STOCK AND OPTION PURCHASE AGREEMENT
This Stock and Option Purchase Agreement (the "Agreement") is entered as
of April 13, 2000 by and between Hidenet Secure Architectures, Inc., a New
Jersey corporation ("Parent"), XxxxxxxXxxxxxx.xxx, Inc., a company organized
under the laws of Delaware (the "Company") and NP Partners, LLC, a limited
liability company organized under the laws of New York (the "Investor").
WHEREAS, Parent owns all the issued and outstanding shares of the
Company; and
WHEREAS, the Investor desires to acquire shares of Series A Preferred
Stock in the Company (the "Preferred Shares"), and an option to acquire shares
in Parent, and the Company wishes to issue and sell to the Investor said shares
in the Company and the Parent wishes to grant the Invester said option on the
terms and conditions set forth herein.
NOW THEREFORE, the parties agree as follows:
1. Purchase and Sale of Preferred Shares and Issuance of Option.
1.1. Subject to the terms and conditions of this Agreement, the Investor
agrees and undertakes to invest in the Company up to US$ 2,000,000
(the "Aggregate Investment") in consideration for (y) 160,000
Preferred Shares, at a price per share equal to $12.50 and (z) the
Option (as defined in Section 2.2(iii)) (together, the "Purchase
Price"), which investment is based on a $12,500,000 pre-money
valuation of each of the Company and Parent, as follows: (i) at
least US $1,000,000 shall be paid at the initial Closing (as defined
below) and (ii) if the initial Closing occurs, but no later than 30
days after the Closing, such additional amount as the Investor
determines which, when added to the amount paid at the Closing,
shall not exceed $2,000,000. The Preferred Shares purchased pursuant
to this Agreement shall have the rights, restrictions, privileges
and preferences as set forth in the Certificate of Designations,
Rights and Preferences of Series A Convertible Preferred Stock filed
April 13, 2000 and attached hereto as Exhibit 1.1 (the "Certificate
of Designation"). The Company agrees to issue and sell the Preferred
Shares and Parent agrees to issue and sell the Option in accordance
with this Agreement.
1.2. The Company and Parent represent and warrant that upon the purchase
and sale of the Preferred Shares, the outstanding shares of the
Company and of Parent, including all outstanding options and
warrants of each, shall be as specified in Exhibit 1.2 attached
hereto. Exhibit 1.2 shall specify with respect to the Company and
Parent, any holder of 5% or more of the Company's or Parent's shares
and all holders of options, warrants or convertible securities of
the Company and Parent, as of the Closing.
1.3. The Investor shall have the non-transfereable right to complete all
or part of the Aggregate Investment by delivering to the Company,
within 30 business days from the Closing Date, the Purchase Price
for the number of Preferred Shares so purchased, by bank check or
wire transfer to the Company's account. Upon receipt by the Company
thereof, the Company (i) shall deliver to the Investor a certificate
representing the number of additional Preferred Shares so purchased,
(ii) Parent and the Company shall each deliver to the Investor
"bring down certificates" with respect to the representations and
warranties contained herein and (iii) Parent shall deliver to the
Investor confirmation of the number of shares exercisable by the
Option, or, if requested by the Investor, the Option initally issued
shall be cancelled and a new Option for the total number of shares
covered thereby shall be issued, with appropriate changes to Section
1.1(a) thereof.
2. Closing.
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2.1. The purchase and sale of the Preferred Shares shall take place at
the offices of Xxxxxxx, Xxxxxxxxx LLP, Two Park Avenue, New York,
New York, on or prior to April 13, 2000 (the "Closing Date"), or at
such other time and place as the parties mutually agree in writing
(which time and place are designated as the "Closing").
2.2. At the initial Closing, the Company and the Parent shall deliver, or
cause to be delivered, to the Investor the following:
(i) a certificate representing the number of Preferred
Shares so purchased by the Investor on the Closing Date;
(ii) The Investor Rights' Agreement, substantially in the
form of Exhibit A attached hereto (the "Investor Rights
Agreement"), duly executed by the Company and IBDH LLC,
a Delaware limited liability company;
(iii) The Option, substantially in the form of Exhibit B
attached hereto (the "Option"), duly executed by Parent;
(iv) A secretary's certificate with respect to minutes of the
directors and the stockholder of the Company approving
the transactions contemplated hereunder;
(v) A secretary's certificate with respect to minutes of the
directors of Parent approving the Option and the
transactions contemplated hereunder;
(vi) A certified copy of the Certificate of Incorporation of
the Company and of Parent,including all amendments
thereto, and a copy of the By-Laws of each of the
Company and Parent, including all amendments thereto;
(vii) Evidence of the filing of the Certificate of
Designation; and
(viii) A legal opinion from Xxxxxxx, Xxxxxxxxx LLP.
2.3. At the initial Closing, the Investor shall deliver, or cause to be
delivered, to the Company the following:
(i) A wire transfer in immediately available funds to the
account designated by the Company in an amount of not
less than $1,000,000;
(ii) The Investor Rights Agreement, duly executed by the
Investor;
(iii) The Option, duly executed by the Investor; and
(iv) A certified copy of the Certificate of Formation and
Operating Agreement of the Investor, including all
amendments thereto.
3. Representations and Warranties of the Company and Parent.
Each of the Company and Parent hereby jointly and severally represents and
warrants to the Investor as follows and acknowledges and confirms that the
Investor is relying upon such representations and warranties in connection
with the purchase by the Investor of the Preferred Shares and the
acquisition of the Option:
3.1. Corporate Organization; Existence and Power. Each of the Company and
Parent : (a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation; (b) has all requisite corporate power and authority
to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently, or
is currently proposed to be, engaged; (c) is, duly qualified as a
foreign corporation, licensed and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification,
except to the extent that the failure to so qualify would not have a
material adverse effect on the condition of the Company and Parent,
as the case may be; and (d) has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement,
the Option, the Investor Rights Agreement, and the other documents
entered into in connection with the transactions contemplated by
this Agreement (all such agreements, the "Transaction Documents").
3.2. Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company and Parent of this Agreement and each
of the other Transaction Documents to which it is or will be a party
and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the
Preferred Shares: (a) has been duly authorized by all necessary
corporate, and if required, stockholder action; (b) do not and will
not contravene the terms of the Certificate of Incorporation or the
By-Laws of such company, or any amendment thereof or any laws
applicable to such company or its respective assets, business or
properties; (c) do not and will not (i) conflict with, contravene,
result in any violation or breach of or default under (with or
without the giving of notice or the lapse of time or both), (ii)
create in any other person or entity a right or claim of termination
or amendment, or (iii) require modification, acceleration or
cancellation of any provision of any security issued by such person
or entity in any agreement, undertaking, contract, indenture,
mortgage, deed of trust or other instrument or arrangement (whether
in writing or otherwise) to which such person or entity or its
property is bound, or any amendment of any of the foregoing
(collectively, "Contractual Obligations"); and (d) do not and will
not result in the creation of any mortgage, deed of trust, pledge,
hypothecation, assignment, lien (statutory or otherwise), charge,
claim, restriction or preference, security interest or preferential
arrangement or any other encumbrance (or obligation to create a
lien) of any kind or nature (collectively, "Liens") against any
property, asset or business of the Company or Parent, as the case
may be, or the suspension, revocation, impairment, forfeiture or non
renewal of any material permit, license, authorization or approval
applicable to the each of said company or its businesses or
operations or any of its assets or properties, other than as
contemplated by the Transaction Documents.
3.3. Governmental Authorization; Third Party Consents No approval,
consent, compliance, exemption, authorization, or other action by,
or notice to, or filing with, any governmental entity or authority
or any other person or entity in respect of any law or Contractual
Obligation, and no lapse of a waiting period under any law or
Contractual Obligation, is necessary or required in connection with
the execution, delivery or performance by (including, without
limitation, the issuance of shares of capital stock upon the
conversion of the Preferred Shares), or enforcement against, the
Company or Parent of this Agreement and the other Transaction
Documents to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
3.4. Binding Effect; Enforceability This Agreement has been, and each of
the other Transaction Documents to which each of the Company and
Parent is a party has been duly executed and delivered by each of
the Company and Parent, and this Agreement constitutes, and such
other Transaction Documents constitute, the legal, valid and binding
obligations of each of the Company and Parent, enforceable against
each of the Company and Parent in accordance with their respective
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and by general principles
of equity relating to enforceability.
3.5. No Legal Bar Neither the execution, delivery and performance of this
Agreement and the other Transaction Documents, nor the issuance of
or performance of the terms of the Preferred Shares or Option will
violate any law or any Contractual Obligation of the Company or
Parent. Neither the Company nor Parent has previously entered into
any agreement which is currently in effect or to which the Company
is currently bound, granting any rights to any person or entity
which are inconsistent with the rights to be granted by the Company
or Parent herein or in the other Transaction Documents.
3.6. Litigation. There are no legal actions, suits, proceedings, claims
or disputes pending or, to the knowledge of the Company or Parent,
threatened, at law, in equity, in arbitration or before any
governmental entity or authority against or affecting the Company or
Parent (or, as applicable, to the Company's or Parent's knowledge,
any of their respective stockholders, directors, officers, employees
or agents), other than actions, suits, proceedings, claims or
disputes which do not exceed $2,500 in the aggregate. No injunction,
writ, temporary restraining order, decree or any order of any nature
has been issued by any court or other governmental entity or
authority purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or the other Transaction Documents.
Neither the Company nor Parent has commenced nor does it currently
intend to initiate any material action, suit, proceeding, claim or
dispute. The bankruptcy of Savin Electronics, Ltd., an Israeli
corporation, has been completed and there are no outstanding claims
remaining to be discharged.
3.7. Compliance with Laws The Company and Parent are in compliance with
all laws applicable to the Company and Parent, as the case may be,
except where non-compliance will not result in material adverse
effect on such company's business.
3.8. Subsidiaries. The Company has no subsidiaries and does not own of
record or beneficially any capital stock or equity interest or
investment in any corporation, association or business entity. Other
than the Company, Savin Electronics, Ltd. and Hidenet Secure
Architectures, Ltd., an Israeli corporation ("Israeli ------- Sub"),
Parent has no subsidiaries and does not own of record or
beneficially any capital stock or equity interest or investment in
any corporation, association or business entity. Parent owns 100% of
the issued and outstanding shares of the Company, Savin Electronics,
Ltd. and Israeli Sub and no person owns any option, warrant,
convertible securities or other investment or right which entitles
the holder to obtain shares of either the Company, Savin Electronics
Ltd. or Israeli Sub. Savin Electronics Ltd. conducts no business and
has no assets or liabilities. Other than the Assignment Agreement
(defined in Section 3.11), the Israeli Sub conducts no business and
has no assets or liabilities. Parent shall cause Israeli Sub to
distribute to the Parent all funds received by it pursuant to the
Assignment Agreement.
3.9. Financial Statement; Absence of Undisclosed Liabilities. Neither the
Company nor Parent has any accrued or contingent liabilities arising
out of any transaction or state of facts existing prior to the date
hereof, which are not disclosed in the financial statements of the
Company or Parent. Since October 1, 1999 Parent and the Company have
conducted their business in the ordinary course and there has not
been any change or event which has had or could reasonably be
expected to have, individually or in the aggregate, a material
adverse effect on the Company or Parent.
3.10. Registration Rights; SEC Filings. Except as provided in the Investor
Rights Agreement and the piggyback registration rights granted to
Xxxxxx Xxxxxxxx (which are not any more favorable than those granted
to the Investor), neither the Company nor Parent has granted or
agreed to grant any registration rights, including piggyback
registration rights, to any person or entity. Parent has filed all
statements, reports and filings, and other documents requested to be
filed by it under the federal securities laws, other than its Form
10-KSB for fiscal year ended December 31, 1999, which Parent will
use its best efforts to file no later than April 14, 2000, and in
any event by April 24, 2000, and each statement or report was or
will be in substantial compliance with applicable statutory
requirements.
3.11. Material Agreements; Company Not in Default. Except for the
Employment Agreement between Parent and Xxxxxx Xxxxxxxx (the
"Employment Agreement"), the Transfer and Assignment Agreements (the
"Assignment Agreements") between Israeli Sub, Parent and the
Company, copies of which are attached hereto as Exhibit 3.11 and the
Transaction Documents, neither the Company nor Parent has any
contract, agreement, lease, or other commitment, written or oral,
absolute or contingent, other than the leases to the offices of the
Company and Parent. Neither the Company nor Parent is in default or
breach of any material contracts, agreements, written or oral,
indentures or other instruments to which it is a party and there
exists no state of facts after which notice or lapse of time or both
would constitute such a default or breach and all such contracts,
agreements, indentures or other instruments are now in good standing
and the Company and Parent, as the case may be, is entitled to all
benefits thereunder. To the knowledge of the Company and Parent, no
other party to any such material contract is in default thereunder,
nor does any condition exist that with notice or lapse of time or
both would constitute such a default. No approval or consent of any
person or entity is needed for all of the material contracts to
continue to be in full force and effect.
3.12. Tax Matters. Parent and the Company have duly filed all tax returns
required to have been filed by them and have not been subject to a
tax audit by any governmental entity of any kind, and have promptly
paid all taxes for which they are liable or accountable for the
periods from the date of their respectiveincorporation until the
date hereof, other than taxes not yet due and payable, all of which
have been fully reserved.
3.13. Intellectual Property.
3.13.1. To the Company's and Parent's knowledge (after
conducting a self patent search in connection with
filing its patent application), the Company has the
right to use its proprietary information, free and clear
of any rights, liens, encumbrances or claims of others,
except that the possibility exists that other persons
may have independently developed trade secrets or
technical information similar or identical to those of
the Company, but the Company and Parent represent and
warrant that they have no knowledge of any such
independent developments. Reasonable security measures
have been taken by the Company to protect the secrecy,
confidentiality and value of the Company's proprietary
information.
3.13.2. Neither the Company nor Parent has received any
communications alleging that the Company has violated
or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity.
3.13.3. To the Company's and Parent's knowledge, the Company is
not required to make any royalty payments with respect
to any licenses by them of the intellectual property
necessary to conduct its business as now being conducted
and as contemplated to be conducted.
3.13.4. The Company owns or has all license rights for all
software required for the conduct of its business as
described in the Business Plan described below.
3.13.5. All of the foregoing representations in this Section
3.13 are qualified in their entirety by the terms and
provisions of the Assignment Agreement, a copy of which
has been reviewed by the Investor.
3.14. Proprietary Information and Inventions Agreement. Each employee,
officer or consultant of the Company has executed or will execute
promptly after Closing a "Confidentiality, Non-Competition and
Intellectual Property Agreement" or a "Confidentiality and
Intellectual Property Agreement" as applicable, in standard form
used in the industry. The Company is not aware that any of its
employees, officers or consultants are in violation thereof.
3.15. Brokerage. There are no claims for, and no person is entitled to,
brokerage commissions or finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement
based on any arrangement made by or on behalf of the Company or
Parent.
3.16. Title to Properties. The Company has all right, title and interest
in and to its property, free and clear of all Liens, liabilities and
rights of any third party, pursuant to the terms of the Assignment
Agreement. Neither the Company nor Parent have title to any real
property. Both the Company and Parent hold the right, title and
interest of the tenant under leases to the Company or Parent, as the
case may be, free and clear of all Liens, liabilities and rights.
3.17. ERISA -- Employee Benefit Plans. Neither the Company nor Parent has
any Employee Benefit Plan as defined in the Employee Retirement
Income Security Act of 1974.
3.18. Capitalization. The Capitalization Table attached as Exhibit 1.2
provides an accurate list immediately prior to and immediately
following the Closing Date, after giving effect to the transactions
contemplated hereby and the other Transaction Documents of (A) all
stockholders owning the issued and outstanding shares of Preferred
Stock and Common Stock of the Company or Parent, together with the
number held by each, and (B) all of the holders of warrants,
options, rights and securities convertible into capital stock,
together with the number of shares of capital stock to be issued
upon the exercise or conversion of such warrants, options, rights
and convertible securities. On the Closing Date, except as disclosed
on Exhibit 1.2, there will be no outstanding securities convertible
into or exchangeable for capital stock of the Company or Parent or
options, warrants or other rights to purchase or subscribe to
capital stock of the Company or Parent or contracts, commitments,
agreements, understandings or arrangements of any kind to which
either of such company is a party relating to the issuance of any
capital stock of the Company or Parent, as the case may be,, any
such convertible or exchangeable securities or any such options,
warrants or rights.
3.19. Business Plan. The Company has previously provided the Investor with
a true, correct and complete copy of its Business Plan, attached
hereto as Exhibit 3.19. The Business Plan was made in good faith by
the senior management of Company. The financial projections set out
in the Business Plan have been prepared in good faith by the senior
management of the Company based upon reasonable assumptions,
provided, however, there is no assurance that the Company shall meet
such projections.
3.20. Interested Party Transactions. Other than the Employment Agreement,
the Assignment Agreement, the Assignment Agreement dated July 20,
1999 between Parent and Israeli Sub and each of the Transaction
Documents, there are no (i) agreements of any kind, including,
without limitation, with respect to any consideration or otherwise
to be provided by the Parent or the Company to any officer, director
or holder of 5% or more of the outstanding shares of the Parent or
the Company, or (ii) agreements between the Company and Parent.
3.21. Labor Agreements and Actions; Employee Compensation. Neither the
Company nor Parent is aware that any officer or key employee, or
that any group of key employees, intends to terminate their
employment with the Company or Parent, nor does the Company or
Parent have a present intention to terminate the employment of any
of the foregoing, provided that no officer or employee of the
Company or Parent is intended to be a third party beneficiary of the
foregoing. The employment of each officer and employee of the
Company and Parent is terminable at the will of the Company or
Parent, as the case may be, subject to prior notice requirements. To
the best of its knowledge, the Company and Parent have complied in
all material respects with all applicable state and Federal equal
employment opportunity and other Laws related to employment.
3.22. Use of Proceeds. The Company and Parent agree that the proceeds of
the Aggregate Investment shall be used only as provided in Exhibit
3.22 and pursuant to the Assignment Agreement.
3.23. Disclosure. This Agreement, together with the Disclosure Schedule
and all exhibits hereto, and the agreements, certificates and other
documents furnished to the Investor by the Company and Parent at the
Closing, (including, without limitation, the other Transaction
Documents) do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
4. Representations and Warranties of the Investor.
The Investor hereby represents and warrants to the Company and
Parent as follows and acknowledges and confirms that the Company and
Parent are relying upon such representations and warranties in
connection with the offer and sale of the Preferred Shares and the
acquisition of the Option to the Investor:
4.1. Organization; Existence and Power. The Investor: (a) is a limited
liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
and (b) has the power and authority to execute, deliver and perform
its obligations under this Agreement and the Transaction Documents.
4.2. Authorization; No Contravention. The execution, delivery and
performance by the Investor of this Agreement and each of the other
Transaction Documents to which it is or will be a party and the
consummation of the transactions contemplated hereby and thereby:
(a) has been duly authorized by all necessary action; (b) do not and
will not contravene the terms of the Certificate of Formation and
Operating Agreement, or any amendment thereof or any laws applicable
to the Investor or its assets, business or properties; (c) do not
and will not (i) conflict with, contravene, result in any violation
or breach of or default under (with or without the giving of notice
or the lapse of time or both), (ii) create in any other person or
entity a right or claim of termination or amendment, or (iii)
require modification, acceleration or cancellation of any provision
of any security issued by such person or entity in any Contractual
Obligation; and (d) do not and will not result in the creation of
any Lien against any property, asset or business of the Investor or
the suspension, revocation, impairment, forfeiture or non renewal of
any material permit, license, authorization or approval applicable
to the Investor or its businesses or operations or any of its assets
or properties, other than as contemplated by the Transaction
Documents.
4.3. Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization, or other action by,
or notice to, or filing with, any governmental entity or authority
or any other person or entity in respect of any law or Contractual
Obligation, and no lapse of a waiting period under any law or
Contractual Obligation, is necessary or required in connection with
the execution, delivery or performance by, or enforcement against,
the Investor of this Agreement and the other Transaction Documents
to which it is a party or the consummation of the transactions
contemplated hereby or thereby.
4.4. Binding Effect; Enforceability. This Agreement has been, and each of
the other Transaction Documents to which the Investor will be a
party to will be, duly executed and delivered by the Investor, and
this Agreement constitutes, and such other Transaction Documents
will constitute, the legal, valid and binding obligations of the
Investor enforceable against the Investor in accordance with their
respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability.
4.5. No Legal Bar. Neither the execution, delivery nor performance of
this Agreement and the other Transaction Documents will violate any
law or any Contractual Obligation of the Investor. The Investor has
not previously entered into any agreement which is currently in
effect or to which the Investor is currently bound, granting any
rights to any person or entity which are inconsistent with the
rights to be granted by the Investor herein or in the other
Transaction Documents.
4.6. Litigation. There are no material legal actions, suits, proceedings,
claims or disputes pending or, to the knowledge of the Investor,
threatened, at law, in equity, in arbitration or before any
governmental entity or authority against or affecting the Investor
(or, as applicable, to the Investor's knowledge, any of their
respective stockholders, directors, members, managers, officers,
employees or agents). No injunction, writ, temporary restraining
order, decree or any order of any nature has been issued by any
court or other governmental entity or authority purporting to enjoin
or restrain the execution, delivery or performance of this Agreement
or the other Transaction Documents.
4.7. Compliance with Laws. The Investor is in compliance with all laws
applicable to the Investor, , except where non-compliance will not
result in material adverse effect on the Investor's business.
4.8. Investment RepresentationsThe investment hereunder is made for the
Investor's own account, not as a nominee or agent, and not with a
view to the distribution of any part thereof, and the Investor has
no present intention of selling, granting participation in, or
otherwise distributing any of the Preferred Shares, the common stock
issuable upon conversion of the Preferred Shares, the Option or the
shares of common stock into which the Option is exercisable for
(collectively, the "Securities").
4.8.1. The Investor is knowledgeable in business and financial
matters and is capable of evaluating the merits and
risks of an investment in the Company. The Investor has
received all the information, records and data it
considers necessary or appropriate for deciding whether
to purchase the Securities, and has an opportunity to
ask questions and receive answers from all persons
acting on behalf of the Company and Parent concerning
the Company, Parent and its business and proposed
business, and the Securities, and all questions have
been answered to Investor's satisfaction.
4.8.2. The Investor understands that none of the Securities
have been registered under the Securities Act of 1933,
as amended (the "1933 Act") or any state securities laws
and are being offered and sold pursuant to an exemption
from registration contained in the 1933 Act based in
part upon the representations of the Investor contained
herein.
4.8.3. The Investor further covenants that it will not make any
sale, transfer or other disposition of the Securities
without registration or exemption under the 1933 Act and
any applicable state securities laws.
4.8.4. The Investor acknowledges that it is aware of Rule 144
promulgated under the 1933 Act, which permits limited
public resales of securities acquired in a nonpublic
offering, subject to the satisfaction of certain
conditions. The Investor understands that under Rule
144, except as otherwise provided by section (k) of that
Rule, the conditions include, among other things: the
availability of certain current public information about
the issuer, the resale occurring not less than one year
after the party has purchased and paid for the
securities to be sold and limitations on the amount of
securities to be sold and the manner of sale.
4.8.5. The Investor is an "accredited investor" as that term is
defined in Regulation D under the 1933 Act because all
of the equity owners of the Investor are "accredited
investors", and if there is any change in such status,
the Investor will immediately furnish such revised or
corrected information to the Company.
4.8.6 The Investor recognizes that an investment in the
Company involves substantial risks, including loss of
the entire amount, and has taken full cognizance of, and
understands all the risks related to, the purchase of
the Preferred Shares
4.9 Brokerage. There are no claims for, and no person is entitled to,
brokerage commissions or finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement based
on any arrangement made by or on behalf of the Investor.
5. Board Structure.
Following the Closing of the initial investment pursuant to Section
1, the board of directors (the "Board of Directors") of both the
Company and Parent shall consist of five (5) members, one of which
shall be nominated by Investor. The Investor hereby designates Xxxx
X. Xxxxxx as its nominee. The Investor shall have a right to
maintain one representative on the Board of Directors of the Company
and Parent so long as Investor retains at least 75% of the aggregate
of the Preferred Shares purchased hereunder and the shares
excercisable upon exercise of the Option.
Simultaneously with the transactions contemplated by this Agreement,
Parent shall issue to Investor or its designee or assignee 1% of the
outstanding shares of Parent. The Company agrees that such interest
may be exchanged at any time for a 1% interest in the Company by
cancelling the 1% interest in the Parent. Such 1% interests may be
transferred or assigned by the party to whom it is issued, subject
to compliance with applicable securities law.
6. Securities Exchange Act Registration
The Parent will maintain effective registration statement
(containing such information and documents as the Commission shall
specify and otherwise complying with the Securities Exchange Act
under section 12(b) or Section 12 (g), whichever is applicable, of
the Securities Exchange Act, with respect to the Common Stock of the
Parent , and the Parent will file on time such information,
documents and reports as the Commission may require or prescribe for
companies whose stock has been registered pursuant to such Section
12(b) or Section 12(g), whichever is applicable.
Parent will, upon request of any holder of Securities, make whatever
other filings with the Commission, or otherwise make generally
available to the public such financial and other information, or any
such holder may deem reasonably necessary or desirable in order to
enable such holder to be permitted to sell Securities pursuant to
the provisions of Rule 144.
7. Non Compete.
The Investor represents and warrants and covenants that it is not,
and undertakes not to become, the holder, directly or indirectly, of
more than 5% of the ownership in competing company or business with
the Company.
The members of the Board of Directors nominated by the Investor for
so long as such member serves as a director of the Company, shall
not serve as a director of a competing company or business, or be
the holder, directly or indirectly, of more than 5% of the ownership
in a competing company or business.
8. General.
8.1. This Agreement contains the entire agreement between the parties
respecting the subject matter hereof, and supersedes and replaces
all previous representations, warranties, agreements,
understandings, commitments or arrangements, oral or written, with
respect thereto. This Agreement may not be modified except by a
written instrument executed by both parties.
8.2. This Agreement shall be interpreted in accordance with, and governed
in all respects by, the laws of the State of Delaware, without
giving effect to the rules of conflict of laws thereof, and the
competent courts of New York shall have exclusive jurisdiction over
all disputes between the parties with respect to this Agreement and
no other court shall have jurisdiction over this Agreement.
8.3. All representations and warranties contained herein shall survive
the execution and delivery of this Agreement.
IN WITNESS WHEREOF, this Stock Purchase Agreement has been executed as of
the date first above written by the parties hereto.
XXXXXXXXXXXXXX.XXX, INC.
/s/ Xxxxxx Xxxxxxxx
-------------------
By: Xxxxxx Xxxxxxxx
Title:Chief Executive Officer
HIDENET SECURE ARCHITECTURES, INC.
/s/ RonFussman
--------------
By: Xxx Xxxxxxx
Title: President
NP PARTNERS, LLC
/s/ Xxxx X. Xxxxxx
------------------
By: Xxxx X. Xxxxxx
Title:Manager
