Exhibit 99.1
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is dated as of
January 18, 2010, by and between Alanco Technologies, Inc., an Arizona
corporation (the "Company"), and Seaside 88, LP, a Florida limited partnership
(such investor, including its successors and assigns, "Seaside").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to Seaside, and Seaside desires to
purchase from the Company, up to 2,000,000 shares of Common Stock on the
Closing Dates;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and Seaside agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"3-Day VWAP" means the volume weighted average of actual trading
prices measured in hundredths of cents of the Common Stock of the Company on the
Trading Market for the three consecutive Trading Days immediately prior to a
Subsequent Closing Date.
"Affiliate" means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 144.
"Closing" means the Initial Closing and each Subsequent Closing.
"Closing Dates" means the Initial Closing Date and each Subsequent
Closing Date.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A common stock of the Company and any
securities into which such common stock may hereafter be reclassified.
"Common Stock Equivalents" means any securities of the Company or
the Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
"Company Counsel" means Xxxxxx X. Xxxx, Esq., or other counsel
(including in-house counsel) reasonably acceptable to Seaside.
"DTC" means the Depository Trust Company.
"DWAC" means DTC's Deposit Withdrawal Agent Commission system.
"Disclosure Schedules" means the disclosure schedules of the Company
delivered concurrently herewith.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Floor" shall mean $0.25 (as the same may be proportionately
adjusted in respect of any stock split, stock dividend, combination,
recapitalization or the like with respect to the Common Stock).
"GAAP" shall have the meaning ascribed to such term in Section
3.1(h).
"Initial Closing" means the closing of the purchase and sale of the
Common Stock pursuant to Section 2.1.
"Initial Closing Date" means January 19, 2010 or such later date
when all of the Transaction Documents have been executed and delivered by the
applicable parties thereto, and all conditions precedent to Seaside's
obligations to purchase the Shares, and the Company's obligations to issue and
deliver the Shares, have been satisfied or waived.
"Intellectual Property" shall have the meaning ascribed to such term
in Section 3.1(q).
"Lien" means a lien, charge, security interest, encumbrance, right
of first refusal, preemptive right or other restriction.
"Material Adverse Effect" means any condition, event, change or
effect that could reasonably be expected to have a material adverse effect on
(i) the legality, validity or enforceability of any Transaction Document,
(ii) the results of operations, assets, business, prospects or financial
condition of the Company and its Subsidiaries, taken as a whole, or (iii) the
Company's ability to perform in any material respect on a timely basis its
obligations under any Transaction Document, but shall not mean or include any
condition, event or change which (1) is or results from events or occurrences
relating to the economy in general (including arising from terrorist attacks,
acts of war or civil unrest) or the Company's industry in general and not
specifically relating to the Company or having a disproportionate impact on the
Company, or (2) results from the announcement of this Agreement or the
transactions contemplated hereby or by the other Transaction Documents.
"Per Share Purchase Price" shall be the lower of an amount equal to
a) the volume weighted average of actual trading prices measured in hundredths
of cents of the Common Stock of the Company on the Trading Market for the ten
consecutive Trading Days immediately prior to a Closing Date multiplied by 0.86
and (b) the volume weighted average of actual trading prices measured in
hundredths of cents of the Common Stock of the Company on the Trading Market for
the Trading Day immediately prior to a Closing Date multiplied by 0.88.
"Permits" shall have the meaning ascribed to such term in Section
3.1(r).
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus Supplement" means the supplement or supplements to the
base prospectus contained in the Registration Statement to be filed in
connection with the sale to Seaside, or the resale by Seaside, of the Shares.
"Registration Statement" means the registration statement of the
Company, Commission File No. 333-163288, as the same may amended from time to
time, covering the sale to Seaside, or the resale by Seaside, of the Shares.
"Required Approvals" shall have the meaning ascribed to such term in
Section 3.1(e).
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Seaside Party" shall have the meaning ascribed to such term in
Section 4.6.
"SEC Reports" shall have the meaning ascribed to such term in
Section 3.1(h).
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued or issuable to
Seaside pursuant to this Agreement.
"Short Sales" shall include, without limitation, all "short sales"
as defined in Rule 200 of Regulation SHO of the Exchange Act.
"Subsequent Closing" means each closing of the purchase and sale of
the Common Stock pursuant to Section 2.2.
"Subsequent Closing Date" means the day two weeks subsequent to the
prior Closing Date (or, if such day is not a Trading Day, then the first day
thereafter that is a Trading Day) commencing two weeks following the Initial
Closing Date and ending on or about the date that is 18 weeks subsequent to the
Initial Closing, or such later dates when all conditions precedent to Seaside's
obligations to purchase the Shares, and the Company's obligations to issue and
deliver the Shares, have been satisfied or waived, in each event with respect to
such Subsequent Closing.
"Subsidiary" shall have the meaning ascribed to such term in Section
3.1(a).
"Trading Day" means a day on which the Common Stock is traded on a
Trading Market.
"Trading Market" means whichever of the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the New York Stock Exchange, the NYSE Alternext Exchange, the NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market or the OTC Bulletin Board.
"Transaction Documents" means this Agreement and any other documents
or agreements executed in connection with the transactions contemplated
hereunder.
ARTICLE II
PURCHASE AND SALE
2.1 Initial Closing. On the Initial Closing Date, Seaside shall
purchase from the Company, and the Company shall issue and sell to Seaside,
200,000 Shares at the Per Share Purchase Price. Upon satisfaction or waiver of
the conditions set forth in Sections 2.3, 2.4, 2.5 and 2.6, the Initial Closing
shall occur at the offices of White White & Van Etten PC, 00 Xxxxxxxxx Xxxxxxx,
Xxxxxxxxx, XX 00000, or such other location as the parties shall mutually agree.
2.2 Subsequent Closings. On each Subsequent Closing Date, subject to
Section 2.6, Seaside shall purchase from the Company, and the Company shall
issue and sell to Seaside, 200,000 Shares at the Per Share Purchase Price. Upon
satisfaction or waiver of the conditions set forth in Sections 2.3, 2.4, 2.5 and
2.6, each Subsequent Closing shall occur at the offices of White White & Van
Etten PC, 00 Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, XX 00000, or such other location as
the parties shall mutually agree. Not more than 2,000,000 shares of Common Stock
shall be sold by the Company to Seaside hereunder.
2.3 Deliveries by the Company. The Company shall deliver or cause to be
delivered to Seaside the following:
(a) on each Closing Date, 200,000 Shares, registered in the name
of Seaside, via the DTC DWAC system, as specified on the signature pages hereto;
(b) on each Closing Date, an officer's certificate of the
Company's Chief Executive Officer or Chief Financial Officer in the form of
Exhibit A attached hereto; and
(c) solely on the Initial Closing Date, a legal opinion of
Company Counsel, in the form of Exhibit B attached hereto.
2.4 Deliveries by Seaside. On each Closing Date, Seaside shall deliver
or cause to be delivered to the Company an amount equal to the Per Share
Purchase Price for each such Closing multiplied by 200,000, in each case by wire
transfer to the account as specified in writing by the Company, and in each case
less the amount due Seaside for reimbursement of its expenses pursuant to
Section 5.2 hereof.
2.5 Closing Conditions.
(a) The obligations of the Company hereunder in connection with
each Closing are subject to the satisfaction by Seaside, or waiver by the
Company, of the following conditions:
(i) the accuracy on the Closing Date of the
representations and warranties of Seaside contained herein;
(ii) all obligations, covenants and agreements of Seaside
required to be performed at or prior to the Closing Date shall have been
performed;
(iii) the delivery by Seaside of the items set forth in
Section 2.4 of this Agreement; and
(iv) with respect to any Subsequent Closing occurring
subsequent to $400,000 of Common Stock having been purchased hereunder, the
3-Day VWAP shall equal or exceed the Floor as set forth in Section 2.6 of this
Agreement.
(b) The obligations of Seaside hereunder in connection with each
Closing are subject to the satisfaction by the Company, or waiver by Seaside, of
the following conditions:
(i) the accuracy on the Closing Date of the
representations and warranties of the Company contained herein;
(ii) all obligations, covenants and agreements of the
Company required to be performed at or prior to the Closing Date shall have been
performed, and all Required Approvals shall have been obtained;
(iii) the delivery by the Company of the items set forth
in Section 2.3 of this Agreement;
(iv) with respect to any Subsequent Closing occurring
subsequent to $400,000 of Common Stock having been purchased hereunder, the
3-Day VWAP shall equal or exceed the Floor as set forth in Section 2.6 of this
Agreement;
(v) there shall have been no Material Adverse Effect
with respect to the Company since the date hereof that has not been cured by the
Company;
(vi) the Registration Statement shall be in full force
and effect;
(vii) the purchase of Shares at a Subsequent Closing from
the Company shall not cause Seaside's beneficial ownership of the Company's
Common Stock, calculated in accordance with Rule 13d-3 promulgated by the
Commission, to exceed 10%; and
(viii) from the date hereof to each Closing Date, trading
in the Common Stock shall not have been suspended by the Commission and trading
in securities generally as reported by Bloomberg Financial Markets shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of Seaside, makes it impracticable or inadvisable to purchase the
Shares at the Closing.
2.6 The Floor. With respect to any Subsequent Closing occurring
subsequent to $400,000 of Common Stock having been purchased hereunder, in the
event that the 3-Day VWAP does not equal or exceed the Floor, as calculated with
respect to any such Subsequent Closing Date, then such Subsequent Closing will
not occur. In each such event, there will be one fewer Subsequent Closing
pursuant to this Agreement and the aggregate number of Shares to be purchased
hereunder shall be reduced by 200,000 Shares for each such Subsequent Closing
that does not occur because the Floor has not been reached.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to Seaside as of the date hereof
and as of each Closing Date:
(a) Subsidiaries. All of the direct and indirect subsidiaries
of the Company are listed in the Company's most recent Annual Report on Form
10-K as modified by any subsequent SEC Reports filed with the SEC (each a
"Subsidiary"). The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary free and clear of any Liens,
and all the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and
similar rights to subscribe for or purchase securities. If the Company has no
subsidiaries, then references in the Transaction Documents to the Subsidiaries
will be disregarded.
(b) Organization and Qualification. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not reasonably be expected to result in a
Material Adverse Effect and, to the knowledge of the Company, no Proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and its stockholders, and no further action is required by
the Company or its stockholders in connection therewith other than in connection
with the Required Approvals. Each Transaction Document has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Shares at
each Closing and the consummation by the Company of the other transactions
contemplated thereby do not and will not (i) conflict with or violate any
provision of the Company's or any Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, violate or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any
Subsidiary pursuant to, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement (written or oral), credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected, except in the case of each of
clauses (ii) and (iii), such as could not reasonably be expected to result in a
Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority, the Trading Market or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing of the Prospectus Supplement
and (ii) any notice filings or SEC Reports as are required to be made following
each Closing Date under applicable federal and state securities laws or under
applicable rules and regulations of the Trading Market (collectively, the
"Required Approvals").
(f) Issuance of the Shares. The Shares are duly authorized and,
when issued and paid for in accordance with the Transaction Documents, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable pursuant to this Agreement.
The issuance by the Company to Seaside, or the resale by Seaside, of the Shares
has been registered under the Securities Act and all of the Shares when
delivered will be freely transferable and tradable on the Trading Market by
Seaside without restriction (other than any restrictions arising solely from an
act or omission of Seaside). The Registration Statement is effective and
available for the issuance and sale or resale of the Shares thereunder and the
Company has not received any notice that the Commission has issued or intends to
issue a stop-order with respect to the Registration Statement or that the
Commission otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has
threatened in writing to do so. The "Plan of Distribution" section under the
Registration Statement as supplemented by the Prospectus Supplement permits the
issuance and sale or resale of the Shares hereunder.
(g) Capitalization. The capitalization of the Company is as set
forth in Section 3.1(g) of the Disclosure Schedule. The Company has not issued
any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of employee stock options
under the Company's stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company's employee stock purchase plan and pursuant
to the conversion or exercise of outstanding Common Stock Equivalents, and as
otherwise set forth in the Disclosure Schedules. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as disclosed in the SEC Reports or Section 3.1(g) of the Disclosure
Schedules, there are no outstanding options, warrants, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents. Except as disclosed in the SEC Reports or Section
3.1(g) of the Disclosure Schedules, the issue and sale of the Shares will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than Seaside) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under such securities. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws and requirements of the
Trading Market, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any stockholder or the Board of
Directors of the Company is required for the issuance and sale of the Shares,
other than the Required Approvals. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company's capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company's stockholders.
(h) SEC Reports; Financial Statements. The Company has filed or
furnished all reports, schedules, forms, statements and other documents required
to be filed or furnished by it under the Securities Act and the Exchange Act
(including all required exhibits thereto), including pursuant to Section 13(a)
or 15(d) thereof, for the 12 months preceding the date hereof (or such shorter
period as the Company was required by law to file such material) (the foregoing
materials, as the same may be amended, and including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the "SEC Reports") and any notices, reports or other filings pursuant
to applicable requirements of the Trading Market on a timely basis or has
received a valid extension of such time of filing, and has filed any such SEC
Reports and notices, reports or other filings pursuant to applicable
requirements of the Trading Market prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements (i) have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and (ii) fairly
present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, year-end audit adjustments.
(i) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, except as has been reasonably cured by the Company,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting except as otherwise pursuant to
GAAP, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders, other than in the ordinary course as
required by outstanding preferred stock, or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option and incentive plans.
(j) Litigation. Except as disclosed in the SEC Reports, there is
no Proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Shares or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of
the Company, any director or officer thereof (in his or her capacity as such),
is or has been the subject of any Proceeding involving a claim or violation of
or liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been and, to the knowledge of the Company, there
is not currently pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the
Company (in his or her capacity as such). The Commission has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act and, to the Company's knowledge, no proceeding for such purpose is pending
before or threatened by the Commission.
(k) Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, could reasonably be expected
to result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or regulation
of any governmental authority or the Trading Market, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in each case as would not have a Material Adverse Effect.
(l) Listing and Maintenance Requirements. The Company's Common
Stock is registered pursuant to Section 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under
the Exchange Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration. Except as disclosed
in the SEC Reports, the Company has not, in the 12 months preceding the date
hereof or any Closing Date, received notice from any Trading Market on which
the Common Stock is or has been listed or quoted (as applicable) to the effect
that the Company is not in compliance with the listing or quotation (as
applicable) and maintenance requirements of such Trading Market. The Company is,
and immediately after the consummation of the transactions contemplated hereby
will be, in compliance with all such listing or quotation (as applicable) and
maintenance requirements, other than the requirement to maintain a minimum bid
price for its Common Stock of at least $1.00.
(m) Intentionally Omitted.
(n) Effective Registration Statement. The Registration Statement
has been declared effective by the Commission and remains effective as of the
date hereof and the Company knows of no reason why the Registration Statement
will not continue to remain effective for the foreseeable future. The Company is
eligible to use Form S-3 registration statements for the issuance of securities.
(o) Acknowledgment Regarding Seaside's Purchase of Shares. The
Company acknowledges and agrees that Seaside is acting solely in the capacity of
an arm's length purchaser with respect to this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby.
The Company further acknowledges that Seaside is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement or the other Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by Seaside or any of its
representatives or agents in connection with this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to Seaside's purchase of the Shares. The Company further
represents to Seaside that the Company's decision to enter into this Agreement
and the other Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated thereby by the Company and its
representatives.
(p) Approvals. The issuance and listing or quotation (as
applicable) on the Trading Market of the Shares requires no further approvals,
including but not limited to, the approval of stockholders.
(q) Intellectual Property. The Company possesses such right,
title and interest in and to, or possesses legal rights to use, all patents,
patent rights, trade secrets, inventions, know-how, trademarks, trade names,
copyrights, service marks and other proprietary rights ("Intellectual Property")
material to the conduct of the Company's business except Intellectual Property
the failure of which to possess would not have a Material Adverse Effect. Except
as disclosed in the SEC Reports, the Company has not received any notice of
infringement, misappropriation or conflict from any third party as to
Intellectual Property owned by or exclusively licensed to the Company that has
not been resolved or disposed of, which infringement, misappropriation or
conflict would if adversely decided have a Material Adverse Effect. To the
Company's knowledge, it has not infringed, misappropriated, or otherwise
conflicted with the Intellectual Property of any third parties, which
infringement, misappropriation or conflict would if adversely decided have a
Material Adverse Effect.
(r) Permits. The Company has made all filings, applications and
submissions required by, and possesses all approvals, licenses, certificates,
certifications, clearances, consents, exemptions, marks, notifications, orders,
permits and other authorizations issued by, the appropriate federal, state or
foreign regulatory authorities necessary to own or lease its properties and to
conduct its businesses (collectively, "Permits"), except for such Permits the
failure of which to possess or obtain would not reasonably be expected to have a
Material Adverse Effect. The Company has not received any written notice of
proceedings relating to the limitation, revocation, cancellation, suspension,
modification or non-renewal of any such Permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect, and has no reason to believe that any such
Permit will not be renewed in the ordinary course.
(s) Disclosure. The Company confirms that neither the Company
nor any officer, director or employee of the Company acting on its behalf (as
such term is used in Regulation FD) has provided Seaside or its agents or
counsel with any information that constitutes or might reasonably be expected to
constitute material, non-public information except insofar as the existence and
terms of the proposed transactions hereunder may constitute such information.
The Company understands and confirms that Seaside will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. None of the representations and warranties of the Company contained
herein, nor any statement made by the Company in any disclosure, schedule,
exhibit, certificate or other document furnished or to be furnished to Seaside
in connection herewith, contains or will contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
3.2 Representations and Warranties of Seaside. Seaside hereby makes the
representations and warranties set forth below to the Company:
(a) Organization; Authority. Seaside is a limited partnership
duly organized, validly existing and in good standing under the laws of the
state of Florida, with full right, power and authority to own and use its
properties and assets and to carry on its business as currently conducted and to
enter into and to consummate the transactions contemplated by this Agreement and
the other Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution, delivery and performance by Seaside of
the transactions contemplated by this Agreement and each other Transaction
Document have been duly authorized by all necessary action on the part of
Seaside and no such further action is required. Each Transaction Document to
which Seaside is a party has been (or upon delivery will have been) duly
executed by Seaside, and, when delivered by Seaside in accordance with the terms
thereof, will constitute the valid and legally binding obligation of Seaside,
enforceable against it in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) Experience of Seaside. Seaside, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Shares, and has so evaluated the
merits and risks of such investment. Seaside is able to bear the economic risk
of an investment in the Shares and, at the present time, is able to afford a
complete loss of such investment.
(c) Short Sales. Seaside has not directly or indirectly executed
any Short Sales or other hedging transactions in the securities of the Company
through the date hereof.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 No Transfer Restrictions. Certificates evidencing the Shares shall
not contain any legend restricting their transferability by Seaside. The Company
shall cause its counsel to issue a legal opinion to the Company's transfer agent
if required by the Company's transfer agent to effect a transfer of any of the
Shares; such opinion shall be provided by the Company's counsel at no expense to
Seaside.
4.2 Furnishing of Information. As long as Seaside owns Shares, the
Company covenants to use its best efforts to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as Seaside owns Shares that are "restricted securities" as
that term is defined in Rule 144 that it has owned for less than one year in
accordance with Rule 144(d), if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to Seaside and make
publicly available in accordance with Rule 144(c) such information as is
required for Seaside to sell the Shares under Rule 144.
4.3 Securities Laws Disclosure; Publicity. The Company shall, by 9:00
a.m. Eastern time on the Trading Day following the date hereof, file a Current
Report on Form 8-K which attaches as exhibits all agreements relating to this
transaction, in each case reasonably acceptable to Seaside and its counsel,
disclosing the material terms of the transactions contemplated hereby.
4.4 Investment Company Act of 1940. The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act of 1940, as amended.
4.5 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide Seaside or its
agents or counsel with any information that the Company believes constitutes
material non-public information. The Company understands and confirms that
Seaside shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
4.6 Indemnification of Seaside. Subject to the provisions of this
Section 4.6, the Company will indemnify and hold Seaside, Seaside's Affiliates
and their respective directors, officers, stockholders, partners, members,
employees and agents (each, a "Seaside Party") harmless from any and all losses,
liabilities, obligations, claims, demands, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation reasonably incurred in
connection with defending or investigating any suit or action in respect thereof
to which any Seaside Party is or may become a party under the Securities Act,
the Exchange Act or any other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, liabilities, obligations,
claims, demands, contingencies, damages, costs and expenses arise out of or are
based on (a) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any Prospectus Supplement, or
(b) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
provided that the Company will not be liable in any such case to the extent that
any such liability, obligation, claim, demand, contingency, damage, cost or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by and regarding
Seaside expressly for inclusion therein. If any action shall be brought against
any Seaside Party in respect of which indemnity may be sought pursuant to this
Agreement, such Seaside Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with counsel of
its own choosing. Any Seaside Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Seaside Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Seaside Party. The Company will not be liable to any
Seaside Party under this Agreement (x) for any settlement by a Seaside Party
effected without the Company's prior written consent, which consent shall not be
unreasonably withheld or delayed; or (y) to the extent, but only to the extent,
that a loss, liability, obligation, claim, demand, damage, cost or expense is
attributable to any Seaside Party's breach of any of the representations,
warranties, covenants or agreements made by Seaside in this Agreement or in the
other Transaction Documents.
4.7 Listing or Quotation of Common Stock. The Company hereby agrees to
use its best efforts to maintain the listing or quotation (as applicable) of the
Common Stock on its current Trading Market. The Company further agrees that, if
the Company applies to have the Common Stock traded on any other Trading Market,
it will include in such application all of the Shares and will take such other
action as is necessary to cause all of the Shares to be listed on such other
Trading Market as promptly as possible. The Company will take all action
reasonably necessary to continue the listing or quotation (as applicable) and
trading of its Common Stock on each Trading Market on which the Common Stock is
listed or quoted (as applicable) and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
such Trading Market(s).
4.8 Stockholder Approval. The Company shall not issue shares of Common
Stock or Common Stock Equivalents, if such issuance would require stockholder
approval pursuant to applicable rules of the Trading Market, unless and until
such stockholder approval is obtained.
4.9 Short Sales. Seaside covenants that neither it nor any Affiliates
acting on its behalf or pursuant to any understanding with it will execute any
Short Sales in the securities of the Company from the date hereof until the
final Subsequent Closing contemplated hereby.
4.10 Prospectus Supplement. The Company will use its best efforts to file
the Prospectus Supplement in accordance with the requirements of Rule 424
promulgated under the Securities Act on or before the Initial Closing Date and,
if required, before each Subsequent Closing Date.
ARTICLE V
MISCELLANEOUS
5.1 Termination; Liquidated Damages. This Agreement may be terminated:
(a) by Seaside, by written notice to the Company, if the Initial
Closing has not been consummated on or before January 31, 2010,
(b) by Seaside, immediately upon written notice to the Company,
if at any time prior to the final Subsequent Closing Date the Company
consummates a financing to which Seaside is not a party, and
(c) by the Company, upon at least 10 days' prior written notice
to Seaside, so long as all other obligations of the Company to Seaside, if any,
have been retired or satisfied in full,
provided, however, that no such termination pursuant to this Section 5.1 will
affect the right of any party to xxx for any breach by the other party (or
parties) and provided, further, that in the event the Company exercises its
termination right pursuant to subsection (c) of this Section 5.1 and within six
months of such termination initiates another financing having committed funding
dates scheduled at pre-determined intervals of between one week and two months
then the Company shall be obligated to pay to Seaside liquidated damages in the
amount of $500,000 immediately upon the first closing of any such subsequent
financing.
5.2 Fees and Expenses. Except as otherwise set forth in this Agreement
and as set forth in this Section 5.2 below, each party shall pay the fees and
expenses of its own advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
delivery of the Shares. Notwithstanding the foregoing, at the Initial Closing
the Company shall reimburse Seaside for the fees and expenses of its counsel,
White White & Van Etten PC, in an amount equal to $25,000 and at each Subsequent
Closing the Company shall reimburse Seaside for the fees and expenses of its
counsel, White White & Van Etten PC, in an amount equal to $2,500. Such legal
fees may be withheld by Seaside from the amount to be paid for the Shares
purchased at the Initial Closing and any Subsequent Closing.
5.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto (including the Disclosure Schedules), contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via electronic mail or facsimile at
the facsimile number set forth on the signature pages attached hereto prior to
5:30p.m. (Eastern time) on a Trading Day, (b) the next Trading Day after the
date of transmission, if such notice or communication is delivered via
electronic mail or facsimile at the facsimile number set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (Eastern time) on any Trading Day, (c) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages attached hereto.
5.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and Seaside or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
5.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 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.
5.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Seaside. Seaside may assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
Company.
5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.6.
5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. The
parties hereby waive all rights to a trial by jury. If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys' fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.
5.10 Survival. The representations and warranties herein shall survive
the Closings and delivery of the Shares.
5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile or email transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
email signature page were an original thereof.
5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever Seaside exercises a right, election, demand or
option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then Seaside may
rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.
5.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, Seaside and
the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of the obligations
set forth herein and hereby agree to waive in any such action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
5.15 Payment Set Aside. To the extent that either party hereto makes a
payment or payments to the other party hereto pursuant to any Transaction
Document or enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the other party, a trustee, receiver or any other person under any
law (including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
5.16 Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
(Signature Pages Follow)
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Alanco Technologies, Inc. Address for Notice:
By:_____________________________________ 00000 Xxxxx 00xx Xxx
Name: Xxxxxx X. Xxxxxxxx Suite 3
Title: Chief Executive Officer Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax: 000-000-0000
With a copy (which shall not constitute
notice) to: 0000 X. Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X.Xxxx,Esq.
Fax: 000-000-0000
Seaside 88, LP Address for Notice:
By: Seaside 88 Advisors, LLC
000 Xxxxx Xxxxxx Xxx
Xxxxx 000
By:_____________________________________ North Xxxx Xxxxx, XX 00000
Name: Xxxxxxx X. Xxxxxx Attention: Xxxxxxx X. Xxxxxx and
Title: Manager Xxxxx X. X'Xxxxxxx, M.D.
Fax: 000-000-0000
With a copy (which shall not constitute
notice) to: White White & Van Etten PC
00 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
DWAC Instructions for Common Stock:
DTC # - 0571 -
Account number - G53-0000000
Exhibit A
Officer's Certificate
In connection with a Closing on the date set forth below pursuant to that
certain Common Stock Purchase Agreement dated as of January 18, 2010 (the
"Agreement") by and between Alanco Technologies, Inc., an Arizona corporation
(the "Company") and Seaside 88, LP, a Florida limited partnership ("Seaside"),
the undersigned, the duly elected and qualified ________________ of the Company,
does hereby certify to the Company as follows:
(i) all representations and warranties of the Company contained
in the Agreement are true and correct in all material
respects (without giving effect to any limitation as to
"materiality" or "knowledge" set forth therein) on and as of
the date hereof as if made on and as of the date hereof
(provided that representations and warranties that speak as
of a specific date shall continue to be true and correct as
of the Closing with respect to such date);
(ii) the Company has performed or complied with all of its
covenants and agreements contained in the Agreement and
required to be performed or complied with by the Company on
or before the date hereof; and
(iii) the Registration Statement has been declared effective by
the Commission and remains effective on and as of the date
hereof.
Capitalized terms used but not defined herein shall have the meanings given
to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Officer's Certificate
to be executed this _____ day of _____________, 2010.
Alanco Technologies, Inc.
By: _____________________________
Name:
Title:
Exhibit B
1. The Company is a corporation duly organized under the General
Corporation Law of the State of Arizona with corporate power and authority to
enter into the Agreement and perform its obligations thereunder. The Company is
validly existing and in good standing under the laws of the State of Arizona,
the only state where the failure to be so qualified and in good standing could
have a Material Adverse Effect.
2. The execution and delivery of the Agreement and the issuance and
sale of the Shares thereunder has been duly authorized by all necessary
corporate action of the Company, no further action is required by the Company or
its stockholders in connection therewith and the Agreement has been duly
executed and delivered by the Company and is enforceable against the Company in
accordance with its terms.
3. We have been advised by the staff of the Commission that the
Registration Statement became effective under the Act on December 30, 2009. With
your consent, based solely on a telephonic confirmation by a member of the staff
of the Commission on ____________, 2010, we confirm that no stop order
suspending the effectiveness of the Registration Statement has been issued under
the Act and no proceedings therefor have been initiated by the Commission.
4. The Shares have been duly authorized and, when issued and delivered
in accordance with the terms of the Agreement, will be validly issued, fully
paid and non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights set forth in the Company's Articles of
Incorporation or Bylaws or any agreement known to us or filed as an exhibit to
any SEC Report.
5. The execution and delivery by the Company of, and the performance by
the Company of its obligations under, the Agreement (including the issuance and
sale of the Shares) will not contravene any provision of any statute, law, rule
or regulation applicable to the Company, any agreement filed as an exhibit to
any SEC Report, or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company that is applicable to the
Company or its properties.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental body,
regulatory authority or Trading Market is required for the execution, delivery
and performance by the Company of its obligations under the Agreement, other
than the filing of the Prospectus Supplement and any notice filings as are
required to be made following the Closing Date under applicable federal and
state securities laws or rules of the Trading Market.
7. The Company is not, and will not be after consummation of the
Agreement, the sale of the Shares to Seaside and the application of the proceeds
thereof, an "investment company" as defined in the Investment Company Act of
1940, as amended.
