SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
THIS
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of September 29,
2006,
is by and between LaPolla Industries Inc., a Delaware corporation, with its
principal place of business at 00000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000 (the "COMPANY"), and Xxxxxxx X. Xxxxx, with a residence at Nine
Xxxx
Xxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000 (the "BUYER").
WHEREAS,
the Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "ACT");
WHEREAS,
the Company has authorized the following new series of its preferred stock,
$1.00 par value per share: the Series D Preferred Stock (the "SERIES D PREFERRED
STOCK"), with a stated value per share of Series D Preferred Stock of $1,000,
which includes a $1.00 par value per share (The Series D Preferred Stock is
referred to in this Agreement as the "SECURITIES"); and
WHEREAS,
the Buyer wishes to purchase and the Company desires to sell an aggregate of
6,900 shares of Series D Preferred Stock for a total of $6,900,000, upon the
terms and conditions stated in this Agreement.
NOW,
THEREFORE, in consideration of the premises and covenants herein contained,
the
Company and the Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF SERIES D PREFERRED STOCK.
a. PURCHASE
OF SERIES D PREFERRED STOCK. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7(a) below, the Company shall issue
and
sell to the Buyer and the Buyer shall purchase from the Company, for an
aggregate of $6,900,000 an aggregate of 6,900 shares of Series D Preferred
Stock
(the "CLOSING"). On the Closing Date, subject to receipt of the agreed upon
consideration, the Company shall cause to be delivered to Buyer a stock
certificate representing the number of shares of Series D Preferred Stock that
Buyer is then purchasing, duly executed on behalf of the Company and registered
in the name of the Buyer or his designee (the "STOCK CERTIFICATE").
b. CLOSING
DATE. The date and time of the Closing (the "CLOSING DATE") shall be 10:00
a.m.
Eastern Daylight Time on September 29, 2006, subject to satisfaction (or waiver)
of the conditions to the Closing set forth in Sections 6 and 7(a) below (or
such
later date as is mutually agreed to by the Company and the Buyer).
c. FORM
OF
PAYMENT. On the Closing Date, Buyer shall cancel indebtedness in the form of
loans bearing interest owed by Company to Buyer as payment of the applicable
purchase price for the Series D Preferred Stock to be issued and sold to Buyer
at the Closing.
2. BUYER'S
REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants with respect
to
only himself that:
a. INVESTMENT
PURPOSE. Such Buyer is acquiring the Series D Preferred Stock for his own
account for investment only and not with a view towards, or for resale in
connection with, the unlawful public sale or distribution thereof, except
pursuant to sales of such shares which are the subject of an effective
registration statement duly filed under the Act or otherwise exempted under
the
Act and all applicable state blue sky laws; provided, however, that by making
the representations herein, such Buyer does not agree to hold any Securities
for
any minimum period or other specific term and reserves the right to dispose
of
the Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Act and all applicable state blue sky
laws.
b. ACCREDITED
INVESTOR STATUS. Buyer is an "accredited investor" as that term is defined
in
Rule 501(a) of Regulation D promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Act ("REGULATION D").
c. RELIANCE
ON EXEMPTIONS. Buyer understands that the Series D Preferred Stock is being
offered and sold to him in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of Buyer to acquire the
Series D Preferred Stock.
d. INFORMATION.
Buyer acknowledges that he is the Chairman of the Board of Directors of the
Company and as such has 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 Series D Preferred Stock that have been requested by
Buyer. No independent due diligence investigations conducted by Buyer shall
modify, amend or affect Buyer's right to rely on the Company's representations
and warranties contained in Section 3 below.
e. NO
GOVERNMENTAL REVIEW. Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made
any
recommendation or endorsement of the Series D Preferred Stock and the Warrants
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 Series
D
Preferred Stock.
f. TRANSFER
OR RESALE. Buyer understands that the: (i) Securities have not been and are
not
being registered under the Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) (i) they have been
subsequently registered thereunder and (ii) they are offered for sale, sold,
assigned and transferred in compliance with the prospectus delivery requirements
of the Act; or (B) Buyer shall have delivered to the Company an opinion of
counsel, in a generally acceptable form, to the effect that such securities
to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration.
g. LEGENDS.
(i) Buyer
understands that the certificates or other instruments representing the Series
D
Preferred Stock shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such stock
certificates):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
(ii) Each
certificate for Series D Preferred Stock shall also bear the following
legend:
ANY
TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE
COMPANY'S CERTIFICATE OF DESIGNATIONS RELATING TO THE SERIES D PREFERRED SHARES
REPRESENTED BY THIS CERTIFICATE. THE NUMBER OF SERIES D PREFERRED SHARES
REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SUCH SHARES
STATED ON THE FACE HEREOF.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Buyer
as
set forth in this Section 3.
a. ORGANIZATION
AND QUALIFICATION. The Company is duly organized and validly existing in good
standing under the laws of the jurisdiction in which it is organized, 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 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, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect. "MATERIAL ADVERSE EFFECT" means any material adverse effect
on
(i) the business, properties, operations, condition (financial or otherwise),
results of operations or objective prospects of the Company taken as a whole,
(ii) on the ability of the Company to perform its obligations hereunder, under
the Certificate of Designation or under the agreements or instruments to be
entered into or filed in connection herewith or therewith, or (iii) the
Securities.
b. AUTHORIZATION;
ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, to issue, sell and perform its obligations
with respect to the Series D Preferred Stock in accordance with the terms hereof
and the Certificate of Designation, (ii) the execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including without limitation the issuance
of
the Series D Preferred Stock, have been duly authorized by the Company's Board
of Directors and no further consent or authorization is required by the Company,
its Board of Directors or its shareholders, (iii) this Agreement and the
certificates for the Series D Preferred Stock have been duly executed and
delivered by the Company, (iv) this Agreement and the certificates for the
Series D Preferred Stock constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies, and (v) the Certificate of Designation will have been
filed
with the Secretary of State of the State of Delaware within sixty (60) days
after the Closing date hereof and will be in full force and effect, enforceable
against the Company in accordance with its terms.
c. CAPITALIZATION.
As of September 29, 2006, the authorized capital stock of the Company consists
of sixty seven million (67,000,000) shares, of which sixty five million
(65,000,000) are for common stock and two million (2,000,000) for preferred
stock. No shares of common stock or preferred stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance
of
any of the Securities as described in this Agreement. The Company has furnished
to the Buyer copies of the Company's Restated Certificate of Incorporation,
as
amended, and as in effect on the date hereof (the "RESTATED CERTIFICATE OF
INCORPORATION"), and the Company's Bylaws, as in effect on the date hereof
(the
"BYLAWS"), and the terms of all securities including the material rights of
the
holders thereof in respect thereto.
d. ISSUANCE
OF SECURITIES. The Securities are duly authorized and, upon issuance in
accordance with the terms hereof, shall be (i) validly issued, fully paid and
non-assessable, (ii) free from all taxes, liens and charges with respect to
the
issue thereof and (iii) entitled to the rights and preferences set forth in
the
Certificate of Designation.
e. NO
CONFLICTS. Except as otherwise expressly stated herein, the execution, delivery
and performance of this Agreement, the performance by the Company of its
obligations under the Certificate of Designation and the consummation by the
Company of the transactions contemplated hereby will not (i) result in a
violation of the Restated Certificate of Incorporation, as amended, any
Certificate of Designation, Preferences and Rights of any outstanding series
of
preferred stock of the Company 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 material 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 and the rules and regulations
of the principal market or exchange on which the common stock is traded or
listed) applicable to the Company or by which any property or asset of the
Company is bound or affected. The Company is not in violation of any term of
or
in default under its Restated Certificate of Incorporation or Bylaws, as
applicable, any Certificate of Designation, Preferences and Rights of any
outstanding series of preferred stock of the Company, or any material contract,
agreement, indebtedness, indenture, instrument, judgment, decree or order
(collectively referred to as the "MATERIAL CONTRACTS") or any statute, rule
or
regulation applicable to the Company. The business of the Company is not being
conducted, and shall not be conducted, in violation of any material law,
ordinance or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Act and applicable
blue
sky laws, the Company is not required to obtain any consent, authorization
or
order of, or make any filing or registration with, any court or governmental
or
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by this Agreement or
perform its obligations under the Certificate of Designation in accordance
with
the terms hereof or thereof.
f. SEC
DOCUMENTS; FINANCIAL STATEMENTS. The Company has 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 "EXCHANGE ACT") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC DOCUMENTS"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents. 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).
g. ACKNOWLEDGMENT
REGARDING BUYERS' PURCHASE OF THE SERIES D PREFERRED STOCK. Purchaser's status
as Chairman of the Board of Directors and holder of more than ten percent (10%)
of the Company's outstanding shares, the Company acknowledges and agrees that
for purposes hereof, Buyer is acting in the capacity of an arm's length
purchaser with respect to this Agreement and the Certificate of Designation
and
the transactions contemplated hereby and thereby. The Company further
acknowledges that for the purposes hereof, Buyer is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect
to
this Agreement and the Certificate of Designation and the transactions
contemplated hereby and thereby and any advice given by Buyer or any of his
representatives or agents in connection with this Agreement and the Certificate
of Designation and the transactions contemplated hereby and thereby is merely
incidental to Buyer's purchase of the Series D Preferred Stock. The Company
further represents to Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the Company
and
its representatives.
h. NO
GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) in connection with the offer or sale of any of the Securities offered
hereby.
i.
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 or solicited any offers to buy any security,
under circumstances that would require registration of any of the Securities
under the Act or cause the offering of any of the Securities to be integrated
with prior offerings by the Company for purposes of the Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any
of
the securities of the Company are listed or designated, nor will the Company
take any action or steps that would require registration of the issuance by
the
Company of any of the Securities under the Act or cause the offering of the
Securities to be integrated with other offerings.
j.
INTELLECTUAL
PROPERTY RIGHTS. The Company owns or possesses adequate rights or licenses
to
use all trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights (collectively
"INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their respective businesses
as now conducted and as presently contemplated to be operated in the future
except for Intellectual Property Rights that, individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect.
k. LEASES.
Any real property and facilities held under lease by the Company are held under
valid, subsisting and enforceable leases.
l.
INSURANCE.
The Company is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as is prudent and customary
in
the businesses in which the Company is engaged. The Company does not have any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not individually or in the aggregate have a Material Adverse
Effect.
m. INTERNAL
ACCOUNTING CONTROLS. The Company maintains a system of internal accounting
controls 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 assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
n. TAX
STATUS. The Company has made all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it
is
subject (unless and only to the extent that the Company has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments
and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim. The Company has
not
been notified that any of its tax returns is currently being audited by any
taxing authority.
4. COVENANTS
AND AGREEMENTS.
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. BLUE
SKY.
The Company shall take such action as the Company shall reasonably determine
is
necessary in order to obtain an exemption for or to qualify the Securities
for,
or obtain exemption for the Securities for, sale to Buyer pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the State of New
Jersey. The Company shall make all filings and reports relating to the offer
and
sale of the Securities required under applicable securities or "Blue Sky" laws
of the State of New Jersey wherein the Buyer resides.
c. FINANCIAL
INFORMATION. The Company agrees to file all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act so long as the Series D
Preferred Stock shall be outstanding. The financial statements of the Company
will be prepared in accordance with generally accepted accounting principles,
consistently applied, and will fairly present in all material respects the
consolidated financial position of the Company and 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).
d. CORPORATE
EXISTENCE. So long as any Buyer beneficially owns any Securities pursuant to
this Agreement, the Company shall maintain its corporate existence in good
standing under the laws of the jurisdiction in which it is incorporated and
shall not sell all or substantially all of the Company's assets, except in
the
event of a merger or consolidation or sale of all or substantially all of the
Company's assets for cash, or, if for securities, where the surviving or
successor entity in such transaction either (i) redeems all of the then
outstanding Series D Preferred Stock in accordance with and subject to the
terms
of the Certificate of Designation applicable to such transactions, or (ii)
assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith.
e. INSURANCE.
The Company shall maintain liability, casualty and other insurance (subject
to
customary deductions and retentions) with responsible insurance companies
against such risk of the types and in the amounts customarily maintained by
companies of comparable size to the Company.
6. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company hereunder
to
issue and sell the Series D Preferred Stock to Buyer at the Closing is subject
to the satisfaction 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. Buyer
shall have executed this Agreement and delivered the same to the
Company.
b. Buyer
shall have delivered to the Company the applicable purchase price for the Series
D Preferred Stock being purchased by Buyer at Closing.
c. The
representations and warranties of Buyer shall be true and correct in all
material respects as of the Closing Date as though made at that time (except
for
representations and warranties that speak as of a specific date), and 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 Buyer at or prior to the Closing
Date.
7. CONDITIONS
TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. CLOSING
DATE. The obligation of Buyer hereunder to purchase the Series D Preferred
Stock
at the Closing is subject to the satisfaction, at or before the Closing Date,
of
each of the following conditions, provided that these conditions are for Buyer's
sole benefit and may be waived by such Buyer at any time in his sole
discretion:
i. The
Company shall have executed this Agreement and delivered the same to such
Buyer.
ii. The
Certificate of Designation shall have been executed by the Company and filed
with the Secretary of the State of Delaware, and a copy marked as filed shall
have been delivered to such Buyer.
iii. The
representations and warranties of the Company shall be true and correct in
all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case such representations and warranties shall be true and correct without
further qualification) 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 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. Buyer shall have received a certificate, executed by an
authorized 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
Buyer.
iv. The
Company shall have executed and delivered to Buyer the Stock Certificates (in
such denominations as such Buyer shall request) for the Series D Preferred
Stock
being purchased by Buyer being given at the Closing.
v.
The
Company shall have delivered to Buyer such other documents relating to the
transactions contemplated by this Agreement as Buyer may reasonably
request.
vi. The
transactions contemplated hereby shall not violate any law, regulation or order
then in effect and applicable to Buyer or the Company.
8. INDEMNIFICATION.
In consideration of each Buyer's execution and delivery of this Agreement and
acquiring the Securities hereunder and in addition to all of the Company's
other
obligations under this Agreement, the Company shall defend, protect, indemnify
and hold harmless Buyer and each other holder of Securities from and against
any
and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether Buyer is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "BUYER INDEMNIFIED LIABILITIES"), incurred by Buyer
(and
shall advance the same) as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in this Agreement, the Certificate of Designation or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in
this
Agreement, the Certificate of Designation or any other certificate, instrument
or document contemplated hereby or thereby, or (c) any cause of action, suit
or
claim brought or made against Buyer and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by the Buyer.
Promptly after receipt by Buyer of notice of the commencement of any action
or
proceeding (including any governmental action or proceeding) involving the
Buyer
Indemnified Liabilities, Buyer shall deliver to the Company a written notice
of
the commencement thereof, and the Company shall have the right to participate
in, and, to the extent it so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
selected by the Company and reasonably satisfactory to Buyer; provided, however,
that Buyer shall have the right to retain its own counsel with the fees and
expenses to be paid by the Company, if, in the reasonable opinion of counsel
retained by the Company, the representation by such counsel of the Buyer and
the
Company would be inappropriate due to actual differing interests between Buyer
and any other party represented by such counsel in such proceeding. The Buyer
shall cooperate fully with the Company in connection with any negotiation or
defense of any such action or claim by the Company and shall furnish to the
Company all information reasonably available to the Buyer which relates to
such
action or claim. The Company shall keep the Buyer fully apprised at all times
as
to the status of the defense or any settlement negotiations with respect
thereto. The Company shall not be liable for any settlement of any action,
claim
or proceeding affected without its written consent, provided, however, that
the
Company shall not unreasonably withhold, delay or condition its consent. The
Company shall not, without the consent of the Buyer, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such
Buyer of a release from all liability in respect to such claim or litigation.
Following indemnification as provided for hereunder, the Company shall be
subrogated to all rights of the Buyer with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the Company within a reasonable time
of
the commencement of any such action shall not relieve it of any liability to
the
Buyer, except to the extent that the Company is prejudiced in its ability to
defend such action. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Buyer Indemnified
Liabilities which is permissible under applicable law.
9. MISCELLANEOUS.
a. 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 delivered to the other
party, PROVIDED THAT a facsimile signature shall be considered due execution
and
shall be binding upon the signatory thereto with the same force and effect
as if
the signature were an original, not a facsimile signature.
b. HEADINGS.
The headings of this Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Agreement.
c. 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.
d. ENTIRE
AGREEMENT; AMENDMENTS. This Agreement and the documents referred to herein,
supersede all other prior or contemporaneous oral or written agreements between
or among the Buyer, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and 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 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 Company and the holders of at least
2/3
of the then outstanding Series D Preferred Stock, but any such waiver or
amendment shall bind all Buyers and holders.
e. NOTICES.
Any notices, consents, waivers or other communications required or permitted
to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
mail, return receipt requested; (iii) three (3) business days after being sent
by U.S. certified mail, return receipt requested, or (iv) one (1) business
day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
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if
to the Company:
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LaPolla
Industries, Inc.
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00000
Xxxxxxx Xxxxxxx Xxxx
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Xxxxx
000
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Xxxxxxx,
Xxxxx 00000
|
|
Telephone:
(000) 000-0000
|
|
Attention:
Xxxxxxx X. Xxxxx, Corporate
Secretary
|
|
with
a copy to:
|
|
Xxxxxxxx
Xxxxx & Xxxxx, LLP
|
|
000
Xxxxx Xxxxxx
|
|
Xxxxx
0000
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Telephone:
(000) 000-0000
|
|
Attention:
Xxxxxx X. Xxxxx, Esquire
|
|
if
to the Buyer:
|
|
Xxxxxxx
X. Xxxxx
|
|
Nine
Xxxx Xxxx Xxxx
|
|
Xxxxxx,
Xxx Xxxxxx 00000
|
|
Telephone:
(000) 000-0000
|
f. SUCCESSORS
AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit
of
the parties and their respective successors and assigns, including any
purchasers of the Securities. The Company shall not assign this Agreement or
any
rights or obligations hereunder without the prior written consent of the holders
of two thirds (2/3) of the Series D Preferred Stock then outstanding. A Buyer
may assign some or all of its rights hereunder without the consent of the
Company, PROVIDED, HOWEVER, that (i) any such assignment shall not release
such
Buyer from its obligations hereunder unless such obligations are assumed by
such
assignee and the Company has consented to such assignment and assumption, which
consent shall not be unreasonably withheld; (ii) Buyer may not assign his
purchase or other rights hereunder in a manner that would cause the offering
of
Securities hereunder to be required to be registered under the Act; (iii) Buyer
may not assign his purchase or other rights with respect to the Series D
Preferred Stock; and (iv) Buyer may not assign his rights hereunder to an entity
that in the good faith judgment of the Board of Directors of the Company is
competitive with a core business of the Company.
g. 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.
h. SURVIVAL.
The representations and warranties of the Company and the Buyer contained in
Sections 3 and 2, respectively, shall survive the Closing until three years
after the Closing Date, including, without limitation, all financial statements
thereto. The agreements and covenants set forth in Sections 4, 5 and 9, and
the
indemnification provisions set forth in Section 8, shall survive the Closing.
Buyer shall be responsible only for his own representations, warranties,
agreements and covenants hereunder.
i.
FURTHER
ASSURANCES. 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.
j.
NO
STRICT
CONSTRUCTION. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules
of
strict construction will be applied against any party.
k. GOVERNING
LAW; JURISDICTION; JURY TRIAL. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule that would cause the application
of
the laws of any jurisdiction other than the State of New York. Each party hereby
irrevocably submits to the non-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, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such
party at the address for such notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING
OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
l.
REMEDIES.
Buyer and each holder of the Securities shall have all rights and remedies
set
forth in this Agreement and the Certificate of Designation and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any person having any rights under any provision of this Agreement shall
be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
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.
|
LAPOLLA
INDUSTRIES, INC.
|
XXXXXXX
X. XXXXX
|
|||||
|
By:
|
/s/
Xxxxxxx X. Xxxxx, EVP
|
By:
|
/s/
Xxxxxxx X. Xxxxx
|
|||
|
Name:
|
Xxxxxxx
X. Xxxxx
|
Name:
Xxxxxxx X. Xxxxx
|
||||
|
Title:
|
Executive
Vice President
|
|||||
