Exhibit 10.1
PRIVATE EQUITY LINE AGREEMENT
BY AND BETWEEN
STRATEGIC INVESTMENT MANAGEMENT SA
AND
CYBERCARE, INC.
DATED AS OF 14 SEPTEMBER 2001
This PRIVATE EQUITY LINE AGREEMENT is entered into as of the 14th day of
September 2001(this "AGREEMENT"), by and between STRATEGIC INVESTMENT MANAGEMENT
SA (the "Investor"), an entity organized and existing under the laws of the
British Virgin Islands, and CYBERCARE, INC., a corporation organized and
existing under the laws of the state of Florida (the "COMPANY").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase, up to USD
$15,000,000 of the Common Stock (as defined below);
WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2)("SECTION 4(2)") and Regulation D ("REGULATION D") of the United
States Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder (the "SECURITIES ACT"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Common Stock to be made ;
WHEREAS, the Company has undertaken to register the Common Stock, to be
acquired in accordance with the Securities Act; by the Investor for resale; and
WHEREAS, the Investor may be deemed to be an underwriter of such
registered Common Stock.
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 [RESERVED]
Section 1.2 "AVERAGE DAILY TRADING VOLUME" shall mean, with respect to any
date, the average of the daily trading volumes for the Common Stock on the
Principal Market for [eight (8)] of the [ten (10)] Trading Days immediately
preceding such date, after removing the Trading Days with the [one] highest
trading volumes and the Trading Days with the [one] lowest trading volumes.
Section 1.3 "BID PRICE" shall mean the closing bid price (as reported by
Bloomberg L.P.) of the Common Stock on the Principal Market for a particular
Trading Day.
Section 1.4 "CAPITAL SHARES" shall mean the Common Stock and any shares of
any other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of dividends (as and when declared) and
assets (upon liquidation of the Company).
Section 1.5 "CLOSING" shall mean one of the closings of a purchase and
sale of the Common Stock pursuant to Section 2.1.
Section 1.6 "CLOSING DATE" shall mean, with respect to Closing, the fifth
Trading Day following the Put Date related to such Closing, provided all
conditions to such Closing have been satisfied on or before such Trading Day.
Section 1.7 "COMMITMENT PERIOD" shall mean the period commencing on the
earlier to occur of (i) the Effective Date or (ii) such earlier date as the
Company and the Investor may mutually agree in writing, and expiring on the
earlier to occur of (x) the date on which the Investor shall have purchased Put
Shares pursuant to this Agreement for an aggregate Purchase Price of the Maximum
Commitment Amount, (y) the date this Agreement is terminated pursuant to Section
2.4, or (z) the date occurring nine (9) months following the date of
commencement of the Commitment Period unless such date is mutually extended in
writing.
Section 1.8 "COMMON STOCK" shall mean the Company's common stock, $0.0025
par value per share.
Section 1.9 "COMMON STOCK EQUIVALENTS" shall mean any securities that are
convertible into or exchangeable for Common Stock or any warrants, options or
other rights to subscribe for or purchase Common Stock or any such convertible
or exchangeable securities.
Section 1.10 "CONDITION SATISFACTION DATE" shall have the meaning set
forth in Section 7.2 of this Agreement.
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Section 1.11 "DAMAGES" shall mean any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorney's fees
and disbursements and costs and expenses of export witnesses and investigation).
Section 1.12 "DISCOUNT" shall mean FIFTEEN percent (15%).
Section 1.13 "EFFECTIVE DATE" shall mean the date on which the SEC first
declares effective a Registration Statement registering resale of the
Registerable Securities as set forth in Section 7.2(a).
Section 1.14 "ESCROW AGREEMENT" shall mean the escrow agreement in the
form of Exhibit A entered into pursuant to Section 7.2(o) hereof.
Section 1.15 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder.
Section 1.16 "FLOOR PRICE"-N/A
Section 1.17 "INVESTMENT AMOUNT" shall mean the dollar amount (within the
range specified in Section 2.2) to be invested by the Investor to purchase Put
Shares with respect to any Put Date as notified by the Company to the Investor
in accordance with Section 2.2 hereof.
Section 1.18 "LEGEND" shall have the meaning specified in Section 8.1.
Section 1.19 "MARKET PRICE" for any particular Trading Day shall mean the
lesser of the Bid Price or the lowest trade price of the Common Stock (as
reported by Bloomberg L.P.) during any such Trading Day.
Section 1.20 "MAXIMUM COMMITMENT AMOUNT" shall mean $ 15,000,000
Section 1.21 "MINIMUM COMMITMENT AMOUNT" shall mean $ 1,000,000
Section 1.22 "MATERIAL ADVERSE EFFECT" shall mean any effect on the
business, operations, properties, or financial condition of the Company that is
material and adverse to the Company and/or any condition, circumstance, or
situations that would prohibit or otherwise interfere with the ability of the
Company to enter into and perform its obligations under any of (i) this
Agreement, (ii) the Registration Rights Agreement, (iii) the Escrow Agreement.
Section 1.23 ""MAXIMUM PUT AMOUNT" shall mean with respect to any Put an
amount of shares equal to 17.5% of the "average daily trading volume" over the
Valuation Period.
Section 1.24 "MINIMUM PUT AMOUNT" shall mean with respect to any Put,
10,000 shares, provided that such amount does not exceed the Maximum Put Amount.
Section 1.25 "NASD" shall mean the National Association of Securities
Dealers, Inc.
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Section 1.26 "OUTSTANDING" when used with reference to Common Shares or
Capital Shares (collectively the "SHARES"), shall mean, at any date as of which
the number of such Shares is to be determined, all issued and outstanding
Shares, PROVIDED, HOWEVER, that "Outstanding" shall not refer to any such Shares
then directly or indirectly owned or held by or for the account of the Company.
Section 1.27 "PERSON" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
Section 1.28 "PREFERRED STOCK" - Not Applicable.
Section 1.29 "PRINCIPAL MARKET" shall mean the NASDAQ National Market, the
NASDAQ National Market, the American Stock Exchange, OTC Bulletin Board or the
New York Stock Exchange, whichever is at the time the principal trading exchange
or market for the Common Stock.
Section 1.30 "PURCHASE PRICE" shall mean, with respect to a Put, the
Market Price on a the applicable Put Date (or such other date on which the
Purchase Price is calculated in accordance with the terms and conditions of this
Agreement) less the product of the Discount and the Market Price; PROVIDED,
HOWEVER, that in no event shall the Purchase Price be less than the Floor Price.
[Subject to Definition]
Section 1.31 "PUT" shall mean each occasion the Company elects to exercise
its right to tender a Put Notice requiring the Investor to purchase a
discretionary amount of the Company's Common Stock, subject to the terms and
conditions of this Agreement.
Section 1.32 "PUT DATE" shall mean the Trading Day during the Commitment
Period that a Put Notice to sell Common Stock to the Investor is deemed
delivered pursuant to Section 2.2(b) hereof.
Section 1.33 "PUT NOTICE" shall mean a written notice from the Company to
the Investor setting forth the Investment Amount that the Company intends to
require from the Investor for the purchase of Common Stock pursuant to the terms
of this Agreement.
Section 1.34 "PUT SHARES" shall mean the maximum number of shares of
Common Stock issued or issuable pursuant to a Put that has been exercised or may
be exercised in accordance with the terms and conditions of this Agreement.
Section 1.35 "REGISTERABLE SECURITIES" shall mean the Put Shares plus any
securities issued or issuable with respect to any of the foregoing by way of
exchange, stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise. As to any particular Registerable Securities, once issued such
securities shall cease to be Registerable Securities when (w) the Registration
Statement has been declared effective by the SEC and all Registerable Securities
have been disposed of pursuant to the Registration Statement, (x) all
Registerable Securities have been sold under
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circumstances under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("RULE 144") are met,
(y) such time as all Registerable Securities have been otherwise transferred to
holders who may trade such shares without restriction under the Securities Act,
and the Company has delivered a new certificate or other evidence of ownership
for such securities not bearing a restrictive legend or (z) in the opinion of
counsel to the Company, reasonably acceptable to the counsel to Investor, all
Registerable Securities may be sold without registration or the need for an
exemption from any registration requirements and without any time, volume or
manner limitations, pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act.
Section 1.36 "REGISTRATION RIGHTS AGREEMENT" shall mean the registration
rights agreement in the form of Exhibit B hereto.
Section 1.37 "REGISTRATION STATEMENT" shall mean a registration statement
on Form S-3,or any other form deemed appropriate (if use of such form is then
available to the Company pursuant to the rules of the SEC and, if not, on such
other form promulgated by the SEC for which the Company then qualifies and which
counsel for the Company shall deem appropriate and which form shall be available
for the resale of the Registerable Securities to be registered thereunder in
accordance with the provisions of this Agreement, the Registration Rights
Agreement and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registerable Securities under the Securities Act.
Section 1.38 "REGULATION D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.39 "SEC" shall mean the Securities and Exchange Commission.
Section 1.40 "SECTION 4(2)" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.41 "SECURITIES ACT" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.42 "SEC DOCUMENTS" shall mean the Company's latest Form 10-K as
of the time in question, all Forms 10-Q and 8-K filed thereafter, and the Proxy
Statement for its latest fiscal year as of the time in question.
Section 1.43 "SUBSCRIPTION DATE" shall mean the date on which this
Agreement is executed and delivered by the parties hereto.
Section 1.44 "TRADING CUSHION" shall mean the mandatory [seven (07)]
Trading Days between Put Dates.
Section 1.45 "TRADING DAY" shall mean any day during which the Principal
Market shall be open for business.
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Section 1.46 "UNDERWRITER" shall mean any underwriter participating in any
disposition of the Registerable Securities on behalf of the Investor pursuant to
the Registration Statement.
Section 1.47 "VALUATION EVENT" shall mean an event in which the Company at
any time during a Valuation Period takes any of the following actions:
(a) Subdivides or combines its Common Stock;
(b) pays a dividend in its Capital Stock or makes any other
distribution of its Capital Shares, except for dividends paid
with respect to the Preferred Stock;
(c) issues any additional Capital Shares or other securities
("ADDITIONAL SECURITIES"), otherwise than as provided in the
foregoing Subsections (a) and (b) above, at a price per share
less, or for other consideration lower, than the Bid Price in
effect on the Trading Day immediately prior to such issuance,
or without consideration;
(d) makes a distribution of its assets or evidences of
indebtedness to the holders of its Capital Shares as a
dividend in liquidation or by way of return of capital or
other than as a dividend payable out of earnings or surplus
legally available for dividends under applicable law or any
distribution to such holders made in respect of the sale of
all or substantially all of the Company's assets; or
(e) takes any other action affecting the number of Outstanding
Capital Shares, which in the opinion of the Investor,
determined in good faith, would have a materially adverse
effect upon the rights of the Investor at the time of a Put.
Section 1.48 "VALUATION PERIOD" shall mean the period of [five (5)] Trading Days
during which the Purchase Price of the Common Stock is valued, which period
shall be with respect to the Purchase Price on any Put Date, the [two (2)]
Trading Day preceding and the [two (2)] Trading Days following the Trading Day
on which the applicable Put Notice is deemed to be delivered, as well as the
Trading Day on which such notice is deemed to be delivered; PROVIDED, HOWEVER,
that if a Valuation Event occurs during any Valuation Period, a new Valuation
Period shall begin on the Trading Day immediately after the public announcement
of such Valuation Event and end on the fifth Trading Day thereafter.
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ARTICLE II
PURCHASE AND SALE OF COMMON STOCK; TERMINATION OF
OBLIGATIONS;
Section 2.1 INVESTMENTS.
(a) PUTS. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of
Article VII hereof), on any Put Date the Company may
exercise a Put by the delivery of a Put Notice. The
number of Put Shares that the Investor shall receive
pursuant to such Put shall be determined by dividing the
Investment Amount specified in the Put Notice by the
Purchase Price with respect to such Put Date.
(b) MINIMUM AMOUNT OF PUTS. The Company shall, in
accordance with Section 2.2(a), issue and sell Put
Shares to the Investor and the Investor shall purchase
Put Shares from the Company totalling (in aggregate
Purchase Prices) at least the Minimum Commitment Amount.
(c) MAXIMUM AMOUNT OF PUTS. No more than 19.9% of the
Outstanding shares of Common Stock may be issued and
sold to the Investor . No Put which would increase
Investor's position to more than 19.9% shall be
enforceable.
Section 2.2 MECHANICS.
(a) PUT NOTICE. At any time during the Commitment Period, the
Company may deliver a Put Notice to the Investor, subject to
the conditions set forth in Section 7.2; PROVIDED, HOWEVER,
the Investment Amount for each Put as designated by the
Company in the applicable Put Notice shall be neither less
than the Minimum Put Amount nor more than the Maximum Put
Amount.
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(b) DATE OF DELIVERY OF PUT NOTICE. A Put Notice shall be
deemed delivered on (i) the Trading Day it is received by
facsimile or otherwise by the Investor if such notice is
received prior to 12:00 noon New York time, or (ii) the
immediately succeeding Trading Day if it is received by
facsimile or otherwise after 12:00 noon New York time on a
Trading Day or at any time on a day which is not a Trading
Day. No Put Notice may be deemed delivered, on a day that is
not a Trading Day.
Section 2.3 CLOSINGS. On each Closing Date for a Put, (i) the Company shall
deliver into escrow one or more certificates, at the Investor's option,
representing the Put Shares to be purchased by the Investor pursuant to Section
2.1 herein, registered in the name of the Investor and (ii) the Investor shall
deliver into escrow the Investment Amount specified in the Put Notice by wire
transfer of immediately available funds to the account provided for in the
Escrow Agreement. In addition, on or prior to such Closing Date, each of the
Company and the Investor shall deliver to the other all documents, instruments
and writings required to be delivered or reasonably requested by either of them
pursuant to this Agreement in order to implement and effect the transactions
contemplated herein. Payment of the Investment Amount to the Company and
delivery of such certificate(s) to the Investor shall occur out of escrow in
accordance with the Escrow Agreement. The Company shall pay the costs and
expenses of the Escrow Agent.
Section 2.4 TERMINATION OF INVESTMENT OBLIGATION. The Investor's obligation to
purchase shares of Common Stock hereunder shall automatically terminate
(including with respect to any Put, notice of which has been given but the
applicable Closing Date has not yet occurred), and the Investor may, at its sole
discretion terminate this Agreement, in the event that (i) the Registration
Statement is not effective within one hundred and twenty (120) days after the
date of this Agreement; (ii) there shall occur any stop order or suspension of
trading in the Common Stock on any other securities of the Company, including,
but not limited to, with respect to the effectiveness of the Registration
Statement, for any reason whatsoever; (iii) the failure of the Company to amend
the Registration Statement as required in order to maintain its compliance with
the disclosure requirements of the Securities Act; (iv) the happening of any
event having a Material Adverse Effect on the Company; (v) any change in control
of the Company (vi) the failure of the Company to maintain its compliance with
the disclosure requirements of the Exchange Act or (vii) the Company shall at
any time fail to comply with the requirements of Section 6.3, 6.4, 6.5 or 6.6 of
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1 INTENT. The Investor is entering into this Agreement for its own
account and the Investor has no present arrangement (whether or not legally
binding) at any time to sell the
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Common Stock to or through any person or entity; PROVIDED, HOWEVER, that by
making the representations herein, the Investor does not agree to hold the
Common Stock for any minimum or other specific term and reserves the right to
dispose of the Common Stock at any time in accordance with federal and state
securities laws applicable to such disposition.
Section 3.2 SOPHISTICATED INVESTOR. The Investor is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as
defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it is capable of evaluation the merits and
risk of an investment Common Stock. The Investor acknowledges that an investment
in the Common Stock is speculative and involves a high degree of risk.
Section 3.3 AUTHORITY. Each of this Agreement, the Registration Rights
Agreement, and the Escrow Agreement has been duly authorized by the Investor and
all necessary corporate action and no further consent or authorization is
required. Each of this Agreement, the Registration Rights Agreement, and the
Escrow Agreement was validly executed and delivered by the Investor and each is
a valid and binding agreement of the Investor enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Section 3.4 NOT AN AFFILIATE. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.
Section 3.5 ORGANIZATION AND STANDING. Investor is duly organized, validly
existing, and in good standing under the laws of the British Virgin Islands.
Section 3.6 ABSENCE OF CONFLICTS. The execution and delivery of this Agreement
and any other document or instrument contemplated hereby, and the consummation
of the transactions contemplated thereby, and compliance with the requirements
thereof, will not (a) violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on Investor, or, to the Investor's
knowledge, (b) violate any provision of any indenture, instrument or agreement
to which Investor is a party or is subject, or by which Investor or any of its
assets is bound, (c) conflict with or constitute a material default thereunder,
(d) result in the creation or imposition of any lien pursuant to the terms of
any such indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by Investor to any third party, or (e) require the approval
of any third-party (that has not been obtained) pursuant to any material
contract to which Investor is subject or to which any of its assets, operations
or management may be subject.
Section 3.7 DISCLOSURE; ACCESS TO INFORMATION. Investor has received all
documents, records, books and other information pertaining to Investor's
investment in the Company that have been requested by Investor of the Company
through the date hereof. The Investor has reviewed or received copies of the SEC
Documents.
Section 3.8 MANNER OF SALE. At no time was Investor presented with or solicited
in connection with this Agreement and the transactions contemplated hereunder by
or through any
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leaflet, public promotional meeting, television advertisement or any other form
of general solicitation or advertising.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that:
Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Florida and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Section 4.2 AUTHORITY. (i) The Company has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement,
the Registration Rights Agreement and the Escrow Agreement and to issue the Put
Shares; (ii) the execution and delivery of this Agreement and the Registration
Rights Agreement, and the execution, by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action and no further consent or authorization of the
Company, its Board of Directors or stockholders is required; and (iii) each of
this Agreement and the Registration Rights Agreement has been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
Section 4.3 CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consisted of 250,000,000 shares of Common Stock, of which
approximately 66,000,000 shares were issued and outstanding, and preferred stock
is authorised. Except for (i) options to purchase not more than 12,000,000
shares of Common Stock (Warrants) which have been set aside for option plans and
are exercisable at various prices, as further described in Schedule 4.3 hereof,
there are no options, warrants, or rights to subscribe to, securities, rights or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of Capital Stock of the Company. All of the outstanding
shares of Common Stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable.
Section 4.4 COMMON STOCK. The Company has registered its Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued listing or quotation of its Common
Stock, and such Common Stock is currently listed or quoted on the Principal
Market. As of the date hereof, the Principal Market is the NASDAQ National
Market.
Section 4.5 SEC DOCUMENTS. The Company has delivered or made available to
the Investor true and complete copies of the SEC Documents (including, without
limitation, proxy
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information and solicitation materials). The Company has not provided to the
Investor any information that, according to applicable law, rule or regulation,
should have been disclosed publicly prior to the date hereof by the Company, but
which has not been so disclosed. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and other federal, state and local laws,
rules and regulations applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of 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
Documents comply as to form and substance in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect hereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis in the United States, during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
Section 4.6 EXEMPTION FROM REGISTRATION; VALID ISSUANCES. The sale and
issuance of the Put Shares in accordance with the terms and on the basis set
forth in this Agreement, may and shall be consummated pursuant to Rule 4(2), and
Regulation D and/or any applicable state law. When issued and paid for as herein
provided, the Put Shares shall be duly and validly issued, fully paid, and
non-assessable. Neither the sales of the Put Shares pursuant to, nor the
Company's performance of its obligations under, this Agreement, or the
Registration Rights Agreement, as shall (i) result in the creation or imposition
of any liens, charges, claims or other encumbrances upon the Put Shares or any
of the assets of the Company, or (ii) entitle the holders of Outstanding Capital
Shares to pre-emptive rights to subscribe to or acquire the Capital Shares or
other securities of the Company. The Put Shares shall not subject the Investor
to personal liability by reason of the ownership thereof.
Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising with respect to any of the Put Shares or (ii) made any
offers or sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the Common Stock
under the Securities Act.
Section 4.8 CORPORATE DOCUMENTS. The Company has furnished or made
available to the Investor true and correct copies of the Company's Articles of
Incorporation, as amended and in effect on the date hereof (the "CERTIFICATE"),
and the Company's By-Laws, as amended and in effect on the date hereof (the
"BY-LAWS").
Section 4.9 NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated
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hereby, including without limitation the issuance of the Put Shares do not and
will not (i) result in a violation of the Certificate or By-Laws or (ii)
conflict with, or constitute a material default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar provision of any underwriting or similar agreement to
which the Company is a party, or (iii) result in a violation of any federal,
state, local or foreign law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or by which any property or asset of the Company is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect) nor is the Company otherwise in violation of, or
in default under any of the foregoing; PROVIDED, HOWEVER, that for purposes of
the Company's representations and warranties as to violations of foreign law,
rule or regulation referenced in clause (iii), such representations and
warranties are made only to the best of the Company's knowledge insofar as the
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby are or may
be affected by the status of the Investor under or pursuant to any such foreign
law, rule or regulation. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations that either singly or in the aggregate do not and will
not have a Material Adverse Effect. The Company is not required under federal,
state or local law, rule or regulation to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell the Common Stock in accordance with the
terms hereof (other than any SEC, NASD or state securities filings that may be
required to be made by the Company subsequent to any Closing, any registration
statement that may be filed pursuant hereto, and any shareholder approval
required by the rules applicable to companies whose common stock trades on the
NASDAQ National Market); provided that, for purposes of the representation made
in this sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Investor herein.
Section 4.10 NO MATERIAL ADVERSE CHANGE. Since 31st December 2000, no
event has occurred that would have a Material Adverse Effect on the Company,
except as disclosed in the SEC Documents filed prior to the date hereof.
Section 4.11 NO UNDISCLOSED LIABILITIES. The Company has no liabilities or
obligations that are material, individually or in the aggregate, and that are
not disclosed in the SEC Documents or otherwise publicly announced, other than
those incurred in the ordinary course of the Company's business since 31st
December 2000 and which, individually or in the aggregate, do not or would not
have a Material Adverse Effect on the Company.
Section 4.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since 31st December
2000, no event or circumstance has occurred or exists with respect to the or its
business, properties, operation or financial condition, that, under applicable
law, rule or regulation, requires public disclosure or announcement prior to the
date hereof by the Company but which has not been so publicly announced or
disclosed in the SEC Documents.
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Section 4.13 LITIGATION AND OTHER PROCEEDINGS. Except as may be set forth
in the SEC Documents, there are no material lawsuits or proceedings pending or
to the best knowledge of the Company threatened, against the Company, nor has
the Company received any written or oral notice of any such action, suit,
proceeding or investigation, which could reasonably be expected to have a
Material Adverse Effect. Except as set forth in the SEC Documents, no judgment,
order, writ, injunction or decree or award has been issued by or, so far as is
known by the Company, requested of any court, arbitrator or governmental agency
which might result in a Material Adverse Effect.
Section 4.14 NO MISLEADING OR UNTRUE COMMUNICATION. The Company, in
connection with the transactions contemplated by this Agreement, has not made,
at any time, any oral communication in connection with the offer or sale of the
same which contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
Section 4.15 MATERIAL NON-PUBLIC INFORMATION. Neither the Company nor its
agents have disclosed to the Investor, any material non-public information
which, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but which has not
been so disclosed, except as provided by law.
Section 4.16 NO MISREPRESENTATIONS OR OMISSIONS. The Company has not made
any misrepresentations to the Investor concerning the Company, its business,
operations, properties, prospects or financial condition, nor has the Company
omitted to state any matter required to make the matters stated not misleading.
ARTICLE V
COVENANTS OF THE INVESTOR
The Investor's, and it's affiliates, and purchase and resale of shares of
the Company's Common Stock will be in compliance with all applicable state and
federal securities laws, rules and regulations and the rules and regulations of
the Principal Market on which the Company's Common Stock is listed. The Investor
will not engage in any short sale or hedging transactions prohibited by Rule
10(b)(6) promulgated under the Exchange Act or any other provision, rule or
regulation of the Federal Securities Laws.The Investor and it's affiliates will
not engage in short selling or hedging transactions with respect to the
Company's Common Stock.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 REGISTRATION RIGHTS. The Company shall use communally
reasonable efforts to cause the Registration Rights Agreement to remain in full
force and effect and the Company shall comply in all material respects with the
terms thereof.
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Section 6.2 RESERVATION OF COMMON STOCK. As of the date hereof, the
Company has available and the Company shall reserve and keep available at all
times, free of pre-emptive rights, shares of Common Stock for the purpose of
enabling the Company to satisfy any obligation to issue the Put Shares; such
amount of shares of Common Stock to be reserved shall be calculated based upon
the minimum Purchase Price for the Put Shares under the terms and conditions of
this Agreement. The number of shares so reserved from time to time, as
theretofore increased or reduced as hereinafter provided, may be reduced by the
number of shares actually delivered hereunder.
Section 6.3 LISTING OF COMMON STOCK. The Company shall maintain its
listing of the Common Stock on a Principal Market, and as soon as practicable
(but in any event prior to the commencement of the Commitment Period) will cause
the Put Shares to be listed on the Principal Market. The Company further shall,
if the Company applies to have the Common Stock traded on any other Principal
Market, include in such application the Put Shares and shall take such other
action as is necessary or desirable in the opinion of the Investor to cause the
Common Stock to be listed on such other Principal Market as promptly as
possible. The Company shall undertake its best efforts to continue the listing
and trading of its Common Stock on the Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will comply in all
respect with the Company's reporting, filing and other obligations under the
bylaws and rules of the NASD and the Principal Market.
Section 6.4 EXCHANGE ACT REGISTRATION. The Company shall (i) cause its
Common Stock to continue to be registered under Section 12 of the Exchange Act,
will comply in all respects with its reporting and filing obligations under said
Act, and will not take any action or file any document (whether or not permitted
by said Act or the rules thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting and filing obligations under said Act.
Section 6.5 LEGENDS. The certificates evidencing the Put Shares shall be
free of legends, except as provided for in Article VIII.
Section 6.6 CORPORATE EXISTENCE. The Company shall take all steps
necessary to preserve and continue the corporate existence of the Company.
Section 6.7 ADDITIONAL SEC DOCUMENTS. The Company shall deliver to the
Investor, promptly after the originals thereof are submitted to the SEC for
filing, copies of all SEC Documents so furnished or submitted to the SEC.
Section 6.8 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF
RIGHT OF MAKE A PUT. The Company shall notify the Investor prior to filing the
Registration Statement, and shall provide the Investor with an advance copy of
such proposed filing, and each Amendment thereto. The Company shall notify the
Investor upon the occurrence of any of the following events in respect of a
registration statement or related prospectus in respect of an offering of
Registerable Securities: (i) receipt of any request for additional information
by the SEC or any other federal or state governmental authority during the
period of effectiveness of the registration statement for amendments or
supplements to the registration statement or related
14
prospectus; (ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registerable
Securities for sale in any Jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
registration statement, related prospectus or documents so that, in the case of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the related prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the registration statement
would be appropriate, and the Company shall promptly make available to the
Investor any such supplement or amendment to the related prospectus. The Company
shall not deliver to the Investor any Put Notice during the continuation of any
of the foregoing events.
Section 6.9 EXPECTATIONS REGARDING PUT NOTICES. Within ten (10) days after
the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company undertakes to notify the
Investor as to its reasonable expectations as to the dollar amount it intends to
raise during such calendar quarter, if any, through the issuance of Put Notices.
Such notification shall constitute only the Company's good faith estimate with
respect to such calendar quarter and shall in no way obligate the Company to
raise such amount during such calendar quarter or otherwise limit its ability to
deliver Put Notices during such calendar quarter. The failure by the Company to
comply with this provision can be cured by the Company's notifying the Investor
at any time as to its reasonable expectations with respect to the current
calendar quarter.
Section 6.10 CONSOLIDATION; MERGER. Except for those transactions set
forth on Schedule 6.10, the Company shall not, at any time after the date
hereof, effect any merger or consolidation of the Company with or into, or a
transfer of all or substantially all of the assets of the Company, to another
entity unless the resulting successor or acquiring entity (if not the Company)
assumes by written instrument the obligation to deliver to the Investor such
shares of stock and/or securities as the Investor is entitled to receive
pursuant to this Agreement.
Section 6.11 ISSUANCE OF PUT SHARES. The sale of the Put Shares shall be
made in accordance with the provisions and requirements of Regulation D and any
applicable state law.
Section 6.12 LEGAL OPINION ON SUBSCRIPTION DATE. The Company's independent
counsel shall deliver to the Investor on the Subscription Date an opinion in the
form of Exhibit E, except for paragraph 7 thereof.
15
Section 6.13 NO OTHER EQUITY LINES. The Company shall refrain from
entering into any other agreements, arrangements or understandings granting to
the Company the right to put shares of its securities to one or more investors
in private placements.
ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING
Section 7.1 Conditions Precedent to the Obligation of the Company to Issue
and Sell Common Stock. The obligation hereunder of the Company to issue and sell
the Put Shares to the Investor incident to each Closing is subject to the
satisfaction, at or before each such Closing, of each of the conditions set
forth below.
(a) ACCURACY OF THE INVESTOR'S REPRESENTATION AND WARRANTIES.
The representations and warranties of the Investor shall be
true and correct in all material respects as of the date of
this Agreement and as of the date of each such Closing as
though made at each such time.
(b) PERFORMANCE BY THE INVESTOR. The Investor shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Investor at or prior to such Closing.
Section 7.2 Conditions Precedent to the Right of the Company to Deliver a Put
Notice and the Obligation of the Investor to Purchase Put Shares. The right of
the Company to deliver a Put Notice and the obligation of the Investor hereunder
to acquire and pay for the Put Shares incident to a Closing is subject to the
satisfaction, on (i) the applicable Put Date and (ii) the applicable Closing
Date (each a "Condition Satisfaction Date"), of each of the following
conditions:
(a) REGISTRATION OF THE REGISTERABLE SECURITIES WITH THE
SEC. As set forth in the Registration Rights Agreement,
the Company shall have filed with the SEC a Registration
Statement with respect to the resale of the Registerable
Securities by the Investor that shall use commercially
reasonable efforts to have declared effective by the SEC
prior to the first Put Date, but in no event later than
one hundred twenty (120) days after the date of this
Agreement.
(b) EFFECTIVE REGISTRATION STATEMENT. As set forth in
the Registration Rights Agreement, the Registration
16
Statement shall have previously become effective and
shall remain effective on each Condition Satisfaction
date and (i) neither the Company nor the Investor shall
have received notice that the SEC has issued or intends
to issue a stop order with respect to the Registration
Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or intends
or has threatened to do so (unless the SEC's concerns
have been addressed and the Investor is reasonably
satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other
suspension of the use or withdrawal of the effectiveness
of the Registration Statement or related prospectus
shall exist.
(c) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the
Company shall be true and correct as of each Condition
Satisfaction date as though made at each such time
(except for representations and warranties specifically
made as of a particular date).
(d) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material
respects with all covenants, agreements and conditions
required by this Agreement, the registration Rights
Agreement, satisfied or complied with by the Company at
or prior to each Condition Satisfaction Date.
(e) NO INJUNCTION. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or adopted by any
court or governmental authority of competent
jurisdiction that prohibits the transactions
contemplated by this Agreement or otherwise has a
Material Adverse Effect, and no actions, suits or
proceedings shall be in progress, pending or threatened
by any Person, that seek to enjoin or prohibit the
transactions contemplated by this Agreement or otherwise
could reasonably be expected to have a Material Adverse
Effect. For purposes of this paragraph (e), no
proceeding shall be deemed pending or threatened unless
17
one of the parties has received written or oral
notification thereof prior to the applicable Closing
Date.
(f) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON
STOCK. The trading of the Common Stock shall not have
been suspended by the SEC, the Principal Market or the
NASD and the Common Stock shall have been approved for
listing or quotation on and shall not have been delisted
from the Principal Market. The issuance of shares of
Common Stock with respect to the applicable Closing, if
any, shall not violate the shareholder approval
requirements of the Principal Market.
(g) LEGAL OPINION. The Company shall have caused to be
delivered to the Investor, within five (5) Trading Days
of the effective date of the Registration Statement, an
opinion of the Company's independent counsel in the form
of Exhibit E hereto, addressed to the Investor.(If
applicable)
(h) DUE DILIGENCE. No dispute between the Company and
the Investor shall exist pursuant to Section 7.3 as to
the adequacy of the disclosure contained in the
Registration Statement.
(i) TEN PERCENT LIMITATION. The Investor shall not be
obligated to purchase and pay for any Put Shares if, on
each Closing Date, the number of Put Shares then to be
purchased by the Investor shall exceed the number of
such Shares that, when aggregated with all other shares
of Registerable Securities then owned by the Investor,
would result in the Investor owning no more than 9.9% of
all of such Common Stock as would be outstanding on such
Closing Date, as determined in accordance with Section
16 of the Exchange Act and the regulations promulgated
thereunder. For purposes of this Section, in the event
that the amount of Common Stock outstanding as
determined in accordance with Section 16 of the Exchange
Act and the regulations promulgated thereunder is
greater on a Closing Date than on the date upon which
the Put Notice associated with such Closing Date is
given, the amount of Common Stock outstanding on such
18
Closing Date shall govern for purposes of determining
whether the Investor, when aggregating all purchases of
Common Stock made pursuant to this Agreement would own
more than 9.9% of the Common Stock following such
Closing Date.
(j) MINIMUM BID PRICE. The Market Price equals or
exceeds the Floor Price during the applicable Valuation
Period (or, with respect to any Put Date, the portion of
the Valuation Period preceding such Put Date).
(k) MINIMUM AVERAGE DAILY TRADING VOLUME. The Average
Daily Trading Volume for the Common Stock with respect
to the applicable Put Date and Closing Date equals or
exceeds 1000 shares per Trading Day.
(l) NO KNOWLEDGE. The Company shall have no knowledge of
any event more likely than not to have the effect of
causing such Registration Statement to be suspended or
otherwise ineffective (which event is more likely than
not to occur within the five (5) Trading Days following
the Trading Day on which such Notice is deemed
delivered).
(m) TRADING CUSHION. The Trading Cushion shall have
elapsed since the immediately preceding Put Date.
(n) SHAREHOLDER VOTE. The issuance of shares of Common
Stock with respect to the applicable Closing, if any,
shall not violate the shareholder approval requirements
of the Principal Market.
(o) ESCROW AGREEMENT. The parties hereto shall have
entered into the Escrow Agreement, which shall remain in
full force and effect.
(p) OTHER. On each Condition Satisfaction Date, the
Investor shall have received and been reasonably
satisfied with such other certificates and documents as
shall have been reasonably requested by the Investor in
order for the Investor to confirm the Company's
satisfaction of the conditions set forth in this Section
19
7.2., including without limitation, a certificate
substantially the form and substance of Exhibit F
hereto, executed in either case by an executive officer
of the Company and to the effect that all the conditions
to such Closing shall have been satisfied as at the date
of each such certificate.
Section 7.3 DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
(a) The Company shall make available for inspection and review
by the Investor, advisors to and representatives of the
Investor (who may or may not be affiliated with the Investor
and who are reasonably acceptable to the Company), any
Underwriter, any Registration Statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Documents and other
filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for
the purpose of such review, and cause the Company's officers,
directors and employees to supply all such information
reasonably requested by the Investor or any such
representative, advisor or Underwriter in connection with such
Registration Statement (including, without limitation, in
response to all questions and other inquiries reasonably made
or submitted by any of them), prior to and from time to time
after the filing and effectiveness of the Registration
Statement for the sole purpose of enabling the Investor and
such representatives, advisors and Underwriters and their
respective accountants and attorneys to conduct initial and
ongoing due diligence with respect to the Company and the
accuracy of the Registration Statement.
(b) Each of the Company, its officers, directors, employees
and agents shall in no event disclose non-public information
to the Investor, advisors to or representatives of the
Investor unless prior to disclosure of such information the
Company identifies such information as being non-public
information and provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to
accept such non-public information for review. The Company
may, as a condition to disclosing any non-public information
hereunder, require the Investor's advisors and representatives
to enter into a confidentiality agreement in form reasonably
satisfactory to the Company and the Investor.
(c) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or
20
representatives, and the Company represents that it does not
disseminate non-public information to any investors who
purchase stock in the Company in a public offering, to money
managers or to securities analysts; PROVIDED, HOWEVER, that
notwithstanding anything herein to the contrary, the Company
shall, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and any
Underwriters of any event or the existence of any circumstance
(without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the
Company specifically or generally during the course of due
diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration
Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated
therein in order to make the statements, therein, in light of
the circumstances in which they were made, not misleading.
Nothing contained in this Section 7.3 shall be construed to
mean that such persons or entities other than the Investor
(without the written consent of the Investor prior to
disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in
accordance with the terms and conditions of this Agreement and
nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration
Statement contains an untrue statement of material fact or
omits a material fact required to be stated in the
Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they
were made, not misleading.
ARTICLE VIII
LEGENDS
Section 8.1 LEGENDS. Each certificate representing Registerable Securities
will bear the following legend (the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
THAT IS EXEMPT FROM, OR NOT SUBJECT TO,
21
SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN
OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE EQUITY LINE AGREEMENT BETWEEN
CYBERCARE,INC. AND STRATEGIC INVESTMENT MANAGEMENT SA. A COPY OF THAT AGREEMENT
OR RELEVANT PORTIONS THEREOF MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE
OFFICES.
As soon as practicable after the execution and delivery hereof, but in any
event within five (5) Trading Days hereafter, the Company shall issue to the
transfer agent for its Common Stock (and to any substitute or replacement
transfer agent for its Common Stock upon the Company's appointment of any such
substitute or replacement transfer agent) instructions, with a copy to the
Investor. Such instructions shall be irrevocable by the Company from and after
the date hereof or from and after the issuance thereof to any such substitute or
replacement transfer agent, as the case may be, except as otherwise expressly
provided in the Registration Rights Agreement. It is the intent and purpose of
such instructions to require the transfer agent for the Common Stock from time
to time upon notice of transfer of Registerable Securities by the Investor at
any time after the Effective Date to issue certificates evidencing such
Registerable Securities free of the Legend during the following periods and
under the following circumstances and without consultation by the transfer agent
with the Company or its counsel and without the need for any further advice or
instruction or documentation to the transfer agent by or from the Company or its
counsel or the Investor:
(a) At any time after the Effective Date, upon surrender of
one or more certificates evidencing Common Stock that bear the
Legend, to the extent accompanied by a notice requesting the
issuance of new certificates free of the Legend to replace
those surrendered; provided that (i) the Registration
Statement shall then be effective and (ii) if reasonably
requested by the transfer agent the Investor confirms to the
transfer agent that the Investor has complied with the
prospectus delivery requirement; or
(b) At any time upon any surrender of one or more certificates
evidencing Registerable Securities that bear the Legend, to
the extent accompanied by a notice requesting the issuance of
new certificates under the Securities Act or containing
representative that the Investor has sold, pledged or
otherwise transferred or agreed to sell, pledge or otherwise
transfer such Registerable Securities in a manner other than
pursuant to an effective registration statement, to a
transferee who shall upon such transfer be entitled to freely
tradable securities.
Section 8.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend other than
the one specified in Section 8.1 has been or shall be placed on the share
certificates representing the Common Stock and no instructions or "stop
transfers orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article VIII.
22
Section 8.3 INVESTOR'S COMPLIANCE. Nothing in this Article VIII shall affect in
any way the Investor's obligations under any agreement to comply with all
applicable securities laws upon resale of the Common Stock.
ARTICLE IX
INDEMNIFICATION
Section 9.1 INDEMNIFICATION. The Company agrees to indemnify and hold harmless
the Investor, its partners, affiliates, officers, directors, employees, and duly
authorized agents, and each Person or entity, if any, who controls the Investor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the Controlling Persons (as defined in the
Registration Rights Agreement) from and against any Damages, joint or several,
and any action in respect thereof to which the Investor, its partners,
affiliates, officers, directors, employees, and duly authorized agents, and any
such Controlling Person become subject to, resulting from, arising out of or
relating to any material misrepresentation, breach of warranty or nonfulfillment
of or failure to perform any material covenant or agreement on the part of
Company contained in this Agreement, as such Damages are incurred, unless such
Damages result primarily from the Investor's gross negligence, recklessness or
bad faith in performing its obligations under this Agreement.
Section 9.2 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for
indemnification by an Indemnified Party (as defined below) under Section 9.1
shall be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which any
person claiming indemnification under any provision of Section
9.1 (an "Indemnified Party") might seek indemnity under
Section 9.1 is asserted against or sought to be collected from
such Indemnified Party by a person other than the Company, the
Investor or any affiliate of the Company or (a "THIRD PARTY
CLAIM"), the Indemnified Party shall deliver a written
notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for
indemnification that is being asserted under any provision of
Section 9.2 against any person (the "INDEMNIFYING PARTY"),
together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such Third Party Claim (a "CLAIM NOTICE") with reasonable
promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness
after the Indemnified Party receives notice of such Third
party Claim, the Indemnifying Party shall not be obligated to
indemnify the Indemnified Party with respect to such Third
Party Claim to the extent that the Indemnifying Party's
ability to defend has been irreparably prejudiced by such
failure of
23
the Indemnified Party. The Indemnifying Party shall notify the
Indemnified Party as soon as practicable within the period
ending thirty (30) calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an Indemnity
Notice (as defined below) (the "DISPUTE PERIOD") whether the
Indemnifying Party disputes its liability or the amount of its
liability to the Indemnified Party under Section 9.1 and
whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third
Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party
within the Dispute Period that the Indemnifying Party desires
to defend the Indemnified Party with respect to the Third
Party Claim pursuant to this Section 9.2(a), then the
Indemnifying Party shall have the right to defend, with
counsel reasonably satisfactory to the Indemnified Party, at
the sole cost and expense of the Indemnifying Party, such
Third party Claim by all appropriate proceedings to a final
conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides
for any relief other than the payment of monetary damages or
that provides for the payment of monetary damages as to which
the Indemnified Party shall not be indemnified in full
pursuant to Section 9.1). The Indemnifying Party shall have
full control of such defenses and proceedings, including any
compromise or settlement thereof; and provided that if
requested by the Indemnifying Party, the Indemnified Party
will, at the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnifying Party in
contesting any Third Party Claim that the Indemnifying Party
elects to contest. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party
Claim controlled by the Indemnifying Party. Notwithstanding
the foregoing, the Indemnified Party may take over the control
of defense or settlement of a Third Party Claim at any time if
it irrevocably waives its right to indemnity under Section 9.1
with respect to such Third Party Claim, or if the Indemnifying
Party shall fail or neglect to vigorously contest and defend
against such Third Party.
(c) If the Indemnifying Party fails to notify the Indemnified
Party within the Dispute Period that the Indemnifying Party
desires to defend the Third Party Claim pursuant to this
Section 9.2 or if the Indemnifying Party gives such notice but
fails to prosecute vigorously and diligently or settle the
Third Party Claim, or if the Indemnifying Party fails to give
any notice whatsoever within the
24
Dispute Period, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted by the
Indemnified Party in a reasonable manner and in good faith or
will be settled at the discretion of the Indemnified Party
(with the consent of the Indemnifying Party, which consent
will not be unreasonably withheld or delayed). The Indemnified
Party will have full control of such defence and proceedings,
including any compromise or settlement thereof; provided,
however, that if requested by the Indemnified Party, the
Indemnifying Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any Third
Party Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this clause, if
the Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party disputes
its liability or the amount of its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and
if such dispute is resolved in favour of the Indemnifying
Party in the manner provided in clause (iii) below, the
Indemnifying Party will not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this
clause or of the Indemnifying Party's participation therein at
the Indemnified Party's request, and the Indemnified Party
shall reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying
Party in connection with such litigation. The Indemnifying
Party may participate in, but not control, any defence or
settlement controlled by the Indemnified Party, and the
Indemnifying Party shall bear its own costs and expenses with
respect to such participation.
(d) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute its liability or the amount of its
liability to the Indemnified Party with respect to the Third
Party Claim under Section 9.1 or fails to notify the
Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes its liability or the amount of its
liability to the Indemnified Party with respect to such Third
party Claim, the full amount of the loss, if any, to the Third
Party in the Claim Notice shall be conclusively deemed a
liability of the Indemnifying Party to the Indemnified Party,
and the Indemnifying Party shall be solely responsible to the
Third Party Claimant for, or in respect of the full amount of
the liability, if any, to the Third Party Claimant, and shall
reimburse the full amount of any such Loss paid by the
Indemnified Party on demand. If the Indemnifying Party has
timely disputed its liability or the amount of its liability
with respect to such claim, the
25
Indemnifying Party and the Indemnified Party shall proceed in
good faith to negotiate a resolution of such dispute, and if
not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by arbitration in
accordance with paragraph (c) of this Section 9.2.
(e) In the event any Indemnified Party should have a claim
under Section 9.1 against the Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall
deliver a written notification of a claim for indemnity under
Section 9.1 specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such claim (an "Indemnity Notice") with reasonable
promptness to the Indemnifying Party. The failure by any
Indemnified Party to give the Indemnity Notice shall not
impair such party's rights hereunder except to the extent that
the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the
claim or the amount of the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the
claim or the amount of the claim described in such Indemnity
Notice, the Loss in the amount specified in the Indemnity
Notice will be conclusively deemed a liability of the
Indemnifying Party under Section 9.1 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the
Resolution Period, such dispute shall be resolved by
arbitration.
ARTICLE X
MISCELLANEOUS
Section 10.1 FEES AND EXPENSES. Each of the Company and the Investor
agrees to pay its own expenses incident to the performance of its obligations
hereunder, except that the Company shall pay the reasonable fees, expenses and
disbursements of the Investor's continuing due diligence with respect to the
registered Shares, including fees of counsel in connection with Investor's
counsel's participation in the Company's filing of the Registration Statement
relating to the Common Stock. The Company shall pay five thousand dollars
($5,000) of such expenses on initial filing, and the additional expenses, if
any, at the Closings of any Put Shares sales. In no event shall such additional
due diligence expenses required to be reimbursed to Investor
26
aggregate more than one percent (1%) of the Company's net proceeds in excess of
One Million Dollars ($1,000,000) from Put Share placements to the Investor.
Section 10.2 REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity
relied upon for the determination of the trading price or trading volume of the
Common Stock on any given Trading Day for the purposes of this Agreement shall
be Bloomberg, L.P. or any successor thereto. The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.
Section 10.3 BROKERAGE. Each of the parties hereto represents to the other
that it has had no dealings in connection with this transaction with any finder
or broker who will demand payment of any fee or commission from the other party.
The Company on the one hand, and the Investor, on the other hand, agree to
indemnify the other against and hold the other harmless from any and all
liabilities to any persons claiming brokerage commissions or finder's fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
Section 10.4 NOTICES. All notices, demands, requests, consents, approvals
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company:
CYBERCARE, INC.
0000 Xxxxxxx Xxxxx Xxxx.
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Xxxxxx Xxxxxx
Attn: Xxxxxxx Xxxxxxx
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
With a copy to:
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If to the Investor:
Strategic Investment Management SA
00/00 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Attn: Xxxxx Xxxx
Telephone: (000) 000 0000
Fax: (000) 000 0000
With copies (which shall not constitute notice) to:
Xxxx Xxxx
Xxxxxxxx xx Xxxx
0 Xxxxxxxxx
Xxxxxx, XX0X 0XX
Telephone: (000) 000 0000
D. Xxxxx Xxxxx, Esq.
000 Xx. Xxxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or facsimile number
for notices or the additional copies required under this Section by giving at
least ten (10) days' prior written notice of such changed address or facsimile
number to the other party hereto.
Section 10.5 ASSIGNMENT. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
person.
Section 10.6 AMENDMENT; NO WAIVER. No party shall be liable or bound to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth in this Agreement or therein. Except as
expressly provided in this Agreement, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by both parties hereto. The failure of the either party to
insist on strict compliance with this Agreement or to exercise any right or
remedy under this Agreement, shall not constitute a waiver of any rights
provided under this Agreement, nor estop the parties from thereafter demanding
full and complete compliance nor prevent the parties from exercising such a
right or remedy in the future.
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Section 10.7 ANNEXES AND EXHIBITS; ENTIRE AGREEMENT. All annexes and
exhibits to this Agreement are incorporated herein by reference and shall
constitute part of this Agreement. This Agreement, the Registration Rights
Agreement and the Escrow Agreement set forth the entire agreement and
understanding of the parties relating to the subject matter hereof and thereof
and supersede all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written, relating to the
subject matter hereof.
Section 10.8 TERMINATION; SURVIVAL. Except as otherwise expressly provided
herein, or in any other Agreement between the parties, this Agreement shall
terminate on the earlier of (i) twenty four (24) months after the sooner of (i)
the commencement of the Commitment Period and (ii) the date on which the Company
has made Puts with an aggregate Investment Amount equal to the Maximum
Commitment Amount.
Section 10.9 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
Section 10.10 TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for the convenience of reference and are not be considered in
construing or interpreting this Agreement.
Section 10.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
Section 10.12 CHOICE OF LAW. This Agreement shall be construed under the
laws of the United States of America, including the Federal Securities Laws and
the laws of Florida.
Section 10.13 ARBITRATION.
(a) Any dispute under or in connection with this Agreement
shall be submitted to arbitration, and such dispute shall be
finally and conclusively determined by the decision of a board
of arbitration consisting of three (3) members (the "BOARD OF
Arbitration") selected as hereinafter provided. Each of the
Company and the Investor shall select one (1) member and the
third member shall be selected by mutual agreement of the
other two members, or if the other members fail to reach
agreement on a third member within twenty (20) days after
their selection, such third member shall thereafter be
selected by the two Arbitrators on or by any court of
competent jurisdiction.
(b) If a dispute arises by claim of the Investor, the
Arbitration shall be held in Fort Lauderdale, Florida or such
other place as the Board of
29
Arbitration unanimously determines. If the dispute arises by
claim of the Company, the Arbitration shall be held in London,
England, or such other place as the Board of Arbitration
unanimously determines..
(c) In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow such rules and procedures,
as a majority of the members of the Board of Arbitration deems
necessary or appropriate. Decisions of the Board of
Arbitration shall be rendered no more than thirty (30)
calendar days following commencement of proceedings with
respect thereto. Any decision made by the Board of Arbitration
shall be final, binding and conclusive on the parties, and may
be enforced to the fullest extent permitted by law and entered
in any court of competent jurisdiction. Each party to any
arbitration shall bear its own expense in relation thereto,
including but not limited to such party's attorneys' fees, if
any, and the expenses and fees of the Board of Arbitration
shall be divided between the parties as determined by the
Board of Arbitration, and, in the absence of a contrary
determination, shall be equally divided.
IN WITNESS WHEREOF, the parties hereto have caused this Private Equity Line
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
STRATEGIC INVESTMENT MANAGEMENT SA
XXXXXXX XXXXXXXX-XXXXX (AUTHORISED SIGNATORY)
By: /s/ Xxxxxxx Xxxxxxxx-Xxxxx
CYBERCARE, INC.
XXXXXX X XXXXXX JUNIOR (AUTHORISED SIGNATORY)
SENIOR VICE PRESIDENT
By: /s/ Xxxxxx X Xxxxxx Junior
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