose names appear on Schedule A attached hereto
(individually, a "Purchaser" and collectively, the "Purchasers").
RECITALS
Upon the terms and conditions hereinafter set forth, the Purchasers desire
to purchase from the Company, and the Company desires to issue to the
Purchasers, units (collectively, the "Units") consisting in the aggregate of (i)
Secured Subordinated Promissory Notes (collectively, the "Notes") in the
aggregate principal amount of $3,500,000 and (ii) Warrants (collectively, the
"Warrants") for the purchase of an aggregate of 525,000 shares of Common Stock
of the Company (the "Warrant Stock").
Concurrently herewith, (i) the Company and the Purchasers are executing a
Pledge Agreement (the "Pledge Agreement") pursuant to which the Company is to
pledge (the "Pledge") to the Purchasers all of the issued and outstanding shares
of Common Stock (the "Payments Stock") of Payments Inc., a New York corporation
("Payments"), as security for the payment of all amounts due under the Notes,
and (ii) Payments and the Purchasers are executing a Security Agreement (the
"Security Agreement") pursuant to which Payments is to grant to the Purchasers a
security interest (the "Security Interest") in all of its assets (the "Payments
Assets") as security for the Company's obligations under the Notes.
A condition to the Closing (as hereinafter defined) is the closing by
Payments of a certain credit facility with Manufacturers and Traders Trust
Company (together with its successors and assigns, "M&T"), as contemplated by
that certain letter agreement (the "Commitment Letter") dated June 10, 2003
between M&T and Payments, among others (the "Credit Facility"). The Commitment
Letter requires that the Purchasers execute and deliver to M&T one or more
Subordination Agreements under terms satisfactory to M&T (whether one or more
than one, collectively, the "Subordination Agreement") pursuant to which, among
other things, the Pledge and the Security Interest shall be subordinated to the
security interest granted to M&T with respect to the Payments Stock and the
Payments Assets and the indebtedness, liabilities and obligations of Payments
and/or the Company to the Purchasers are subordinated to the indebtedness,
liabilities and obligations owed to M&T.
Concurrently herewith, the Company and the Purchasers are executing a
Registration Rights Agreement (the "Registration Rights Agreement") pursuant to
which the Purchasers are to be granted certain registration rights with respect
to the resale of the Warrant Stock.
Concurrently herewith, each of the Purchasers is executing an Appointment
of Representative (the "Appointment") pursuant to which Xxxx Xxxxxxx (the
"Representative") is being appointed the representative and attorney-in-fact of
the Purchasers, to act on their behalf with respect to this Agreement, the
Notes, the Pledge Agreement, the Security Agreement, the Subordination
Agreement, the Registration Rights Agreement and the Escrow Agreement (as
hereinafter defined).
The Notes, the Warrants, the Pledge Agreement, the Security Agreement, the
Subordination Agreement, the Registration Rights Agreement and the Escrow
Agreement are collectively referred to as the "Other Transaction Documents".
Concurrently herewith, the Purchase Price (as hereinafter defined), the
Notes, the Warrants, the Pledge Agreement, the Security Agreement, the
Subordination Agreement, the Registration Rights Agreement and the UCC-1 Filing
Authorization (as hereinafter defined) are being deposited into escrow pursuant
to the terms of the Escrow Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to the Purchasers,
and the Purchasers shall, severally and not jointly, purchase from the Company,
their respective Units. The closing (the "Closing") of the purchase and the sale
of the Units shall take place at the offices of Xxxxx Xxxx Xxxxxxxx Xxxxxxxxx,
1290 Avenue of the Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at such time as the
conditions set forth in Section 1.5 have been satisfied or waived by the
appropriate party or at such other location or such later date as the parties
shall agree (such date, the "Closing Date").
1.2 Deliveries upon Execution of this Agreement. On the date of execution
of this Agreement, the parties shall deliver or cause to be delivered the
following:
(a) the Company shall deliver or cause to be delivered:
(i) to each Purchaser,
(A) this Agreement, executed by the Company; and
(B) an escrow agreement (the "Escrow Agreement") by and
among the Company, Payments, the Purchasers and
Certilman Balin Xxxxx & Xxxxx, LLP (the "Escrow
Agent"), executed by the Company and Payments, pursuant
to which the Escrow Agent will hold in escrow the
documents referred to in Section 1.2(a)(ii) and
(b)(ii); and
(ii) to the Escrow Agent,
(A) Notes in the names of the respective Purchasers in the
principal amounts as specified next to each Purchaser's
name on Schedule
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A hereto (executed by the Company but undated);
(B) Warrants in the names of the respective Purchasers,
representing the right to purchase the number of shares
of Common Stock as specified next to each Purchaser's
name on Schedule A hereto (executed by the Company but
undated);
(C) four (4) copies of each of the Pledge Agreement, the
Security Agreement and the Registration Rights
Agreement (each executed by the Company or Payments, as
the case may be, but undated); and
(D) an authorization to file a UCC-1 Financing Statement
with the Secretary of State of New York with respect to
the Security Interest (the "UCC-1 Filing
Authorization") (executed by Payments but undated); and
(b) each Purchaser shall deliver or cause to be delivered:
(i) to the Company,
(A) this Agreement, executed by the Purchaser;
(B) the Escrow Agreement, executed by the Purchaser; and
(C) the Appointment, executed by the Representative and the
Purchaser; and
(ii) to the Escrow Agent,
(A) in United States dollars in immediately available
funds, the principal amount of the Purchaser's Note, as
specified next to such Purchaser's name on Schedule A
hereto (the "Purchase Price"); and
(B) four (4) copies of each of the Pledge Agreement, the
Security Agreement, the Subordination Agreement and the
Registration Rights Agreement (each executed by the
Purchaser but undated).
1.3 Deliveries upon Execution of Credit Facility Agreement. On the date of
execution of the Financing and Security Agreement with respect to the Credit
Facility, the Escrow Agent shall date, as of the date thereof, the Subordination
Agreement deposited in escrow with the Escrow Agent pursuant to Section
1.2(b)(ii) hereof and deliver it to M&T.
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1.4 Deliveries on Closing. On the Closing Date, the Escrow Agent shall
(a) date, as of the Closing Date, the Notes and the Warrants
deposited with the Escrow Agent pursuant to Section 1.2(a)(ii) hereof and
deliver them to the Representative,
(b) deliver the aggregate amount of the Purchase Price for the Units
deposited with the Escrow Agent pursuant to Section 1.2(b)(ii) hereof to or at
the direction of the Company,
(c) date, as of the Closing Date, the four (4) copies of the Pledge
Agreement, the Security Agreement and the Registration Rights Agreement
deposited with the Escrow Agent pursuant to Section 1.2(a)(ii) and (b)(ii)
hereof and deliver two (2) copies of each of the Company and the Representative,
and
(d) date, as of the Closing Date, the UCC-1 Filing Authorization
deposited with the Escrow Agent pursuant to Section 1.2(a)(ii) hereof and
deliver it to the Representative.
1.5 Conditions to Closing.
(a) The obligation of a Purchaser to perform at the Closing is
subject to satisfaction or waiver by such Purchaser of each of the following
conditions:
(i) Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be true and correct in all
material respects (except where the representation and warranty is already
qualified as to materiality, in which case the representation and warranty shall
be true and correct in all respects) as of the date when made and as of the
Closing Date as though first made at that time (except for representations and
warranties that speak of a specific date, which need only be true and correct as
of such date).
(ii) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants
and agreements required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.
(iii) Credit Facility Closing. The conditions to the initial
advance under the Credit Facility (other than the receipt by the Company or
Payments of the Purchase Price) shall have been satisfied or waived by M&T.
(iv) Compliance Certificate. The Company shall have delivered to
the Representative an Officer's Certificate signed by the Company's Chief
Executive Officer, dated as of Closing Date, certifying that the Company has
satisfied the conditions set forth in Section 1.5(a).
(b) The obligation of the Company to perform at the Closing is
subject to satisfaction or waiver by the Company of each of the following
conditions:
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(i) Representations and Warranties. The representations and
warranties of each Purchaser in this Agreement shall be true and correct in all
material respects (except where the representation and warranty is already
qualified as to materiality, in which case the representation and warranty shall
be true and correct in all respects) as of the date when made and as of the
Closing Date as though first made at that time (except for representations and
warranties that speak of a specific date, which need only be true and correct as
of such date).
(ii) Performance by the Company. Each Purchaser shall have
performed, satisfied and complied in all material respects with all covenants
and agreements required by this Agreement to be performed, satisfied or complied
with by such Purchaser at or prior to the Closing Date.
(iii)Credit Facility Closing. The conditions to the initial
advance under the Credit Facility (other than the receipt by the Company or
Payments of the Purchase Price) shall have been satisfied or waived by M&T..
1.6 Termination. If the Closing shall not have occurred on or prior to
August 31, 2003, then this Agreement shall be automatically deemed null and void
and of no further force and effect and the Escrow Agent shall promptly
thereafter return the Purchase Price to the respective Purchasers and shall
destroy the other documents held by it in escrow.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company makes the following representations and warranties to the
Purchasers on the date hereof and the Closing Date:
2.1 Valid Corporate Existence. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the requisite corporate power to carry on its business
as now conducted and to own its assets. The Company is in good standing and
qualified to do business as a foreign corporation in each jurisdiction in which
it is required to be so qualified, except where the failure to be so qualified
or in good standing, as the case may be, would not, individually or in the
aggregate, have or reasonably could be expected to result in: (i) an adverse
effect on the legality, validity or enforceability of this Agreement or the
Other Transaction Documents to which it is a party, (ii) a material adverse
effect on the results of operations, assets, business or condition (financial or
otherwise) of the Company and the Subsidiaries (as defined below), taken as a
whole, or (iii) an adverse impairment to the Company's ability to perform on a
timely basis its obligations under this Agreement or the Other Transaction
Documents to which it is a party (any of (i), (ii) or (iii), a "Material Adverse
Effect").The copies of the Company's Restated Certificate of Incorporation and
By-laws, as amended, which have heretofore been made available to the
Purchasers, are true and complete copies of such documents as now in effect.
2.2 Capitalization.
(a) The authorized capital stock of the Company consists of
40,000,000 shares of Common Stock, $.01 par value, of which 12,353,402 shares
are issued and outstanding, and 1,000,000 shares of Preferred Stock, $.01 par
value, none of which are issued and outstanding. All the issued and outstanding
shares of Common Stock have been validly issued and are fully paid and
nonassessable.
(b) Except as set forth on Schedule B attached hereto, there are no
subscriptions, options, warrants, rights, calls or other commitments to which
the Company is a party, or by which it is bound, calling for the issuance, sale,
transfer or other disposition of any class of securities of the Company and
there are no outstanding securities or instruments of the Company convertible
into or exchangeable for shares of Common Stock or any other securities of the
Company.
2.3 Subsidiaries.
(a) Schedule C attached hereto sets forth a complete list of the
names and jurisdictions of incorporation of each of the Company's subsidiaries
(excluding inactive entities) (collectively, the "Subsidiaries"). Each of the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power to carry on its business as now conducted and to own
its assets. Each Subsidiary is qualified to do business as a foreign corporation
in each jurisdiction in which it is required to be so qualified, except where
the failure to be so qualified would not, individually or in the aggregate, have
or reasonably could be expected to result in, a Material Adverse Effect.
(b) Except as set forth on Schedule C, all of the outstanding capital
stock of each of the Subsidiaries is owned, directly or indirectly, by the
Company.
(c) Except in connection with the Credit Facility and except as set
forth on Schedule D attached hereto, there are no subscriptions, options,
warrants, rights, calls or other commitments to which the Company or any of the
Subsidiaries is a party, or to which any of them is bound, calling for the
issuance, sale, transfer or other disposition of any class of securities of any
of the Subsidiaries and there are no outstanding securities or instruments of
the Company of any of the Subsidiaries convertible into or exchangeable for
shares of Common Stock or any other securities of any of the Subsidiaries.
2.4 Consents. No consents of governmental or other regulatory agencies,
foreign or domestic, or of other parties are required to be received by or on
the part of the Company or Payments, as the case may be, to enable it to enter
into and carry out this Agreement and the Other Transaction Documents to which
it is a party and the transactions contemplated hereby and thereby.
2.5 Authority; Binding Nature of Agreement. The Company or Payments, as
the case may be, has the requisite corporate power and authority to enter into
this Agreement and the Other Transaction Documents to which it is a party and to
carry out its obligations hereunder and
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thereunder. The execution and delivery of this Agreement and the Other
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors of the Company or Payments, as the case may be, and no other
corporate proceedings are necessary to authorize the execution and delivery of
this Agreement and the Other Transaction Documents to which it is a party and
the consummation of the transactions contemplated hereby and thereby. Each of
this Agreement and the Other Transaction Documents to which it is a party
constitutes the valid and binding obligation of the Company or Payments, as the
case may be, and is enforceable against the Company or Payments, as the case may
be, in accordance with its terms.
2.6 SEC Reports. The Company has previously delivered to the
Representative, for distribution to the Purchasers, true and complete copies of
(i) its Annual Report on Form 10-KSB for the fiscal year ended December 31,
2002, (ii) its Quarterly Report on Form 10-QSB for the period ended March 31,
2003 and (iii) its Current Reports on Form 8-K for events dated April 29, 2003,
May 27, 2003, May 28, 2003 and June 11, 2003. The Company has filed all reports
required to be filed by it under the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including pursuant to Section 13(a) or 15(d) thereof and
including any and all filings required under the Xxxxxxxx-Xxxxx Act of 2002, for
the two years preceding the date hereof (or such shorter period as the Company
was required by law to file such reports) (the foregoing materials, as amended,
being collectively referred to herein as the "SEC Reports") on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of the respective
dates of the SEC Reports (except that, with respect to SEC Reports that have
been amended, as of the respective dates of the latest amendment thereto), the
SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Securities and Exchange Commission (the "Commission") promulgated thereunder,
and none of the SEC Reports, when filed (except that, with respect to SEC
Reports that have been amended, when the latest amendment thereto was filed),
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto (subject, in the case of unaudited
statements, to the absence of footnotes), and fairly present in all material
respects the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
2.7 No Breach. Neither the execution and delivery of this Agreement or the
Other Transaction Documents nor compliance by the Company with any of the
provisions hereof or thereof nor the consummation of the transactions
contemplated hereby or thereby, will:
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(a) violate or conflict with any provision of the Restated
Certificate of Incorporation or By-laws of the Company or any of its
Subsidiaries;
(b) violate or, alone or with notice or the passage of time, result
in the breach or termination of, or otherwise give any contracting party the
right to terminate, or declare a default under, the terms of any agreement to
which the Company or any of its Subsidiaries is a party or by which it or any of
its assets may be bound;
(c) violate any judgment, order, injunction, decree or award against,
or binding upon, the Company or any of its Subsidiaries or upon their respective
assets; or
(d) violate any law or regulation of any jurisdiction relating to the
Company or any of its Subsidiaries.
2.8 Brokers. The Company has not engaged, consented to, or authorized any
broker, finder, investment banker or other third party to act on its behalf,
directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement.
2.9 Warrant Stock. The Warrant Stock is duly authorized and, when issued
and paid for in accordance with the Warrants, will be duly and validly issued,
fully paid and non-assessable, free and clear of all Liens. The Company has
reserved from its duly authorized capital stock the number of shares
representing the Warrant Stock.
2.10 Litigation. Except as set forth in the SEC Reports, there is no action
which (i) adversely affects or challenges the legality, validity or
enforceability of any of this Agreement or the Other Transaction Documents or
the Warrant Stock or (ii) would, if there were an unfavorable decision,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries, nor
any current director or officer thereof, is or has been for the last three (3)
years the subject of any action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty
with respect to the Company. To the knowledge of the Company, there has not
been, during the last three (3) years, and there is not pending or contemplated,
any investigation by the Commission involving the Company or any current
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.
2.11 Title to Assets. The Company and the Subsidiaries have good title in
fee simple to all real property owned by them that is material to their
respective businesses and good title in all personal property owned by them that
is material to their respective businesses, in each case free and clear of all
liens, except as set forth in the SEC Reports or on Schedule E attached hereto
and for liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries are
in compliance in all material reports.
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2.12 Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary and material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have would, individually or in the aggregate, have, or reasonably be expected
to result in, a Material Adverse Effect (collectively, the "Intellectual
Property Rights"). Neither the Company nor any Subsidiary has received a written
notice that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person whi8ch if
determined adversely to the Company would, individually or in the aggregate,
have or could reasonably be expected to result in a Material Adverse Effect.
Except as set forth in the SEC Reports, to the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.
2.13 Transactions With Affiliates and Employees. Except as set forth in the
SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
2.14 Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls which the audit committee of
the board of directors believes is sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for significant assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
2.15 Certain Registration Matters. Assuming the accuracy of the Purchasers'
representations and warranties, no registration under the Securities Act is
required for the offer and sale of the Warrant Stock by the Company to the
Purchasers under this Agreement or the Other Transaction Documents.
2.16 Listing and Maintenance Requirements. The Company has not, in the two
years preceding the date hereof, received notice (written or oral) from the NASD
OTC Electronic Bulletin Board to the effect that the Company is not in
compliance with the listing or maintenance requirements thereof. The Company is,
and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with the listing and maintenance requirements for continued
listing of the Common Stock.
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2.17 Investment Company. The Company is not, and is not an affiliate of, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
2.18 Disclosure. The Company confirms that neither it nor any person acting
on its behalf has provided any of the Purchasers or their agents or counsel with
any information that the Company believes constitutes material, non-public
information. The Company understands and confirms that the Purchasers will rely
on the foregoing representations and covenants in effecting transactions in
securities of the Company. Neither this Agreement nor any Other Transaction
Document contains any untrue statement of material fact concerning the Company,
its Subsidiaries or this offer and sale of securities, or omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
The Purchasers acknowledge and agree that the Company does not make and has
not made any representation or warranty with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each Purchaser makes the following representations and warranties to the
Company, with respect to himself, on the date hereof and the Closing Date:
3.1 Authority; Binding Nature of Agreement. The Purchaser has the
requisite power to enter into this Agreement and the Other Transaction Documents
to which he is a party and to carry out his obligations hereunder and
thereunder. Each of this Agreement and the Other Transaction Documents to which
he is a party constitutes the valid and binding obligation of the Purchaser and
is enforceable in accordance with its terms.
3.2 No Breach. Neither the execution and delivery of this Agreement or the
Other Transaction Documents to which he is a party nor compliance by the
Purchaser with any of the provisions hereof or thereof nor the consummation of
the transactions contemplated hereby or thereby will:
(a) violate or conflict with any provisions of the Certificate of
Incorporation, By-Laws or other organizational documents of the Purchaser;
(b) violate or, alone or with notice or the passage of time, result
in the breach of any agreement to which the Purchaser is a party or by which he
is bound;
(c) violate any judgment, order, injunction, decree or award against,
or binding upon, the Purchaser or upon his assets; or
(d) violate any law or regulation of any jurisdiction relating to the
Purchaser.
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3.3 Brokers. The Purchaser has not engaged, consented to, or authorized
any broker, finder, investment banker or other third party to act on his behalf,
directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement.
3.4 Investment Representations.
(a) The Purchaser is acquiring the Note and the Warrants, and will
acquire the Warrant Stock, for his own account, and not as nominee or agent, and
will not resell or otherwise distribute any of the Notes, the Warrants or the
Warrant Stock except in compliance with the Securities Act.
(b) The Purchaser understands that (i) neither the Notes, nor the
Warrants nor the Warrant Stock have been registered under the Securities Act or
any state securities laws, (ii) neither the Notes, nor the Warrants nor the
Warrant Stock may be resold unless they are registered under the Securities Act
or an exemption from registration is available, and (iii) there is no agreement
on the part of the Company to register any of the Notes, the Warrants or the
Warrant Stock thereunder.
(c) The Purchaser recognizes that the acquisition of the Notes, the
Warrants and the Warrant Stock involves a high degree of risk and is suitable
only for persons of adequate financial means who have no need for liquidity in
this investment in that (i) he may not be able to liquidate his investment in
the event of an emergency; (ii) transferability is extremely limited; and (iii)
he could sustain a complete loss of his investment.
(d) The Purchaser represents that he (i) is competent to understand
and does understand the nature of this investment; and (ii) is able to bear the
economic risk of this investment.
(e) The Purchaser represents that he is an "accredited investor," as
such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
(f) The Purchaser represents that he has been furnished by the
Company with all information regarding the Company which he had requested or
desired to know; that all documents which could be reasonably provided have been
made available for his inspection and review; that he has been afforded the
opportunity to ask questions of and receive answers from duly authorized
representatives of the Company concerning the terms and conditions of the
offering, and any additional information which he had requested, including,
without limitation, with regard to the contemplated Credit Facility; that he has
reviewed the SEC Reports; and that he has had the opportunity to consult with
his own tax or financial advisor concerning a purchase of the Units.
3.5 Restrictive Legend. The Purchasers agree to the imprinting of the
following legend on the certificates evidencing the Warrant Stock:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
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SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES SUBJECT TO COMPLIANCE WITH APPLICABLE LAW.
The Company acknowledges and agrees that none of the Purchasers makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 Entire Agreement. This Agreement, including the schedules attached
hereto, which are a part hereof, constitutes the entire agreement of the parties
with respect to the subject matter hereof.
4.2 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this section prior to 6:30 p.m. (New York City time) on a business
day, (ii) the business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Agreement later than 6:30 p.m. (New York City time) on any date and earlier
than 11:59 p.m. (New York City time) on such date, (iii) the business day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows::
If to the Company at:
0000 Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
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with a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Purchasers at:
c/o Xxxx Xxxxxxx
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Xxxx Xxxxxxxx Xxxxxxxxx
Xxxxx Cave LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or at such other address as any party or person shall designate by notice to the
other parties in accordance with the provisions hereof.
4.3 Choice of Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by this Agreement and the Other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York, Borough of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of the Other Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court or that such proceeding is improper. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If any party shall
commence a proceeding to enforce any provisions of this Agreement or the Other
Transaction Documents, then the prevailing party in such proceeding shall be
reimbursed by the other party for its reasonable
13
attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such proceeding.
4.4 Severability. In the event any clause, section or part of this
Agreement shall be held or declared to be void, illegal or invalid for any
reason, all other clauses, sections or parts of this Agreement which can be
effected without such void, illegal or invalid clause, section or part shall
nevertheless continue in full force and effect.
4.5 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns.
4.6 Headings. The headings or captions in this Agreement are for
convenience of reference only and do not in any way modify, interpret or
construe the intent of the parties or affect any of the provisions of this
Agreement.
4.7 Facsimile Signatures. Signatures transmitted by facsimile shall be
deemed original signatures.
4.8 Counterpart Signatures. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.9 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
4.10 Representation by Counsel. Each party acknowledges that he has been
represented by counsel in connection with this Agreement and the Other
Transaction Documents and the transactions contemplated hereby and thereby.
Accordingly, any rule or law or any legal decision that would require the
interpretation of any claimed ambiguities in this Agreement or the Other
Transaction Documents against the party that drafted it has no application and
is expressly waived by the parties. The provisions of this Agreement and the
Other Transaction Documents shall be interpreted in a reasonable manner to give
effect to the intent of the parties hereto.
4.11 Gender. All references to the masculine gender herein shall be deemed
to refer to the feminine and neuter where applicable.
4.12 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Representative or, in the case of a waiver, by the party
(including the Representative on behalf of the Purchasers) against whom
enforcement of any such waiver is sought. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
14
4.13 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing.
4.14 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under this Agreement and the Other Transaction
Documents are several and not joint with the obligations of any other Purchaser,
and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under this Agreement and the Other
Transaction Documents. Nothing contained in this Agreement and the Other
Transaction Documents, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement and the Other
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement and the Other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The foregoing shall not be construed to limit the
powers of the Representative pursuant to the Appointment.
{Remainder of page intentionally left blank.}
15
WITNESS the execution of this Agreement as of the date first above written.
DCAP GROUP, INC.
By:
-----------------------------
Xxxxx Xxxxxxxxx
Chief Executive Officer
PURCHASERS:
TO BE COMPLETED BY INDIVIDUAL TO BE COMPLETED BY CORPORATE,
PURCHASER PARTNERSHIP, LIMITED LIABILITY
COMPANY OR TRUST PURCHASER
----------------------------------- -------------------------------------
Name(s) of Purchaser(s) [Please Print] Name of Purchaser [Please Print]
---------------------------------- By:
Signature of Purchaser -----------------------------------
Authorized Signatory
----------------------------------- -------------------------------------
Signature of Purchaser, if jointly held Name and Title of Authorized Signatory
[Please Print]
----------------------------------- ------------------------------------
Social Security Number(s) of Purchaser(s) Taxpayer Identification Number of Purchaser
List of Schedules
SCHEDULE A - Purchasers
SCHEDULE B - Outstanding Options and Warrants
SCHEDULE C - Subsidiaries
SCHEDULE D - Pledge of Shares
SCHEDULE E - Liens
