Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), is made as of
December 15, 1999, by and between Nurescell Inc., a corporation organized under
the laws of the State of Nevada, U.S.A., with headquarters located at 0000
Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 (the "Company")
and the buyer set forth on the execution page hereof (the "Buyer").
RECITALS
A. The Company and the Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
provisions of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act") and Section 4(2) under the 1933 Act;
B. The Buyer desires to purchase from the Company, and the Company
desires to sell to the Buyer, for the amounts and upon the terms and conditions
stated in this Agreement, in a closing (the "Closing") as herein described,
certain of the Company's convertible notes as listed and described in Recital
B(i) immediately below, and certain warrants as listed and described in Recital
B(ii) below.
(i) At the Closing (the "Closing"), the Company's Series 1999-A Eight
Percent (8%) Convertible Notes, the form of which is attached
hereto as Exhibit A (the "Notes"), which may be converted into
common stock of the Company, $.0001 par value per share ("Common
Stock"), upon the terms and conditions hereof and upon the terms
and conditions of the Notes. The purchase price for the Notes
sold pursuant to this Agreement shall be as stated in Section
1(a) below. The total aggregate face amount of the Notes to be
issued and sold by the Company at the Closing is Three Hundred
Eighty Five Thousand and no/100 United States Dollars
($385,000.00), all in accordance with the terms of this Agreement
and of the Notes.
(ii) At the Closing, as additional consideration for Buyer's purchase
of the Notes a warrant (the "Warrants") to purchase 25,000 shares
of Common Stock at a purchase price of $2.25 per share, which
Warrants must be exercised if at all within three (3) years after
the date of issuance. The Warrants shall be substantially in the
form attached hereto as Exhibit B.
The Common Stock into which the Notes may (in accordance with their terms)
be convertible shall be collectively referred to herein as the "Conversion
Shares." Certain shares of Common Stock may (at the Company's option as
described in the Notes) be issued to the Buyer in payment of interest (the
"Interest Shares"). The Common Stock received upon exercise of the Warrants
shall be referred to as the "Warrant Shares." The Notes, the Conversion Shares,
the Interest
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Shares (if any), the Warrants and the Warrant Shares may be collectively
referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
(the "Registration Rights Agreement") substantially in the form of Exhibit C
attached hereto pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the Company and the Buyer hereby
agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
a. PURCHASE. The Buyer hereby agrees to purchase from the Company, and
the Company agrees to sell to the Buyer, $385,000.00 in aggregate principal
amount of Notes at the Closing. The purchase price (the "Purchase Price") for
the Notes purchased at the Closing shall be $250,000.00.
b. THE CLOSING. The date of the Closing (the "Closing Date") shall be
December 15, 1999. The Purchase Price for the Notes being purchased at the
Closing shall be delivered to the Escrow Agent (as defined in the Escrow
Agreement substantially in the form of Exhibit D attached hereto (the "Escrow
Agreement")) on behalf of the Company on or before the Closing Date. On or
before the Closing Date, the Company shall deliver the original Notes and
Warrants being purchased at the Closing, duly issued, authorized and executed by
the authorized officers on behalf of the Company, to the Escrow Agent (as
defined in the Escrow Agreement) on behalf of the Buyer.
c. FORM OF PAYMENT. The Buyer shall pay the Purchase Price for the
Securities purchased at the Closing by wire transfer of immediately available
funds in United States Dollars, to be deposited into the Escrow Account as
defined in the Escrow Agreement, against delivery to the Escrow Agent of duly
executed Notes and Warrants being purchased by the Buyer hereunder at such
Closing. The Escrow Agent shall be responsible for delivery of the Purchase
Price to the Company and the Notes and Warrants to the Buyer in accordance with
the terms of the Escrow Agreement and with the instructions of the said parties.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer understands, agrees with, and represents and warrants to the
Company with respect to its purchase hereunder, that:
a. INVESTMENT PURPOSES; COMPLIANCE WITH 1933 ACT. The Buyer is purchasing
the Securities for its own account for investment only and not with a view
towards, or in connection
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with, the public sale or distribution thereof, except pursuant to sales
registered under or exempt from the 1933 Act and applicable state securities
laws. The Buyer is not purchasing the Securities for the purpose of covering
short sale positions in the Common Stock established on or prior to the Closing
Date. The Buyer agrees to offer, sell or otherwise transfer the Securities only
(i) in accordance with the terms of this Agreement, the Notes and the Warrants,
as applicable, and (ii) pursuant to registration under the 1933 Act or to an
exemption from registration under the 1933 Act and any other applicable
securities laws. The Buyer does not by its representations contained in this
Section 2(a) agree to hold the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time pursuant to a
registration statement or in accordance with an exemption from registration
under the 1933 Act, in all cases in accordance with applicable state and federal
securities laws. The Buyer understands that it shall be a condition to the
issuance of the Conversion Shares, the Warrant Shares and the Interest Shares
(if any) that the Conversion Shares, the Warrant Shares and the Interest Shares
(if any) be and are subject to the representations set forth in this Section
2(a).
b. ACCREDITED INVESTOR STATUS. The Buyer is an "accredited investor" as
that term is defined in Rule 501 (a) of Regulation D. The Buyer is a Delaware
limited partnership. The Buyer has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of an
investment made pursuant to this Agreement. The Buyer is aware that it may be
required to bear the economic risk of an investment made pursuant to this
Agreement for an indefinite period of time, and is able to bear such risk for an
indefinite period.
c. RELIANCE ON EXEMPTIONS. The Buyer understands the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of the applicable United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, acknowledgments,
understandings, agreements and covenants of the Buyer set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Buyer to acquire the Securities.
d. INFORMATION. The Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities that have
been requested by the Buyer. The Buyer and its advisors, if any, have been
afforded the opportunity to ask all such questions of the Company as they have
in their discretion deemed advisable. The Buyer understands that its investment
in the Securities involves a high degree of risk. The Buyer has sought such
accounting, legal and tax advice as it has considered necessary to an informed
investment decision with respect to the investment made pursuant to this
Agreement.
e. NO GOVERNMENT REVIEW. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
approved or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities, nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
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f. TRANSFER OR RESALE. The Buyer understands that: (i) except as provided
in the Registration Rights Agreement, the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless either (a) subsequently
registered thereunder or (b) the Buyer shall have delivered to the Company an
opinion by counsel reasonably satisfactory to the Company, in form, scope and
substance reasonably satisfactory to the Company, to the effect that the
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, (ii) any sale of
such securities made in reliance on Rule 144 (as hereafter defined) may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such securities under circumstances in which the
seller (or the person though whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder and applicable state securities laws, and (iii) neither the
Company nor any other person is under any obligation to register such securities
under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to
this Agreement or the Registration Rights Agreement).
g. LEGEND. The Buyer understands that the Notes, the Warrants, and until
such time as the Conversion Shares, the Warrant Shares and the Interest Shares
(if any) (collectively, the "Registrable Securities"), have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement or
otherwise may be sold by the Buyer pursuant to Rule 144 (as amended, or any
applicable rule which operates to replace said Rule) promulgated under the 1933
Act ("Rule 144"), the stock certificates representing the Registrable Securities
will bear a restrictive legend (the "Legend") in substantially the following
form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
The Legend shall be removed and the Company will issue certificates without
the Legend to the holder of the applicable Notes or any Registrable Securities
upon which the Legend is stamped, in accordance with Section 5(b).
h. AUTHORIZATION; ENFORCEMENT. This Agreement, the Registration Rights
Agreement and the Escrow Agreement have been duly and validly authorized,
executed and delivered by the
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Buyer and are each and collectively valid and binding agreements of the Buyer
enforceable in accordance with their terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium, and
other similar laws affecting the enforcement of creditors' rights generally.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company understands, agrees with, and represents and warrants to the
Buyer that:
a. ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized and existing in good standing under the laws of the jurisdiction in
which is is incorporated, except as would not have a Material Adverse Effect (as
defined below), and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. The Company is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary and where the failure so to qualify would have a
Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on the operations, properties or financial condition of the Company taken
as a whole. The Common Stock is eligible to trade and is listed for trading on
the OTC BULLETIN BOARD MARKET. The Company has received no notice, either
written or oral, with respect to the continued eligibility of the Common Stock
for such listing, and the Company has maintained all requirements for the
continuation of such listing, and the Company does not reasonably anticipate
that the Common Stock will be delisted from the OTC BULLETIN BOARD MARKET for
the foreseeable future. The Company has complied or will timely comply with all
requirements of the National Association of Securities Dealers and the OTC
BULLETIN BOARD MARKET with respect to the issuance of the Securities.
b. AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and the Escrow Agreement, to issue and sell the
Notes and the Registrable Securities in accordance with the terms hereof, and to
perform its obligations under the Notes in accordance with the requirements of
the same, (ii) the execution, delivery and performance of this Agreement, the
Notes, the Warrants, the Registration Rights Agreement and the Escrow Agreement
by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company, its Board of Directors,
or its stockholders is required, (iii) this Agreement, the Registration Rights
Agreement, the Escrow Agreement and, on the Closing Date, the Notes and Warrants
sold at the Closing, have been duly and validly authorized, executed and
delivered by the Company, and (iv) this Agreement, the Notes (when issued), the
Warrants (when issued), the Registration Rights Agreement and the Escrow
Agreement constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting, generally, the enforcement of creditors' rights and remedies or by
other equitable principles of general application. The Company (and its legal
counsel) has examined this Agreement and is satisfied in its sole discretion
that this Agreement and
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the accompanying Exhibits, Schedules and the Addenda, if any, are in accordance
with Regulation D and the 1933 Act and are effective to accomplish the purposes
set forth herein and therein.
c. CAPITALIZATION. As of December 1, 1999, the authorized capital stock
of the Company consists of 50,000,000 shares of Common Stock of which 13,096,000
shares were issued and outstanding. An additional 554,000 shares of Common Stock
are in the process of being issued to a number of individuals involved with the
affairs of the Company, not to exceed five (5) persons. All of such outstanding
shares have been validly issued and are fully paid and nonassessable. No shares
of Common Stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances. Except as disclosed in Schedule 3(c) (attached if
applicable), as of the effective date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its subsidiaries, (ii) there are no outstanding debt securities, and
(iii) there are no agreements or arrangements under which the Company or any of
its subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act (except as provided herein and in the Registration
Rights Agreement). If requested by the Buyer, the Company has furnished to the
Buyer, and the Buyer acknowledges receipt of same by its signature hereafter,
true and correct copies of the Company's Articles of Incorporation, as amended,
as in effect on the date hereof ("Articles of Incorporation"), and the Company's
Bylaws, as in effect on the date hereof (the "Bylaws").
d. ISSUANCE OF SECURITIES. The Registrable Securities are all duly
authorized and reserved for issuance, and in all cases upon issuance shall be
validly issued, fully paid and non-assessable, free from all taxes, liens and
charges with respect to the issue thereof, and will not be subject to preemptive
rights or other similar rights of stockholders of the Company.
e. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF THE SECURITIES. The
Company acknowledges and agrees that the Buyer is not acting as financial
advisor to or fiduciary of the Company (or in any similar capacity with respect
to this Agreement or the transactions contemplated hereby), that this Agreement
and the transactions contemplated hereby, and the relationship between the Buyer
and the Company, are and will be considered "arms-length" notwithstanding any
other or prior agreements or nexus between the Buyer and the Company, whether or
not disclosed, and that any statement made by the Buyer, or any of its
representatives or agents, in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to the Buyer's purchase of the Securities and has not been relied
upon in any way by the Company, its officers or directors. The Company further
represents to the Buyer that the Company's decision to enter into this Agreement
and the transactions contemplated hereby have been based solely upon an
independent evaluation by the Company, its officers and directors.
f. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security
6
or solicited any offers to buy any security under circumstances which would
prevent the parties hereto from consummating the transactions contemplated
hereby pursuant to an exemption from registration under the 1933 Act and
specifically in accordance with the provisions of Regulation D. The transactions
contemplated hereby are exempt from the registration requirements of the 1933
Act, assuming the accuracy of the representations and warranties contained
herein of the Buyer.
g. NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Articles of
Incorporation or Bylaws or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). Except as set forth in Schedule 3(g)
(attached if applicable), neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation or other organizational documents,
and neither the Company nor any of its/subsidiaries is in default (and no event
has occurred which, with notice or lapse of time or both, would put the Company
or any of its subsidiaries in default) under, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, except
for possible defaults or rights as would not, in the aggregate or individually,
have a Material Adverse Effect. The business of the Company and its subsidiaries
is not being conducted, and shall not be conducted so long as the Buyer owns any
of the Securities, in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations which neither singly or in
the aggregate would have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and any
applicable state securities laws (any of which exceptions are set forth in
Schedule 3(g)), the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement, the Notes, the Warrants, the Registration Rights Agreement
or the Escrow Agreement in accordance with the terms hereof and thereof, or to
perform its obligations with respect to the Notes exactly as described in the
Notes (once issued), and with respect to the Warrants exactly as described in
the Warrants (once issued).
h. SEC DOCUMENTS; FINANCIAL STATEMENTS. Except as disclosed on Schedule
3(h) hereof, since at least June 28, 1999, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed
prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to
7
as the "SEC Documents"). The Company has delivered to the Buyer as requested by
the Buyer true and complete copies of the SEC Documents, except for such
exhibits, schedules and incorporated documents. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, 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. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyer (including the information referred to in Section 2(d) of this
Agreement) contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstance under which they are or were made, not misleading.
Except as set forth in the financial statements of the Company included in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
the date of such financial statements and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such financial
statements, in each case of clause (i) and (ii) next above which, individually
or in the aggregate, are not material to the financial condition, business,
operations, properties, operating results or prospects of the Company. The SEC
Documents contain a complete and accurate list of all written and oral
contracts, agreements, leases or other instruments to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is subject which
are required by the rules and regulations promulgated by the SEC to be so listed
(each a "Contract"). None of the Company, its subsidiaries or, to the best of
the Company's knowledge, any of the other parties thereto, is in breach or
violation of any Contract, which breach or violation would, or with the lapse of
time, the giving of notice, or both, have a Material Adverse Effect.
i. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC Documents,
since at least September 30, 1998, there has been no material adverse change and
no material adverse development in the business, properties, operation,
financial condition, results of operations or prospects of the Company. The
Company has not taken any steps, and does not currently have any reasonable
expectation of taking any steps, to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge that its creditors intend to
initiate involuntary bankruptcy proceedings. The Company shall, at least until
Buyer no longer holds any of the Securities, maintain
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its corporate existence in good standing and shall pay all taxes when due except
for taxes it reasonably disputes.
j. ABSENCE OF LITIGATION. Except as set forth in Schedule 3(j) (attached
if applicable), there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein.
k. FOREIGN CORRUPT PRACTICES. Neither the Company nor any of its
subsidiaries, nor any officer, director or other person acting on behalf of the
Company or any subsidiary has, in the course of his actions for or on behalf of
the Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity, made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
l. BROKERS; NO GENERAL SOLICITATION. The Company has taken no action that
would give rise to any claim by any person for brokerage commissions, finder's
fees or similar payments relating to this Agreement and the transactions
contemplated hereby, other than to Bridgwater Capital Corporation and to
Dutchess Capital Partners, Inc. The Company and the Buyer both acknowledge that
no other broker or finder was involved with respect to the transactions
contemplated hereby, other than Bridgewater Capital Corporation and Dutchess
Capital Partners, Inc. Neither the Company nor any distributor participating on
the Company's behalf in the transactions contemplated hereby nor any person
acting for the Company, or any such distributor, has conducted any "general
solicitation," as described in Rule 502(c) under Regulation D, with respect to
the Securities being offered hereby.
m. ACKNOWLEDGMENT OF DILUTION. The number of Conversion Shares issuable
upon conversion of the Notes may increase substantially in certain
circumstances, including the circumstance wherein the trading price of the
Common Stock declines. The Company's executive officers and directors have
studied and fully understand the nature of the securities being sold hereunder
and recognize they have a potential dilutive effect. The board of directors of
the Company has concluded in its good faith business judgment that such issuance
is in the best interests of the Company. The Company acknowledges that its
obligation to issue Conversion Shares upon conversion of the Notes is binding
upon it and enforceable regardless of the dilution that such issuance may have
on the ownership interests of other stockholders.
n. ELIGIBILITY TO FILE REGISTRATION STATEMENT. The Company is currently
eligible to file a registration statement with the SEC either on Form SB-1, Form
SB-2 or Form S-3 under the 1933 Act.
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o. (Intentionally Omitted.)
p. NON-DISCLOSURE OF NON-PUBLIC INFORMATION. (a) The Company shall in no
event disclose non-public information to the Buyer, advisors to or
representatives of the Buyer unless prior to such disclosure of information the
Company marks such information as "non-public information - confidential" and
provides the Buyer, such advisors and representatives with the opportunity to
accept or refuse to accept such non-public information for review. The Company
may, as a condition to disclosing any non-public information hereunder, require
the Buyer, its advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the Buyer.
(b) Nothing herein shall require the Company to disclose non-public
information to the Buyer, its advisors or representatives, and the Company
represents that it does not disseminate non-public information to investors who
purchase stock in the Company in a public offering, to money managers or to
securities analysts; provided, however, that notwithstanding anything herein to
the contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Buyer and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the registration statement
to be filed pursuant to the Registration Rights Agreement, would cause such
prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements therein, in light
of the circumstances in which they were made, not misleading. Nothing herein
shall be construed to mean that such persons or entities other than the Buyer
(without the written consent of the Buyer prior to disclosure of such
information) may not obtain non-public information in the course of conducting
due diligence in accordance with the terms of this Agreement and nothing herein
shall prevent any such persons or entities from notifying the Company of their
opinion that, based upon such due diligence by such persons or entities, that
the registration statement contains an untrue statement of a material fact or
omits a material fact required to be stated in such registration statement or
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts timely to satisfy
each of the conditions to be satisfied by it as provided in Sections 6 and 7 of
this Agreement.
b. SECURITIES LAWS. The Company agrees to timely file a Form D (or
equivalent form required by applicable state law) with respect to the Securities
if and as required under Regulation D and applicable state securities laws and
to provide a copy thereof to the Buyer promptly after such filing. The Company
shall, on or before the Closing Date, take such action as is necessary to sell
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the Securities being sold to the Buyer on each such date under applicable
securities laws of the United States and the relevant state(s), and shall if
specifically so requested provide evidence of any such action so taken to the
Buyer on or prior to the Closing Date.
c. REPORTING STATUS. So long as the Buyer beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations hereunder would permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Securities for the payment of production expenses, securities issuance and
legal expenses and general operational expenses.
e. FINANCIAL INFORMATION. Until such time as the Buyer no longer
beneficially owns Notes and Warrants, or the Common Stock into which the Notes
are convertible and/or the Warrants are exercisable, the Company agrees to send
the following reports to the Buyer: (i) after filing with the SEC, a copy of
each of its Annual Reports, its quarterly Reports, and any reports filed on Form
8-K; and (ii) as soon as practicable after release thereof, copies of all press
releases issued by the Company or any of its subsidiaries.
f. RESERVATION OF SHARES. The Company shall at all times have authorized,
and reserved for the purpose of issuance, a sufficient number of shares of
Common Stock to provide for the issuance of all of the Conversion Shares, the
Warrant Shares and the Interest Shares (if any). Prior to complete conversion of
the Notes and exercise of the Warrants, the Company shall not reduce the number
of shares of Common Stock reserved for issuance hereunder without the written
consent of the Buyer except for a reduction proportionate to a reverse stock
split effected for a business purpose other than affecting the requirements of
this Section, which reverse stock split affects all shares of Common Stock
equally.
g. LISTING. Upon the Closing, the Company shall promptly secure the
listing of the Common Stock underlying the Notes and the Warrants upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance)
and shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of shares of Registrable Securities from time to time
issued under the terms of this Agreement and the Registration Rights Agreement.
The Company shall at all times comply in all respects with the Company's
reporting, filing and other obligations under the by-laws or rules of the
National Association of Securities Dealers and the OTC BULLETIN BOARD MARKET (or
such other national securities exchange or market on which the Common Stock may
then be listed, as applicable).
h. PROSPECTUS DELIVERY REQUIREMENT. The Buyer understands that the 1933
Act requires delivery of a prospectus relating to the Common Stock in connection
with any sale thereof pursuant to a registration statement under the 1933 Act
covering any resale by the Buyer of the Common
11
Stock being sold, and the Buyer shall comply with any applicable prospectus
delivery requirements of the 1933 Act in connection with any such sale. The
Company shall have the unequivocal right to rely upon the Buyer's representation
contained in this Section 4(h), and thus, with respect to any resales by the
Buyer pursuant to a registration statement of Common Stock issued to the Buyer
upon conversion of the Notes (or in payment of interest on the Notes) or upon
exercise of the Warrants, such Common Stock shall not contain a restrictive
legend of any kind.
i. INTENTIONAL ACTS OR OMISSIONS. Neither party shall intentionally
perform any act that if performed, or omit to perform any act which if omitted
to be performed, would prevent or excuse the performance of this Agreement or
any of the transactions contemplated hereby.
j. NO SHORTING. As a material inducement for the Company to enter into
this Agreement, the Buyer represents that it has not as of the date hereof, and
covenants on behalf of itself and its affiliates that neither Buyer nor any
affiliate of Buyer will at any time in which the Buyer or any affiliate of the
Buyer beneficially owns any of the Securities, engage in any short sales of, or
hedging or arbitrage transactions with respect to, the Common Stock, or sell
"put" options or similar instruments with respect to the Common Stock. The
Company acknowledges that a sale of Conversion Shares (or Warrant Shares) on the
date a conversion of the Notes (or exercise notice for the Warrants) is made,
even if such sale is made prior to delivery of the notice of conversion with
respect to such Conversion Shares (or exercise notice with respect to such
Warrant Shares), is not a "short sale" for purposes of this Section 4(j).
k. EXPENSES. The Company agrees to pay to or at the direction of the
Buyer the sum of $3,500.00 at the Closing as reimbursement for the attorney's
fees and expenses of the Buyer incurred by it in connection with the
transactions contemplated by this Agreement.
l. [Intentionally Omitted.]
m. RESTRICTION ON BELOW MARKET ISSUANCE OF SECURITIES. Until the date
which is the earlier of nine (9) months from the Closing Date or the date the
Notes have been paid or converted in full, the Company shall not issue or agree
to issue {other than (i) to the Buyer pursuant to the transactions contemplated
herein, (ii) pursuant to any employee stock option plan or employee stock
purchase plan of the Company established during the term of this restriction for
a legitimate business purpose and not to avoid the restrictions imposed in this
Section 4(m), (iii) pursuant to any existing security, option, warrant, scrip,
call or commitment or right in each case as disclosed on Schedule 3(c) hereof,
or (iv) with the consent of the Buyer, not to be unreasonably withheld} any
equity securities of the Company (or any security convertible into or
exercisable or exchangeable, directly or indirectly, for equity securities of
the Company) or debt securities of the Company if such securities are issued at
a price (or provide for a conversion, exercise or exchange price) which may be
less than the current market price for the Common Stock on the date of issuance
(in the case of Common Stock) or the date of conversion, exercise or exchange
(in the case of securities convertible into or exercisable or exchangeable,
directly or indirectly, for Common Stock). Except as provided with respect to
the transactions contemplated herein and in subsections (i), (ii), (iii), or
(iv) above of this Section 4(m),
12
until such time as the Notes have been paid or converted in full, the Company
shall not grant any additional so-called "registration rights."
5. LEGEND AND TRANSFER INSTRUCTIONS.
a. TRANSFER AGENT INSTRUCTIONS. The Company shall instruct its transfer
agent to issue certificates, registered in the name of the Buyer or its
permitted nominee, for the Conversion Shares, the Warrant Shares and the
Interest Shares (if any) in accordance with the terms of the applicable Notes
and Warrants and in such amounts as specified from time to time by the Buyer to
the Company, upon conversion of the Notes or exercise of the Warrants (as
applicable). All such certificates shall bear the restrictive legend specified
in Section 2(g) of this Agreement only to the extent required by applicable law
and as specified in this Agreement and the Exhibits and Addenda hereto. The
Company warrants that no instruction other than such instructions referred to in
this Section 5, and stop transfer instructions to give effect to Section 2(f)
hereof in the case of the Conversion Shares, the Warrant Shares and the Interest
Shares (if any) prior to the registration of same under the 1933 Act, will be
given by the Company to its transfer agent and that the Conversion Shares, the
Warrant Shares and the Interest Shares (if any) shall otherwise be freely
transferable on the books and records of the Company as and to the extent
permitted by applicable law and provided by this Agreement, the Warrants and the
Registration Rights Agreement. Nothing in this Section shall affect in any way
the Buyer's obligations and agreement to comply with all applicable securities
laws upon resale of the Conversion Shares, the Warrant Shares and/or the
Interest Shares (if any). If the Buyer (x) provides the Company with an opinion
of counsel reasonably satisfactory to Company that registration by the Buyer of
the Notes, the Warrants, the Warrant Shares, the Conversion Shares and/or the
Interest Shares (if any) is not required under the 1933 Act, or (y) transfers
Securities to an affiliate which is an accredited investor (in accordance with
the provisions of this Agreement) or in compliance with Rule 144, then in either
instance the Company shall permit the said transfer, and if applicable promptly
(and in all events within two (2) trading days) instruct its transfer agent to
issue one or more certificates in such name and in such denominations as
specified by the Buyer.
b. REMOVAL OF LEGENDS. The Legend shall be removed and the Company shall
issue a certificate without such Legend to the holder of any Security upon which
it is stamped, and a certificate for a security shall be originally issued
without the Legend, if, unless otherwise required by state securities laws, (x)
the sale of such Security is registered under the 1933 Act, or (y) such holder
provides the Company with an opinion by counsel reasonably satisfactory to the
Company, that is in form, substance and scope reasonably satisfactory to the
Company, to the effect that a public sale or transfer of such Security may be
made without registration under the 1933 Act or (z) such holder provides the
Company with assurances reasonably satisfactory to the Company and its counsel,
that such Security can be sold pursuant to Rule 144. The Buyer agrees that its
sale of all Securities, including those represented by a certificate(s) from
which the Legend has been removed, or which were originally issued without the
Legend, shall be made only pursuant to an effective registration statement (and
to deliver a prospectus in connection with such sale) or in compliance with an
exemption from the registration requirements of the 1933 Act. In the event the
Legend is
13
removed from any Security or any Security is issued without the Legend and
thereafter the effectiveness of a registration statement covering the sales of
such Security is suspended or the Company determines that a supplement or
amendment thereto is required by applicable securities laws, then upon
reasonable advance notice to the holder of such Security, the Company shall be
entitled to require that the Legend be placed upon any such Security which
cannot then be sold pursuant to an effective registration statement or Rule 144
or with respect to which the opinion referred to in clause (y) next above has
not been rendered, which Legend shall be removed when such Security may be sold
pursuant to an effective registration statement or Rule 144 (or such holder
provides the opinion with respect thereto described in clause (y) next above.
c. CONVERSION OF NOTES. The Buyer shall have the right to convert the
Notes sold hereunder by delivering via facsimile an executed and completed
Notice of Conversion (as defined in the Notes) to the Company and delivering
within two (2) business days thereafter the original Notice of Conversion and
the original Note being converted by express courier to the Company. Each date
on which a Notice of Conversion is faxed to the Company in accordance with the
provisions hereof shall be deemed a "Conversion Date." The Company will transmit
the certificates representing the shares of Common Stock issuable upon
conversion of any Notes (along with a replacement Note representing the amount
of principal of said Note not so converted, if applicable) to the Buyer via
express courier, within three (3) business days after the relevant Conversion
Date (with respect to each conversion, the "Deadline"). Time is of the essence
with respect to the requirements of the immediately preceding sentence.
d. INJUNCTIVE RELIEF FOR BREACH. The Company acknowledges that a breach
of its obligations under Sections 5(a), 5(b) and 5(c) above will cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly the Company agrees that the remedy
at law for a breach of its obligations under such Sections would be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of such Sections, the Buyer shall be entitled, in addition to all
other remedies at law or in equity, to an injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
e. LIQUIDATED DAMAGES FOR NON-DELIVERY OF CERTIFICATES. In addition to
the provisions of Section 5(d) above, the Company understands and agrees that a
delay in the issuance of the Certificates beyond the Deadline will result in
substantial economic loss and other damages to the Buyer. As partial
compensation to the Buyer for such loss, the Company agrees to pay liquidated
damages (and which the Company acknowledges is not a penalty) to the Buyer for
issuance and delivery of the Certificates after the Deadline, in accordance with
the following schedule (where "No. Business Days Late" is defined as the number
of business days beyond five (5) business days from the date of delivery by the
Buyer to the Company of a facsimile Notice of Conversion (or, if later, from the
date on which all other necessary documentation duly executed and in proper form
required for conversion of Notes as described in this Agreement, including the
original Notice of Conversion, all in accordance with this Agreement ONLY IF
such necessary documentation has not been delivered to the Company within the
two (2) business day period after the facsimile delivery
14
to the Company of the Notice of Conversion required in this Agreement)):
No. Business Days Late Liquidated Damages
---------------------- ------------------
(in US$)
1 $300
2 $400
3 $500
4 $600
5 $700
6 $800
7 $900
8 $1,000
9 $1,000
10 $1,500
11+ $1,500 + $500 for
each Business Day Late
beyond 11 days
The Company shall pay the Buyer any liquidated damages incurred as called
for under this Section 5(e) by certified or cashier's check upon the earlier of
(i) issuance of the Certificates to the Buyer or (ii) each monthly anniversary
of the receipt by the Company of the Buyer's Notice of Conversion. Nothing
herein shall limit the Buyer's right to pursue actual damages for the Company's
failure to issue and deliver the Certificates to the Buyer in accordance with
the terms of this Agreement or for breach by the Company of this Agreement.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell Notes and Warrants at the
Closing is subject to the satisfaction, on or before the Closing Date, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:
a. The parties shall have executed this Agreement, the Registration
Rights Agreement and the Escrow Agreement, and the parties shall have delivered
the respective documents or signature pages thereof (via facsimile or otherwise
as permitted in the Escrow Agreement) to the Escrow Agent.
b. The Buyer shall have delivered to the Escrow Agent on behalf of the
Company the Purchase Price for the Notes and Warrants purchased at the Closing,
by wire transfer of immediately available funds pursuant to the wiring
instructions provided by the Escrow Agent.
15
c. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date made and as of the Closing Date
as though made at that time (except for representations and warranties that
speak as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self regulatory
organization having authority over the matters contemplated hereby which
restricts or prohibits the consummation of any of the transactions contemplated
herein.
e. The Company's Board of Directors shall have approved this Agreement
and the related documentation referred to herein.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer to purchase Notes and Warrants is subject
to the satisfaction, on or before the Closing Date, of each of the following
conditions, provided that these conditions are for the sole benefit of the Buyer
and may be waived by the Buyer at any time in its sole discretion:
a. The parties shall have executed this Agreement, the Registration
Rights Agreement and the Escrow Agreement, the parties shall have delivered the
respective documents or signature pages thereof (via facsimile or otherwise as
permitted in the Escrow Agreement) to the Escrow Agent on behalf of each other.
b. The representations and warranties of the Company shall be true and
correct in all material respects as of the date made and as of Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Buyer may require a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably
requested by the Buyer.
c. With respect to the Closing, the Company shall have issued and have
duly executed by the authorized officers of the Company, and delivered to the
Escrow Agent on behalf of the Buyer, the Note and Warrant being sold at the
Closing (via facsimile or otherwise as required by the Escrow Agreement,
provided that any permitted facsimile of such documents shall be followed with
physical delivery to the Escrow Agent of the original instrument or security
within one (1) business day after facsimile of same to the Escrow Agent).
16
d. The Common Stock shall be authorized for quotation on the OTC BULLETIN
BOARD MARKET (or another national securities exchange or market) and trading in
the Common Stock on such market shall not have been suspended by the SEC or
other relevant regulatory agency.
e. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self regulatory
organization having authority over the matters contemplated hereby which
restricts or prohibits the consummation of any of the transactions contemplated
herein.
f. The Escrow Agent shall have received on behalf of the Buyer the
opinion of Company counsel, dated as of the Closing Date, substantially in the
form attached hereto as Exhibit E.
8. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws. In the event of any litigation regarding the
interpretation or application of this Agreement, the parties irrevocably consent
to jurisdiction in any of the state or federal courts located in the State of
Delaware and waive their rights to object to venue in any such court, regardless
of the convenience or inconvenience thereof to any party. Service of process in
any civil action relating to or arising out of this Agreement (including also
all Exhibits or Addenda hereto) or the transaction(s) contemplated herein may be
accomplished in any manner provided by law. The parties hereto agree that a
final, non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.
b. COUNTERPARTS. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
signature pages from such counterparts have been delivered to the Escrow Agent
on behalf of the other party. In the event any signature page is delivered by
facsimile transmission (which the parties agree is an acceptable form of
delivery), the party using such means of delivery shall cause three (3)
additional originally executed signature pages to be physically delivered to the
Escrow Agent on behalf of the other party within two (2) business days of the
execution and delivery hereof.
c. HEADINGS; GENDER, ETC. The headings of this Agreement are for
convenience of reference and shall not form a part of, or affect the
interpretation of this Agreement. As used herein, the masculine shall refer to
the feminine and neuter, the feminine to the masculine and neuter, and the
neuter to the masculine and feminine, as the context may require. As used
herein, unless the context clearly requires otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date specified
herein falls upon a Saturday, Sunday or public or legal holidays, the date shall
be construed to mean the next business day following such Saturday, Sunday or
public or legal holiday. For
17
purposes of this Agreement, a "business day" is any day other than a
Saturday, Sunday or public or legal holiday.
d. SEVERABILITY. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. NOTICES. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by U. S. Mail or delivered personally or by
courier or via facsimile (if via facsimile, to be followed within three (3)
business days by an original of the notice document via U.S. Mail or courier)
and shall be effective five (5) days after being placed in the mail, if mailed,
certified or registered, return receipt requested, or upon receipt, if delivered
personally or by courier or by facsimile, in each case properly addressed to the
party to receive the same. The addresses for such communications shall be:
If to the Company: Nurescell Inc.
0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000.000.0000
Facsimile: 949.752.0091
Attention: Xx. Xxxxxx X. Xxxxxx, CEO
With a copy to: Herzog, Fisher, Xxxxxxx & Xxxxx
0000 Xxxxxxxx Xxxx., 0xx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000.000.0000
Facsimile: 310.278.5430
Attention: Xx. Xxxxxxx X. Xxxxx, Esq.
If to the Buyer, at the address on the signature page of this Agreement. Each
party shall provide written notice to the other party of any change in address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent
18
of the other (which consent shall not be unreasonably withheld), and in any
event any assignee of the Buyer shall be an accredited investor (as defined in
Regulation D), in the written opinion of counsel who is reasonably satisfactory
to the Company and in form, substance and scope reasonably satisfactory to the
Company. Notwithstanding the foregoing, if applicable, any of the entities
constituting the Buyer (if greater than one (1) entity) may assign its rights
hereunder to any of its "affiliates," as that term is defined under the 1934
Act, without the consent of the Company; provided, however, that any such
assignment shall not release such assigning entity from its obligations
hereunder unless such obligations are assumed by such affiliate and the Company
has prior to such assignment and assumption consented in writing to the same;
and no such assignment shall be made unless it is made in accordance with any
applicable securities laws of any applicable jurisdiction. Any request for an
assignment made hereunder by the Buyer shall be accompanied by a legal opinion
in form, substance and scope reasonably satisfactory to the Company, that such
assignment is proper under applicable law. Notwithstanding anything herein to
the contrary, Buyer may pledge the Securities as collateral for a bona fide loan
pursuant to a security agreement with a third party lender, and such pledge
shall not be considered an assignment in violation of this Agreement so long as
it is made in compliance with all applicable law.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under Section 8(1), the
representations and warranties of the Company and the Buyer contained in
Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5 and
8 shall survive the Closing of the purchase and sale of Securities purchased and
sold hereby.
j. PUBLICITY. The Company and the Buyer shall have the right to review
before issuance by the other, any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without prior consultation with or approval of
the Buyer, to make any press release or other public disclosure with respect to
such transactions as is required by applicable law and regulations.
k. FURTHER ASSURANCE. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. TERMINATION. In the event that the Closing shall not have occurred on
or before ten (10) business days from the date hereof, this Agreement shall
terminate at the close of business on such date. Neither party may unilaterally
terminate this Agreement after the Closing for any reason other than a material
breach of this Agreement by the non- breaching party. Such termination shall not
be the sole remedy for a breach of this Agreement by the non-breaching party,
and each party
19
shall retain all of its rights hereunder at law or in equity. Notwithstanding
anything herein to the contrary, a party whose breach of a covenant or
representation and warranty or failure to satisfy a condition prevented the
Closing shall not be entitled to terminate this Agreement.
m. REMEDIES. No provision of this Agreement providing for any specific
remedy to a party shall be construed to limit such party to the specific remedy
described, and any other remedy that would otherwise be available to such party
at law or in equity shall be so available. Nothing in this Agreement shall limit
any rights a party may have with any applicable federal or state securities laws
with respect to the transactions contemplated hereby.
IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
[SIGNATURE PAGE FOLLOWS]
List of Exhibits
Exhibit A Form of Note
Exhibit B Warrant to Purchase Common Stock
Exhibit C Registration Rights Agreement
Exhibit D Escrow Agreement
Exhibit E Opinion of Counsel for Nurescell Inc.
20
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT DATED
AS OF DECEMBER 15, 1999]
COMPANY:
NURESCELL INC.
By:_____________________________________________
Xx. Xxxxxx X. Xxxxxx, CEO
BUYER:
TRITON PRIVATE EQUITIES FUND, L.P.
By: Triton Capital Management, L.L.C., a General Partner
By:____________________________________________
Xx. Xxxx X. Xxxxxxx, Managing Member
BUYER'S ADDRESS:
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxx 00000
Telephone: 000.000.0000
Telecopier: 316.262.6801
21
SECURITIES PURCHASE AGREEMENT
Schedule 3(c)
OUTSTANDING OPTIONS TO PURCHASE COMMON STOCK:
Effective June 15, 1998, the Company created an Incentive Stock Option Plan
granting to any director, employee or consultant of the Company options to
purchase Company Common stock over a ten-year period, at the fair market value
at time of grant. The aggregate number of common shares of the Company which may
be granted under the plan is 360,000 shares. As of December 1, 1999, options for
360,000 shares have been granted under the Plan, 120,000 of which have been
exercised.
In addition to options under the Incentive Stock Option Plan, the Company has
also issued options (1) to Xxxxxx Xxxxxx for the purchase of 100,000 shares of
Common Stock at $1.00 per share; (2) to an initial investor in the Company for
the purchase of 24,000 shares of Common Stock at $1.00 per share; (3) to Xxxxxx
Xxxxxx for the purchase of 200,000 shares of Common Stock at $2.00 per share;
and (4) to Xxxxxx Xxxx for the purchase of 250,000 shares of Common Stock at
$.75 per share.
OUTSTANDING WARRANTS TO PURCHASE COMMON STOCK:
Effective September 15, 1998 the Company issued units consisting of one share of
Common Stock (the "Common Stock") and one Class "A" Common Stock Purchase
Warrant (the "Class A Warrants") of the Company.
The Class "A" Warrants are exercisable into one (1) share of Common Stock and
one (1) Class "B" Common Stock Purchase Warrant (the "Class "B" Warrant")
commencing the day immediately after the first anniversary of the closing of the
offering of the units (the "A" Exercise Date") and have an exercise price of
$4.00. The Class "A" Warrants expire on the first anniversary of the "A"
Exercise Date (the "A" Expiration Date"). The Class "B" Warrants are exercisable
into one(1) share of Common Stock commencing immediately upon their issuance
(the "B" Exercise Date") and have an exercise price of $3.00 per share of
Company Common Stock. The Class "B" Warrants expire on the first anniversary of
the "B" Exercise Date.
Prior to permitting the exercise of either the Class "A" or Class "B" Warrants,
the Company will be required to either register the underlying Common Stock or
seek an exemption from registration under both federal and state law. The Common
Stock and the Class A Warrants are immediately detachable.
OTHER STOCK PURCHASE RIGHTS
22
PURSUANT TO HIS EMPLOYMENT AGREEMENT, XXXXXX XXXX IS ENTITLED TO RECEIVE FOR HIS
SERVICES 100,000 SHARES OF COMMON STOCK FOR EVERY SIX (6) MONTHS DURING THE TERM
OF THE SAID EMPLOYMENT AGREEMENT.
PURSUANT TO HIS CONSULTING AGREEMENT, AS AMENDED, XX. XXXXX XXXX IS ENTITLED TO
RECEIVE 400,000 SHARES OF COMMON STOCK, 134,000 OF WHICH ARE IN THE PROCESS OF
BEING ISSUED, 133,000 OF WHICH ARE TO BE ISSUED IN 2000, AND THE REMAINDER OF
WHICH ARE TO BE ISSUED IN 2001.
PURSUANT TO A BOARD RESOLUTION ADOPTED ON NOVEMBER 22, 1999, THE COMPANY HAS
RESERVED THE RIGHT TO OFFER ITS EMPLOYEES AND CONSULTANTS COMMON STOCK IN LIEU
OF CASH COMPENSATION AT THE RATE OF FOUR SHARES FOR EVERY DOLLAR OF
COMPENSATION.
23
SECURITIES PURCHASE AGREEMENT
SCHEDULE 3(g)
REGISTRATION OF ALL THE REGISTRABLE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, REQUIRES THE FILING OF A REGISTRATION STATEMENT WITH THE
SECURITIES AND EXCHANGE COMMISSION AND A DECLARATION OF EFFECTIVENESS OF THE
REGISTRATION STATEMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
[ADDITIONAL REGISTRATION RIGHTS, IF ANY]
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SECURITIES PURCHASE AGREEMENT
SCHEDULE 3(j)
THE COMPANY IS CURRENTLY A DEFENDANT IN A CIVIL ACTION FILED BY BILMORE
ADVISORS, LLC, IN ORANGE COUNTY SUPERIOR COURT ON OCTOBER 21, 1999.
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