EXHIBIT 10.17
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of June 30, 1998, between SAC
TECHNOLOGIES, INC., a Minnesota corporation with principal executive offices
located at 0000 Xxxx 00xx Xxxxxx Xxxxx 000, Xxxxx Xxxxxxxxx 00000 (the
"Company"), and the undersigned, domiciled in the British Virgin Islands
("Buyer").
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from the Company, and the Company
desires to issue and sell to the Buyer, upon the terms and subject to the
conditions of this Agreement, the Company's 5% Convertible Debentures due June
30, 2001 (the "Debentures") which, upon the terms and subject to the conditions
of the Debentures, will be convertible into shares of the Company's common
stock, $.01 par value (the "Common Stock") and warrants to purchase 100,000
shares of Common Stock (the "Warrants") the Warrants and the Debentures are
collectively referred to herein as the "Securities");
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
I. PURCHASE AND SALE OF DEBENTURES
A. TRANSACTION. Buyer hereby agrees to purchase from the Company,
and the Company has offered and hereby agrees to issue and sell to the Buyer in
a transaction exempt from the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended (the "Securities Act"), i) $2,500,000
aggregate principal amount of the Debentures having the terms and conditions and
being in the form attached hereto as ANNEX I and ii) the Warrants.
B. PURCHASE PRICE; FORM OF PAYMENT. The purchase price for the
Debentures and the Warrants to be purchased by Buyer hereunder shall be U.S.
$2,500,000 (the "Purchase Price"). Buyer shall pay the Purchase Price on the
date hereof by wire transfer of immediately available funds to the escrow agent
(the "Escrow Agent") identified in those certain Escrow Instructions of even
date herewith, a copy of which is attached hereto as ANNEX II (the "Escrow
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Instructions"). If during the thirty (30) calendar day period from the date upon
which the registration statement required to be filed pursuant to Section 2 of
the Registration Rights Agreement (as defined herein) is declared effective by
the Commission (the "Registration Statement Effective Date")(the "30 Day
Period"), (i) the closing bid price for the Common Stock as reported on NASDAQ
on the 30th day of the 30 Day Period, is at least $5.00 per share (provided,
that the average closing bid price for the Common Stock for the previous 30 Day
Period is at least $5.00) and (ii) the Common Stock has had an average trading
volume, as reported on NASDAQ for such 30 Day Period of at least 40,000 shares
per day, then on such 30th day or the next business day following such 30 Day
Period (the "Second Funding Date"), the Company shall have the option,
exercisable in its sole discretion, to sell to Buyer and the Buyer shall then
have the obligation to buy from the Company on the same terms and pursuant to
the same conditions contained herein and in the Debentures, an additional one
million dollars ($1,000,000) aggregate principal amount of Debentures (the
"Additional Debentures") (the "Sale Option"). The closing of the purchase and
sale and issuance of the Additional Debentures shall occur within 7 days of the
Second Funding Date.
If the conversion of the Debenture is automatically postponed for a
period of 45 days as set forth in Section 3.1 of the Debenture, the 30 day
period used to determine the Second Funding Date shall run from the date upon
which the automatic conversion postponement lapses and not from the Registration
Statement Effective Date. If (a) the conditions set forth in clauses IB(i) and
IB(ii) above are not satisfied or waived by the Buyer and the Company in writing
on the Second Funding Date, or (b) the Company has not exercised its Sale
Option, then the Buyer shall have no further obligation and the Company shall
have no right to require Buyer to purchase any additional Debentures at any
time.
Simultaneously against receipt by the Escrow Agent of the Purchase
Price, the Company shall deliver one or more duly authorized, issued and
executed certificates (I/N/O Buyer or, if the Company otherwise has been
notified, I/N/O Buyer's nominee) evidencing the Debentures, to the Escrow Agent
or its designated depository. By executing and delivering this Agreement, Buyer
and the Company each hereby agrees to observe the terms and conditions of the
Escrow
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Instructions, all of which are incorporated herein by reference as if fully set
forth herein.
C. METHOD OF PAYMENT. Payment into escrow of the Purchase Price
shall be made by wire transfer of immediately available funds to:
X.X. Xxxxxx Services, Inc.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
ABA# 000000000
SWIFT# MGTCUS33
For the Account of: Weil, Gotshal & Xxxxxx LLP
Special Account
Account# 000-00-000
Reference# 73601.0012
Simultaneously with the execution of this Agreement, the Buyer shall deposit
with the Escrow Agent the Purchase Price and the Company shall deposit with the
Escrow Agent the Debentures.
II. BUYER'S REPRESENTATIONS, WARRANTIES; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
Buyer represents and warrants to and covenants and agrees with the
Company as follows:
A. Buyer is purchasing the Debentures and the Warrants for its own
account, for investment purposes only and not with a view towards or in
connection with the public sale or distribution thereof in violation of the
Securities Act.
B. Buyer is (i) an "accredited investor" within the meaning of Rule
501 of Regulation D under the Securities Act, (ii) experienced in making
investments of the kind contemplated by this Agreement, (iii) capable, by reason
of its business and financial experience, of evaluating the relative merits and
risks of an investment in the Securities, and (iv) able to afford the loss of
its investment in the Securities.
C. Buyer understands that the Securities (and the Common Stock
issuable upon conversion thereof) are being offered and sold by the Company in
reliance on an exemption from the registration requirements of the Securities
Act and equivalent state securities and "blue sky" laws, and that
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the Company is relying upon the accuracy of, and Buyer's compliance with,
Buyer's representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of Buyer to
purchase the Securities;
D. Buyer has been furnished with or provided access to all materials
relating to the business, financial position and results of operations of the
Company, and all other materials requested by Buyer to enable it to make an
informed investment decision with respect to the Securities.
E. Buyer acknowledges that it has been furnished with copies of (i)
the Company's Annual Reports on Form 10- KSB for the fiscal years ended December
31, 1997 and December 31, 1996, (ii) the Company's quarterly reports on Form
10-KSB, and (iii) and all other reports and documents heretofore filed by the
Company with the Securities and Exchange Commission (the "Commission") pursuant
to the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") since November 1, 1996 (collectively the "Commission Filings").
F. Buyer acknowledges that in making its decision to purchase the
Securities it has (i) relied upon independent investigations made by it and its
professional advisors, (ii) visited the Company's principal executive offices
and been given access and the opportunity to examine all material agreements,
books and records of the Company and all documents relating to the Company's
private placement of the Securities, and (iii) been given an opportunity to ask
questions of and to receive answers from the Company's executive officers,
directors and management personnel concerning the terms and conditions of the
private placement of the Securities by the Company.
G. Buyer understands that the Securities have not been approved or
disapproved by the Commission or any state securities commission and that the
foregoing authorities have not reviewed any documents or instruments in
connection with the offer and sale to it of the Securities and have not
confirmed or determined the adequacy or accuracy of any such documents or
instruments.
H. This Agreement has been duly and validly authorized, executed and
delivered by Buyer and is a valid and binding agreement of Buyer enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
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insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally.
I. Neither Buyer nor its affiliates nor any person acting on its or
their behalf has the intention of entering, or will enter into, prior to the
closing, any put option, short position or other similar instrument or position
with respect to the Common Stock and neither Buyer nor any of its affiliates nor
any person acting on its or their behalf will use at any time shares of Common
Stock acquired pursuant to this Agreement or the Securities to settle any put
option, short position or other similar instrument or position that may have
been entered into prior to the execution of this Agreement.
III. COMPANY'S REPRESENTATIONS
Except as otherwise disclosed in the Company's Form SB-2 (file no.
333-16451) effective February 14, 1997, the Companys' Form 10-KSB for the fiscal
year ended December 31, 1997 and the Company's Form 10-QSB for the fiscal year
ended March 31, 1998, the Company represents and warrants to Buyer that:
A. CAPITALIZATION. 1. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, of which 7,503,867 shares are
outstanding on the date hereof; all of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued and are fully paid and
non-assessable. The Common Stock issuable upon conversion of the Securities has
been duly and validly authorized and reserved for issuance by the Company, and
when issued by the Company upon conversion of, or in lieu of accrued interest
on, the Debentures, will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability by
reason of being such holder. There are no outstanding preemptive, subscription,
"call" or other similar rights to acquire the Common Stock (including Common
Stock issuable upon conversion of the Securities) that have been issued or
granted to any person, except as disclosed on Schedule A hereto or otherwise
previously disclosed in writing to Buyer.
2. The Company does not own or control, directly or indirectly, any
interest in any other corporation, partnership, limited liability company,
unincorporated
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business organization, association, trust or other business entity. The Company
has no subsidiaries.
B. ORGANIZATION; REPORTING COMPANY STATUS. 1. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota and is duly qualified as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise) or results of operations of the Company or on the consummation of any
of the transactions contemplated by this Agreement (a "Material Adverse
Effect").
2. The Company has registered certain shares of its Common Stock
pursuant to Section 12 of the Exchange Act and has timely filed with the
Commission all reports and information required to be filed by it pursuant to
all reporting obligations under Section 13(a) or 15(d), as applicable, of the
Exchange Act for the 9-month period immediately preceding the date hereof. The
Common Stock is listed and traded on the National Association of Securities
Dealers, Inc. Automated Quotation System - SmallCap Market ("NASDAQ") and the
Company has not received any notice regarding, and to its knowledge there is no
threat, of the termination or discontinuance of the eligibility of the Common
Stock for such listing.
C. AUTHORIZED SHARES. The Company has duly and validly authorized
and reserved for issuance shares of Common Stock sufficient in number for the
conversion, in full, of the Debentures (assuming for purposes of this Section
3.c. a Conversion Price of $3.00) and the full exercise of 100,000 Warrants. The
Company understands and acknowledges the potentially dilutive effect to the
Common Stock of the issuance of the Conversion Shares and Warrant Shares upon
conversion of the Debentures and exercise of the Warrants. The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion of
the Debentures in accordance with this Agreement, and upon exercise of the
Warrants is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the
Company.
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D. TERMS OF DEBENTURES. The Debentures when issued to Buyer pursuant
to this Agreement shall be in the form of ANNEX I attached hereto.
E. TERMS OF WARRANTS. The Warrants when issued to Buyer pursuant to
this Agreement shall be in the form of ANNEX II attached hereto.
F. AUTHORITY; VALIDITY AND ENFORCEABILITY. The Company has the
requisite corporate power and authority to enter into this Agreement, the
Registration Rights Agreement of even date herewith between the Company and
Buyer, a copy of which is annexed hereto as ANNEX III (the "Registration Rights
Agreement") and the Escrow Instructions and to perform all of its obligations
hereunder and thereunder (including the issuance, sale and delivery to Buyer of
the Debentures and the Common Stock issuable upon conversion thereof). The
execution, delivery and performance by the Company of this Agreement and the
Registration Rights Agreement, and the consummation by the Company of the
transactions contemplated hereby and thereby, has been duly authorized by all
necessary corporate action on the part of the Company. Each of this Agreement
and the Registration Rights Agreement has been duly and validly executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally.
The Debentures and the Warrants have been duly and validly authorized for
issuance by the Company and, when executed and delivered by the Company, will be
valid and binding obligations of the Company enforceable against it in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally.
G. NON-CONTRAVENTION. The execution and delivery by the Company of
this Agreement and the Registration Rights Agreement, the issuance of the
Debentures and the exercise of the Warrants (and the Common Stock issuable upon
conversion thereof), and the consummation by the Company of the other
transactions contemplated hereby and thereby, do not and will not conflict with
or result in a breach by the Company of any of the terms or provisions of, or
constitute a default (or an event which, with notice, lapse of time or both,
would
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constitute a default) under, the articles of incorporation or by-laws of the
Company, or any indenture, mortgage, deed of trust or other material agreement
or instrument to which the Company is a party or by which its properties or
assets are bound, or any law, rule, regulation, decree, judgment or order of any
court or public or governmental authority having jurisdiction over the Company
or any of its properties or assets, except such conflict, breach or default
which would not have a Material Adverse Effect.
H. APPROVALS. No authorization, approval or consent of any court or
public or governmental authority is required to be obtained by the Company for
the issuance and sale of the Debentures (and the Common Stock issuable upon
conversion thereof) to Buyer as contemplated by this Agreement, except such
authorizations, approvals and consents that have been obtained by the Company
prior to the date hereof.
I. COMMISSION FILINGS. None of the Commission Filings contained at
the time they were filed any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
J. ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date (as
defined in Section 3.M.), there has not occurred any change, event or
development in the business, financial condition, prospects or results of
operations of the Company, and there has not existed any condition having or
reasonably likely to have, a Material Adverse Effect.
K. FULL DISCLOSURE. There is no fact known to the Company (other
than general economic or industry conditions known to the public generally) that
has not been fully disclosed in writing to the Buyer that (i) reasonably could
be expected to have a Material Adverse Effect or (ii) reasonably could be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement or the Registration Rights
Agreement.
L. ABSENCE OF LITIGATION. There is no action, suit, claim,
proceeding, inquiry or investigation pending or, to the Company's knowledge,
threatened, by or before any court or public or governmental authority which, if
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determined adversely to the Company or any of its subsidiaries, would have a
Material Adverse Effect.
M. ABSENCE OF EVENTS OF DEFAULT. No "Event of Default" (as defined
in any agreement or instrument to which the Company or any of its subsidiaries
is a party) and no event which, with notice, lapse of time or both, would
constitute an Event of Default (as so defined), has occurred and is continuing,
which could have a Material Adverse Effect.
N. FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. Seller has
delivered to Buyer true and complete copies of its audited balance sheet as at
December 31, 1997 and the related audited statements of operations and cash
flows for the fiscal years ended December 31, 1997 and December 31, 1996
including the related notes and schedules thereto (collectively, the "Financial
Statements"), and all management letters, if any, from the Company's independent
auditors relating to the dates and periods covered by the Financial Statements.
To the best of the Company's knowledge, each of the Financial Statements is
complete and correct in all material respects, has been prepared in accordance
with United States General Accepted Accounting Principles ("GAAP") (subject, in
the case of the interim Financial Statements, to normal year end adjustments and
the absence of footnotes) and in conformity with the practices consistently
applied by the Company without modification of the accounting principles used in
the preparation thereof, and fairly presents the financial position, results of
operations and cash flows of the Company as at the dates and for the periods
indicated. For purposes hereof, the audited balance sheet of the Company as at
December 31, 1996 is hereinafter referred to as the "Balance Sheet" and December
31, 1996 is hereinafter referred to as the "Balance Sheet Date". The Company
does not have any indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to become due)
that would have been required to be reflected in, reserved against or otherwise
described in the Balance Sheet or in the notes thereto in accordance with GAAP,
which was not fully reflected in, reserved against or otherwise described in the
Balance Sheet or the notes thereto or was not incurred in the ordinary course of
business consistent with the Company's past practices since the Balance Sheet
Date.
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O. COMPLIANCE WITH LAWS; PERMITS. The Company is in compliance with
all laws, rules, regulations, codes, ordinances and statutes (collectively
"Laws") applicable to it or to the conduct of its business, except for such
non-compliance which would not have a Material Adverse Effect. The Company
possesses all permits, approvals, authorizations, licenses, certificates and
consents from all public and governmental authorities which are necessary to
conduct its business, except for those the absence of which would not have a
Material Adverse Effect.
P. RELATED PARTY TRANSACTIONS. Neither the Company nor any of its
officers, directors or "Affiliates" (as such term is defined in Rule 12b-2 under
the Exchange Act) has borrowed any moneys from or has outstanding any
indebtedness or other similar obligations to the Company. Neither the Company
nor any of its officers, directors or Affiliates (i) owns any direct or indirect
interest constituting more than a one percent equity (or similar profit
participation) interest in, or controls or is a director, officer, partner,
member or employee of, or consultant to or lender to or borrower from, or has
the right to participate in the profits of, any person or entity which is (x) a
competitor, supplier, customer, landlord, tenant, creditor or debtor of the
Company or any of its subsidiaries, (y) engaged in a business related to the
business of the Company or any of its subsidiaries, or (z) a participant in any
transaction to which the Company is a party or (ii) is a party to any contract,
agreement, commitment or other arrangement with the Company.
Q. INSURANCE. The Company maintains property and casualty, general
liability, workers' compensation, environmental hazard, personal injury and
other similar types of insurance with financially sound and reputable insurers
that is adequate, consistent with industry standards and the Company's
historical claims experience. The Company has not received notice from, and has
no knowledge of any threat by, any insurer (that has issued any insurance policy
to the Company) that such insurer intends to deny coverage under or cancel,
discontinue or not renew any insurance policy presently in force.
R. SECURITIES LAW MATTERS. Based, in part, upon the representations
and warranties of Buyer set forth in Section 2 hereof, the offer and sale by the
Company of the Securities (and the Common Stock issuable upon conversion
thereof) is exempt from (i) the registration and prospectus
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delivery requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification provisions
of all applicable state securities and "blue sky" laws. Other than pursuant to
an effective registration statement under the Securities Act or exemption
therefrom, the Company has not issued, offered or sold the Debentures, Warrants
or any shares of Common Stock (including for this purpose any securities of the
same or a similar class as the Debentures, Warrants or Common Stock, or any
securities convertible into or exchangeable or exercisable for the Debentures or
Common Stock or any such other securities) within the six-month period next
preceding the date hereof, except as otherwise previously disclosed in writing
to Buyer, and the Company shall not directly or indirectly take, and shall not
permit any of its directors, officers or Affiliates directly or indirectly to
take, any action (including, without limitation, any offering or sale to any
person or entity of the Debentures, Warrants or shares of Common Stock), so as
to make unavailable the exemption from Securities Act registration being relied
upon by the Company for the offer and sale to Buyer of the Debentures (and the
Common Stock issuable upon conversion thereof) as contemplated by this
Agreement. No form of general solicitation or advertising has been used or
authorized by the Company or any of its officers, directors or Affiliates in
connection with the offer or sale of the Debentures and the Warrants (and the
Common Stock issuable upon conversion thereof) as contemplated by this Agreement
or any other agreement to which the Company is a party.
S. ENVIRONMENTAL MATTERS. 1. The operations of the Company are, to
its knowledge, in material compliance with all applicable Environmental Laws and
all permits issued pursuant to Environmental Laws or otherwise;
2. to its knowledge, the Company has obtained or applied for all
material permits required under all applicable Environmental Laws necessary to
operate its business;
3. the Company is not the subject of any outstanding written order
of or agreement with any governmental authority or person respecting (i)
Environmental Laws, (ii) Remedial Action or (iii) any Release or threatened
Release of Hazardous Materials;
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4. the Company has not received, since December 31, 1996, any
written communication alleging that it may be in violation of any Environmental
Law or any permit issued pursuant to any Environmental Law, or may have any
liability under any Environmental Law;
5. the Company does not have any current contingent liability in
connection with any Release of any Hazardous Materials into the indoor or
outdoor environment (whether on-site or off-site);
6. to the Company's knowledge, there are no investigations of the
business, operations, or currently or previously owned, operated or leased
property of the Company pending or threatened which could lead to the imposition
of any liability pursuant to any Environmental Law that would have a Material
Adverse Effect;
7. to the Company's knowledge, there is not located at any of the
properties of the Company any (A) underground storage tanks, (B)
asbestos-containing material or (C) equipment containing polychlorinated
biphenyls; and,
8. the Company has provided to Buyer all environmentally related
audits, studies, reports, analyses, and results of investigations that have been
performed with respect to the currently or previously owned, leased or operated
properties of the Company.
For purposes of this Section III.S.:
"Environmental Law" means any foreign, federal, state or local
statute, regulation, ordinance, or rule of common law as now or hereafter in
effect in any way relating to the protection of human health and safety or the
environment including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. App. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean
Water Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.), and the
regulations promulgated pursuant thereto.
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"Hazardous Material" means any substance, material or waste which is
regulated by the United States, Canada or any of its provinces, or any state or
local governmental authority including, without limitation, petroleum and its
by-products, asbestos, and any material or substance which is defined as a
"hazardous waste," "hazardous substance," "hazardous material," "restricted
hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant,"
"toxic waste" or toxic substance" under any provision of any Environmental Law;
"Release" means any release, spill, filtration, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or leaching into
the indoor or outdoor environment, or into or out of any property;
"Remedial Action" means all actions to (x) clean up, remove, treat
or in any other way address any Hazardous Material; (y) prevent the Release of
any Hazardous Material so it does not endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (z) perform
pre-remedial studies and investigations or post- remedial monitoring and care.
T. LABOR MATTERS. The Company is not party to any labor or
collective bargaining agreement and there are no labor or collective bargaining
agreements which pertain to employees of the Company. No employees of the
Company are represented by any labor organization and none of such employees has
made a pending demand for recognition, and there are no representation
proceedings or petitions seeking a representation proceeding presently pending
or, to the Company's knowledge, threatened to be brought or filed, with the
National Labor Relations Board or other labor relations tribunal. There is no
organizing activity involving the Company pending or to the Company's knowledge,
threatened by any labor organization or group of employees of the Company. There
are no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii)
material grievances or other labor disputes pending or, to the knowledge of the
Company, threatened against or involving the Company. There are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge of the
Company, threatened by or on behalf of any employee or group of employees of the
Company.
U. ERISA MATTERS. The Company and its ERISA Affiliates are in
compliance in all material respects with
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all provisions of ERISA applicable to it. No Reportable Event has occurred, been
waived or exists as to which the Company or any ERISA Affiliate was required to
file a report with the Pension Benefits Guaranty Corporation, and the present
value of all liabilities under all Plans (based on those assumptions used to
fund such Plans) did not, as of the most recent annual valuation date applicable
thereto, exceed the value of the assets of all such Plans in the aggregate. None
of the Company or ERISA Affiliates has incurred any Withdrawal Liability that
could result in a Material Adverse Effect. None of the Company or ERISA
Affiliates has received any notification that any Multiemployer Plan is in
reorganization or has been terminated within the meaning of Title IV of ERISA,
and no Multiemployer Plan is reasonably expected to be in reorganization or
termination where such reorganization or termination has resulted or could
reasonably be expected to result in increases to the contributions required to
be made to such Plan or otherwise.
For purposes of this Section III.U.:
"ERISA" means the Employee Retirement Income Security Act of 1974,
or any successor statute, together with the regulations thereunder, as the same
may be amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that was, is or hereafter may become, a member of a group of which
the Company is a member and which is treated as a single employer under ss. 414
of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
ss. 414 of the Internal Revenue Code) is making or accruing an obligation to
make contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
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"Plan" means any pension plan (other than a Multiemployer Plan)
subject to the provision of Title IV of ERISA or ss. 412 of the Internal Revenue
Code that is maintained for employees of the Company or any ERISA Affiliate.
"Reportable Event" means any reportable event as defined in Section
4043(b) of ERISA or the regulations issued thereunder with respect to a Plan
(other than a Plan maintained by an ERISA Affilare that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of ss. 414 of the Internal
Revenue Code.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
V. TAX MATTERS. 1. The Company has filed all Tax Returns which it is
required to file under applicable Laws, except for such Tax Returns in respect
of which the failure to so file does not and could not have a Material Adverse
Effect; all such Tax Returns are true and accurate and have been prepared in
compliance with all applicable Laws; the Company has paid all Taxes due and
owing by it (whether or not such Taxes are required to be shown on a Tax Return)
and have withheld and paid over to the appropriate taxing authorities all Taxes
which it is required to withhold from amounts paid or owing to any employee,
stockholder, creditor or other third parties; and since the Balance Sheet Date,
the charges, accruals and reserves for Taxes with respect to the Company
(including any provisions for deferred income taxes) reflected on the books of
the Company are adequate to cover any Tax liabilities of the Company if its
current tax year were treated as ending on the date hereof.
2. No claim has been made by a taxing authority in a jurisdiction
where the Company does not file tax returns that such corporation is or may be
subject to taxation by that jurisdiction. There are no foreign, federal, state
or local tax audits or administrative or judicial proceedings pending or being
conducted with respect to the Company, the result of which will have a Material
Adverse Effect; no information related to Tax matters has been requested by any
foreign, federal, state or local taxing authority; and, except as disclosed
above, no written notice indicating an intent to open an audit or other review
15
has been received by the Company from any foreign, federal, state or local
taxing authority. There are no material unresolved questions or claims
concerning the Company's Tax liability. The Company (A) has not executed or
entered into a closing agreement pursuant to ss. 7121 of the Internal Revenue
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law; or (B) has not agreed to or is required to make any
adjustments pursuant to ss. 481 (a) of the Internal Revenue Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or any of its subsidiaries or has any knowledge
that the IRS has proposed any such adjustment or change in accounting method, or
has any application pending with any taxing authority requesting permission for
any changes in accounting methods that relate to the business or operations of
the Company. The Company has not been a United States real property holding
corporation within the meaning of ss. 897(c)(2) of the Internal Revenue Code
during the applicable period specified in ss. 897(c)(1)(A)(ii) of the Internal
Revenue Code.
3. The Company has not made an election under ss. 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of another person
that is not a subsidiary of the Company under (A) Treas. Reg. ss. 1.1502-6 (or
comparable provisions of state, local or foreign law), (B) as a transferee or
successor, (C) by contract or indemnity or (D) otherwise. The Company is not a
party to any tax sharing agreement. The Company has not made any payments, is
obligated to make payments or is a party to an agreement that could obligate it
to make any payments that would not be deductible under ss. 280G of the Internal
Revenue Code.
For purposes of this Section III.V.:
"IRS" means the United States Internal Revenue Service.
"Tax" or "Taxes" means federal, state, county, local, foreign, or
other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
16
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"Tax Return" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto and including any
amendment thereof.
W. PROPERTY. The Company does not own any real property. The Company
has good and marketable title to all personal property owned by it, free and
clear of all liens, encumbrances and defects or such as do not materially affect
the value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company; and any real property and
buildings held under lease by the Company are held by it under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company.
X. INTELLECTUAL PROPERTY. To the best of its knowledge, the Company
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct of its
business as now being conducted. To the best of the Company's knowledge, the
Company is not infringing upon or in conflict with any right of any other person
with respect to any Intangibles. No claims have been asserted by any person to
the ownership or use of any Intangibles that would have a Material Adverse
Effect on the Company and the Company has no knowledge of any basis for such
claim.
Y. [Reserved]
Z. INTERNAL CONTROLS AND PROCEDURES. The Company maintains accurate
books and records and internal accounting controls which provide reasonable
assurance that (i) all transactions to which the Company is a party or by which
its properties are bound are executed with management's authorization; (ii) the
reported accountability of the Company's assets is compared with existing assets
at regular intervals; (iii) access to the Company's assets is
17
permitted only in accordance with management's authorization; and (iv) all
transactions to which the Company is a party or by which its properties are
bound are recorded as necessary to permit preparation of the financial
statements of the Company in accordance with U.S. generally accepted accounting
principles.
AA. PAYMENTS AND CONTRIBUTIONS. Neither the Company nor any of its
directors, officers or, to its knowledge, other employees has (i) used any
Company funds for any unlawful contribution, endorsement, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment of Company funds to any foreign or domestic government
official or employee; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other similar payment to any
person with respect to Company matters.
BB. CUSTOMERS. To the Company's knowledge, except as otherwise
provided to Buyer in writing by the Company, none of [the Company's Largest
Customers] intend to discontinue or decrease their purchases of the Company's
products and the Company's relationship with such customers is strong and all
accounts receivable of such customers are current.
CC. NO MISREPRESENTATION. No representation or warranty of the
Company contained in this Agreement, any schedule, annex or exhibit hereto or
any agreement, instrument or certificate furnished by the Company to Buyer
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, not misleading.
IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. RESTRICTIVE LEGEND. Buyer acknowledges and agrees that, upon
issuance pursuant to this Agreement, the Debentures (and any shares of Common
Stock issued in conversion thereof) shall have endorsed thereon a legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the Debentures and the shares of Common Stock issuable upon
conversion thereon):
18
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OR SUCH OTHER LAWS."
B. FILINGS. The Company shall make all necessary filings in
connection with the sale of the Debentures to the Buyer as required by all
applicable Laws, and shall provide a copy thereof to the Buyer promptly after
such filing.
C. REPORTING STATUS. So long as the Buyer beneficially owns any of
the Securities, the Company shall file all reports required to be filed by it
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
D. USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Securities (excluding amounts paid by the Company for legal fees and
finder's fees in connection with such sale) solely for working capital and other
general corporate purposes.
E. LISTING. The Company shall use its best efforts to maintain its
listing of the Common Stock on NASDAQ.
F. RESERVED CONVERSION SHARES. The Company at all times from and
after the date hereof shall have a sufficient number of shares of Common Stock
duly and validly authorized and reserved for issuance to satisfy the conversion,
in full, of the Debentures and the full exercise of the Warrants (assuming for
purposes of this Section 3.F., a conversion price of $3.00).
V. TRANSFER AGENT INSTRUCTIONS.
A. The Company undertakes and agrees that no instruction other than
the instructions referred to in this Section 5 and customary stop transfer
instructions prior to the registration and sale of the Common Stock pursuant to
an
19
effective Securities Act registration statement will be given to its transfer
agent for the Common Stock and that the Common Stock issuable upon conversion of
the Debentures otherwise shall be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement, the Registration
Rights Agreement and applicable law. Nothing contained in this Section 5.A.
shall affect in any way Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of such Common Stock. If, at any time,
Buyer provides the Company with an opinion of counsel reasonably satisfactory to
the Company and its legal counsel that registration of the resale by Buyer of
such Common Stock is not required under the Securities Act and that the removal
of restrictive legends is permitted under applicable law, the Company shall
permit the transfer of such Common Stock and, promptly instruct the Company's
transfer agent to issue one or more certificates for Common Stock without any
restrictive legends endorsed thereon.
B. The Company shall permit Buyer to exercise its right to convert
the Debentures by telecopying an executed and completed Notice of Conversion to
the Company. Each date on which a Notice of Conversion is telecopied to and
received by the Company in accordance with the provisions hereof shall be deemed
a Conversion Date. The Company shall transmit the certificates evidencing the
shares of Common Stock issuable upon conversion of any Debentures (together with
certificates evidencing any principal amount of the Debentures not being so
converted) to Buyer via express courier, by electronic transfer or otherwise,
within three business days after receipt by the Company of the telecopied Notice
of Conversion (the "Delivery Date").
C. The Company understands that a delay in the issuance of the
shares of Common Stock upon such conversion beyond the Delivery Date could
result in economic loss to Buyer. As compensation to Buyer for such loss (and
not as a penalty), the Company agrees to pay to Buyer for late issuance of
Common Stock upon conversion in accordance with the following schedule (where
"No. Business Days" is defined as the number of business days beyond three (3)
days from Delivery Date):
20
Compensation For Each
$10,000 Principal
Amount of Debentures
No. Business Days Not Converted Timely
----------------- --------------------
1 $25
2 $50
3 $75
4 $100
5 $125
6 $150
7 $175
8 $200
9 $225
10 $250
more than 10 $250 + $100 for each
Business Day Late
beyond 10 days
The Company shall pay to Buyer the compensation described above by the transfer
of immediately available funds upon Buyer's demand. Nothing herein shall limit
Buyer's right to pursue actual damages for the Company's failure to issue and
deliver Common Stock to Buyer, and in addition to any other remedies which may
be available to Buyer, in the event the Company fails for any reason to effect
delivery of such shares of Common Stock within five business days after the
relevant Delivery Date, Buyer shall be entitled to rescind the relevant Notice
of Conversion by delivering a notice to such effect to the Company whereupon the
Company and Buyer shall each be restored to their respective original positions
immediately prior to delivery of such Notice of Conversion.
VI. DELIVERY INSTRUCTIONS.
The Debentures shall be delivered by the Company to the Escrow Agent
pursuant to Section 1(b) hereof on a "delivery-against-payment basis" at the
Closing.
VII. CLOSING DATE.
The date and time of the issuance and sale of the Debentures (the
"Closing Date") shall be the date hereof or such other as shall be mutually
agreed upon in writing. The issuance and sale of the Debentures shall occur on
the Closing Date at the offices of the Escrow Agent. Notwithstanding anything to
the contrary contained herein,
21
the Escrow Agent shall not be authorized to release to the Company the Purchase
Price and to Buyer the certificate(s) (I/N/O Buyer) evidencing the Debentures
being purchased by Buyer unless the conditions set forth in Section 8(c) and
9(g) hereof have been satisfied.
VIII. CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The Buyer understands that the Company's obligation to sell the
Debentures on the Closing Date to Buyer pursuant to this Agreement is
conditioned upon:
A. Delivery by Buyer to the Escrow Agent of the Purchase Price;
B. The accuracy on the Closing Date of the representations and
warranties of Buyer contained in this Agreement as if made on the Closing Date
(except for representations and warranties which, by their express terms, speak
as of and relate to a specified date, in which case such accuracy shall be
measured as of such specified date) and the performance by Buyer in all material
respects on or before the Closing Date of all covenants and agreements of Buyer
required to be performed by it pursuant to this Agreement on or before the
Closing Date;
C. There shall not be in effect any Law or order, ruling, judgment
or writ of any court or public or governmental authority restraining, enjoining
or otherwise prohibiting any of the transactions contemplated by this Agreement.
IX. CONDITIONS TO BUYER'S OBLIGATIONS.
The Company understands that Buyer's obligation to purchase the
Debentures on the Closing Date pursuant to this Agreement is conditioned upon:
A. Delivery by the Company to the Escrow Agent of one or more
certificates (I/N/O Buyer) evidencing the Debentures to be purchased by Buyer
pursuant to this Agreement;
B. The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date (except for representations and warranties which, by their express terms,
speak as of and relate to a specified date, in which
22
case such accuracy shall be measured as of such specified date) and the
performance by the Company in all material respects on or before the Closing
Date of all covenants and agreements of the Company required to be performed by
it pursuant to this Agreement on or before the Closing Date;
C. Buyer having received an opinion of counsel for the Company,
dated the Closing Date, in form, scope and substance reasonably satisfactory to
the Buyer, to the effect set forth in ANNEX IV attached hereto.
D. There not having occurred (i) any general suspension of trading
in, or limitation on prices listed for, the Common Stock on the NASDAQ, (ii) the
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) the commencement of a war, armed hostilities
or other international or national calamity directly or indirectly involving the
United States or any of its territories, protectorates or possessions, or (iv)
in the case of the foregoing existing at the date of this Agreement, a material
acceleration or worsening thereof.
E. There not having occurred any event or development, and there
being in existence no condition, having or which reasonably and foreseeably
could have a Material Adverse Effect.
F. The Company shall have delivered to Buyer (as provided in the
Joint Escrow Instructions) reimbursement of Buyer's out-of-pocket costs and
expenses incurred in connection with the transactions contemplated by this
Agreement (including reasonable fees and disbursements of Buyer's legal counsel
not to exceed $30,000), upon submission by Buyer to the Company of appropriate
documentary evidence of such out-of-pocket costs and expenses.
G. There shall not be in effect any Law or order, ruling, judgment
or writ of any court or public or governmental authority restraining, enjoining
or otherwise prohibiting any of the transactions contemplated by this Agreement.
X. TERMINATION.
A. TERMINATION BY MUTUAL WRITTEN CONSENT. This Agreement may be
terminated and the transactions
23
contemplated hereby may be abandoned, for any reason and at any time prior to
the Closing Date, by the mutual written consent of the Company and Buyer.
B. TERMINATION BY THE COMPANY OR BUYER. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by action
of the Company or Buyer if (i) the Closing shall not have occurred at or prior
to 5:00 p.m., New York City time, on June 30, 1998; provided, however, that the
right to terminate this Agreement pursuant to this Section 10.a.(i) shall not be
available to any party whose failure to fulfill any of its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur at or before such time and date or (ii) any court or public or
governmental authority shall have issued an order, ruling, judgment or writ, or
there shall be in effect any Law, restraining, enjoining or otherwise
prohibiting the consummation of any of the transactions contemplated by this
Agreement.
C. TERMINATION BY BUYER. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned by Buyer at any time prior to
the Closing Date, if (i) the Company shall have failed to comply in any material
respect with any of its covenants or agreements contained in this Agreement,
(ii) there shall have been a breach by the Company with respect to any
representation or warranty made by it in this Agreement, or (iii) there shall
have occurred any event or development, or there shall be in existence any
condition, having or reasonably and foreseeably likely to have a Material
Adverse Effect.
D. TERMINATION BY THE COMPANY. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned by the Company at any time
prior to the Closing Date, if (i) Buyer shall have failed to comply in any
material respect with any of its covenants or agreements contained in this
Agreement or (ii) there shall have been a breach by Buyer with respect to any
representation or warranty made by it in this Agreement.
XI. SURVIVAL; INDEMNIFICATION.
A. The representations, warranties and covenants made by each of the
Company and Buyer in this Agreement, the annexes, schedules and exhibits hereto
and in each instrument, agreement and certificate entered into and
24
delivered by them pursuant to this Agreement, shall survive the Closing and the
consummation of the transactions contemplated hereby. In the event of a breach
or violation of any of such representations, warranties or covenants, the party
to whom such representations, warranties or covenants have been made shall have
all rights and remedies for such breach or violation available to it under the
provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or prior
to the Closing Date.
B. Indemnification of Buyer by the Company.
The Company hereby agrees to indemnify and hold harmless the Buyer,
its Affiliates and their respective officers, directors, partners and members
(collectively, the "Buyer Indemnitees"), from and against any and all losses,
claims, damages, judgments, penalties, liabilities and deficiencies
(collectively, "Losses"), and agrees to reimburse the Buyer Indemnitees for all
out-of-pocket expenses (including the fees and expenses of legal counsel), in
each case promptly as incurred by the Buyer Indemnitees and to the extent
arising out of or in connection with:
1. any misrepresentation, omission of fact or breach of any of the
Company's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant to this
Agreement; or
2. any failure by the Company to perform in any material respect any
of its covenants, agreements, undertakings or obligations set forth in
this Agreement, the annexes, schedules or exhibits hereto or any
instrument, agreement or certificate entered into or delivered by the
Company pursuant to this Agreement.
C. Indemnification of the Company by Buyer.
Buyer hereby agrees to indemnify and hold harmless the Company, its
Affiliates and their respective officers, directors, partners and members
(collectively, the "Company Indemnitees"), from and against any and all Losses,
and agrees to reimburse the Company Indemnitees for all out-of-pocket expenses
(including the fees and expenses of legal counsel), in each case promptly as
incurred by the Company
25
Indemnitees and to the extent arising out of or in connection with:
1. any misrepresentation, omission of fact, or breach of any of
Buyer's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by Buyer pursuant to this Agreement;
or
2. any failure by Buyer to perform in any material respect any of
its covenants, agreements, undertakings or obligations set forth in this
Agreement or any instrument, certificate or agreement entered into or
delivered by Buyer pursuant to this Agreement.
D. Third Party Claims. Promptly after receipt by either party hereto
seeking indemnification pursuant to this Section 11 (an "Indemnified Party") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Section 11 is being sought (the "Indemnifying Party") of the
commencement thereof; but the omission to so notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is materially prejudiced
and forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party and the Indemnifying
Party reasonably shall have concluded that representation of the Indemnified
Party by the Indemnifying Party by the same legal counsel would not be
appropriate due to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between such parties in the
conduct of the defense of such Claim, or if there may be legal defenses
26
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party, or (z) the Indemnifying Party shall
have failed to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the commencement of
such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified Party. Except as provided above, the Indemnifying Party shall not,
in connection with any Claim in the same jurisdiction, be liable for the fees
and expenses of more than one firm of legal counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party (which consent shall
not unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnified Party from all liabilities with respect to such Claim or judgment.
E. Other Claims.
In the event one party hereunder should have a claim for
indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.
XII. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York, without regard to the conflicts of law
principles of such state. Each of the parties consents to the jurisdiction of
the federal courts whose districts encompass any part of the City of New York or
the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non
27
conveniens, to the bringing of any such proceeding in such jurisdictions. A
facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
XIII. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given upon personal delivery or seven business days after deposit in
the United States Postal Service, by (a) advance copy by fax, and (b) mailing by
express courier or registered or certified mail with postage and fees prepaid,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto.
COMPANY: SAC Technologies, Inc.
0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxx
Xxxxx X0
Xxx Xxxxx, Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Rumble & Xxxxxx
Professional Association
0000 Xxxxx Xxxxxx Towers
000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
28
BUYER: THE SHAAR FUND, LTD.
C/O THE SHAAR ADVISORY SERVICES LTD.
00 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx 0X
Xxxxxxxxx, Xxxxxx
Attention: Xxxxxx Xxxxxxxx
Telephone: 00-000-0-000-0000
Fax: 00-000-0-000-0000
ESCROW AGENT: WEIL, GOTSHAL & XXXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Block, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
XIV. CONFIDENTIALITY. Each of the Company and Buyer agrees to keep
confidential and not to disclose to or use for the benefit of any third party
the terms of this Agreement or any other information which at any time is
communicated by the other party as being confidential without the prior written
approval of the other party; provided, however, that this provision shall not
apply to information which, at the time of disclosure, is already part of the
public domain (except by breach of this Agreement) and information which is
required to be disclosed by law (including, without limitation, pursuant to Item
10 of Rule 601 of Regulation S-K under the Securities Act and the Exchange Act).
Any press release must be jointly approved by the Buyers and the Company prior
to its release.
XV. ASSIGNMENT. This Agreement shall not be assignable by either of
the parties hereto prior to the Closing without the prior written consent of the
other party, and any attempted assignment contrary to the provisions hereby
shall be null and void; provided, however, that Buyer may assign its rights and
obligations hereunder, in whole or in part, to any affiliate of Buyer who
furnishes to the Company the representations and warranties set forth in Section
2 hereof and otherwise agrees to be bound by the terms of this Agreement.
29
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the date first above written.
SAC TECHNOLOGIES, INC.
By:
------------------------------------
Name:
Title:
THE SHAAR FUND LTD.
By: INTER CARIBBEAN SERVICES
LTD.
By:
------------------------------------
Name:
Title:
30