CONVERTIBLE DEBENTURE AND COMMON STOCK PURCHASE AGREEMENT
CONVERTIBLE DEBENTURE AND COMMON STOCK PURCHASE AGREEMENT
This Agreement is made September 15, 1999 by and among GEM GLOBAL YIELD
FUND LIMITED, a Nevis company, with its office at c/x Xxxxxxxx & Co., 00
Xxxxxxxx Xxxxxx, Xxxxxx, X0X 0XX (the "Buyer") and GEM INVESTMENTS, LTD., a
Delaware corporation, with offices at 00 Xxxxxxxxxx Xxxxx, Xxxxxxx, XX 00000
("Seller").
WITNESSETH:
WHEREAS, Seller is the owner of $650,000 principal amount of 2%
convertible debentures due May 12, 2004 of Q Comm International, Inc. ("QCOM or
the Company") (the "Debentures");
WHEREAS, Two Million (2,000,000) shares of the common stock, $.001 par
value (the "Common Stock") of the Company (the "Escrow Shares") registered in
the name of the Seller are being held in escrow by Xxxxxx Gottbetter & Xxxxxxxx,
LLP as escrow agent (the "Escrow Agent") for the purpose of honoring conversions
by the Seller of the Debentures; and
WHEREAS, Seller is the owner of One Hundred Twenty-Five Thousand (125,000)
shares of the Common Stock, which Seller acquired through the exercise of
warrants to purchase common stock expiring on May 12, 2004.
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from the Seller, the entire amount of the Debentures registered in the name of
the Seller along with conversion rights to 2,000,000 Escrow Shares and all of
the shares of the Common Stock on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which the parties hereto acknowledge, it is agreed as
follows:
Article I
Sale of Debenture
Section 1.1. Sale of Debenture.
(a) Seller agrees to sell to the Buyer and the Buyer agrees to purchase
from the Seller, the entire amount of the Debentures registered in the name of
the Seller along with conversion rights to 2,000,000 Debenture Escrow Shares and
One Hundred Twenty-Five Thousand (125,000) shares of the Common Stock.
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not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on (a) the results of operations, assets, prospects, or financial
condition of the Seller, or (b) the Buyer's rights under this Agreement, the
Escrow Agreement and the Common Stock (a "Material Adverse Effect").
Section 2.4 Authorization; Enforcement.
Seller has the requisite corporate power and authority to enter into and
to consummate the transactions contemplated hereby and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of this
Agreement by the Seller and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Seller. This Agreement has been duly executed and
delivered by the Seller and constitutes the valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 2.5 No Conflicts.
The execution, delivery and performance of this Agreement by the Seller
and the consummation by the Seller of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of its
certificate of incorporation or bylaws or (ii) subject to obtaining the consents
referred to in Section 2.6, conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Seller is a
party, or (iii) to the knowledge of the Seller result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Seller is subject (including
Federal and state securities laws and regulations), or by which any property or
asset of the Seller is bound or affected, except in the case of each of clauses
(ii) and (iii), such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Seller is not
being conducted in violation of any law, ordinance or regulation of any
governmental authority, except for violations which, individually or in the
aggregate, do not have a Material Adverse Effect.
Section 2.6 Consents and Approvals.
Except as specifically set forth in Schedule 2.6, the Seller is required
to obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Seller of this Agreement, and other than, in all
cases, where the failure to obtain such consent, waiver, authorization or order,
or to give or make such notice or filing,
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would not materially impair or delay the ability of the Seller to effect the
Closing and deliver to the Buyer the Common Stock free and clear of all Liens
(collectively, the "Required Approvals").
Section 2.7 Litigation; Proceedings.
Except as specifically disclosed in Schedule 2.7, there is no action,
suit, notice of violation, proceeding or investigation pending or, to the best
knowledge of the Seller, threatened against or affecting the Seller or any of
its respective properties before or by any court, governmental or administrative
agency or regulatory authority (Federal, State, county, local or foreign) which
(i) relates to or challenges the legality, validity or enforceability of this
Agreement or the Common Stock (ii) could, individually or in the aggregate, have
a Material Adverse Effect or (iii) could, individually or in the aggregate,
materially impair the ability of the Seller to perform fully on a timely basis
its obligations under this Agreement.
Section 2.8 No Default or Violation.
Seller (i) is not default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such conflicts or defaults
as do not have a Material Adverse Effect, (ii) is in violation of any order of
any court, arbitrator or governmental body, except for such violations as do not
have a Material Adverse Effect, or (iii) is not in violation of any statute,
rule or regulation of any governmental authority which could (individually or in
the aggregate) (x) adversely affect the legality, validity or enforceability of
this Agreement, (y) have a Material Adverse Effect or (z) adversely impair the
Seller's ability or obligation to perform fully on a timely basis its
obligations under this Agreement.
Section 2.9. No Brokers.
Seller, covenants and warrants to Buyer that: (i) no negotiations in
connection herewith were made with or through any person or entity acting as a
broker, (ii) no broker was instrumental in the consummation of this transaction
and (iii) no commitment was made by Seller, as the case may be, with or to any
broker in connection with this sale transaction. Seller agrees to indemnify and
hold the Buyer harmless from and against all obligations for the payment of any
and all brokerage commission or fee which may be claimed by any broker claiming
to have dealt with the Seller or predicated on the act of the Seller on breach
this warranty and covenant.
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Article III
Buyers' Representations and Warranties
The Buyer hereby warrants and represents the following representations and
warranties made under this Article III:
Section 3.1.
Buyer is a corporation duly and validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Buyer has the requisite
power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder and
thereunder. The purchase of the Debentures and the shares of Common Stock by the
Buyer hereunder has been duly authorized by all necessary action on the part of
the Buyer. This Agreement has been duly executed and delivered by the Buyer or
on its behalf and constitutes the valid and legally binding obligation of the
Buyer, enforceable against the Buyer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity.
Section 3.2. No Brokers.
Buyer, covenants and warrants to Seller that: (i) no negotiations in
connection herewith were made with or through any person or entity acting as a
broker, (ii) no broker was instrumental in the consummation of this transaction
and (iii) no commitment was made by Buyer, as the case may be, with or to any
broker in connection with this sale transaction. Buyer agrees to indemnify and
hold the Buyer harmless from and against all obligations for the payment of any
and all brokerage commission or fee which may be claimed by any broker claiming
to have dealt with the Buyer or predicated on the act of the Buyer on breach
this warranty and covenant.
Section 3.3. Buyer Status.
Buyer is an "accredited investor" as such term is defined in Rule
501(a)(2) under the Act, in that it is a business trust, not formed for the
specific purpose of acquiring the Debentures or Common Stock offered, with total
assets in excess of $5,000,000. The Buyer is purchasing the Debentures and
Common Stock for its own account.
Section 3.4. Promise to Comply with Purchase Agreement.
Buyer further agrees to be bound by the Convertible Debenture and Warrant
Purchase Agreement by and between GEM Investments, Ltd. and Q Comm
International, Inc.. dated May 13, 1999.
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Article IV
Conditions Precedent to Closing
Section 4.1. Conditions Precedent to Obligations of the Buyer.
The obligation of the Buyer to purchase the shares of Debentures and the
shares of Common Stock is subject to the satisfaction or waiver by the Buyer, at
or prior to the Closing, of each of the following conditions:
(a) Legal Opinion. The Buyer shall have received the legal opinion,
addressed to it and dated the Closing Date of thc Counsel for the Seller. Such
legal opinion shall address the Seller's authority to enter into this Agreement
and the removal of any restrictions on the transfer and sale of Debentures, the
Escrow Shares and the Common Stock.
(b) Accuracy of the Seller's Representations and Warranties. The
representations and warranties of the Seller contained herein shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except that representations and warranties
that are made as of a specific date need be true in all material respects only
as of such date);
(c) Performance by the Seller. The Seller shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Seller at or prior to the Closing;
(d) No Prohibitions. The purchase of and payment for the Debentures and
Common Stock hereunder (i) shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation and (ii) shall not
subject the Buyer to any penalty, or in its reasonable judgment, other onerous
condition under or pursuant to any applicable law or governmental regulation
that would materially reduce the benefits to the Buyer of the purchase of the
Debentures and Common Stock (provided, however, that such regulation, law or
onerous condition was not in effect in such form at the date of this Agreement);
(e) Required Approvals. All Required Approvals shall have been obtained;
(f) Delivery of Escrow Shares. The Seller shall have delivered to the
Escrow Agent the certificate(s) representing the Debentures, Escrow Shares and
Common Stock Shares which has been registered in the name of the Buyer and free
of all legends and restrictions; and
Section 4.2. Conditions Precedent to Obligations of the Seller.
The obligation of the Seller to sell the Debentures and Common Stock
hereunder is subject to the satisfaction or waiver by the Seller, at or to the
Closing, of each of the following conditions:
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(a) Accuracy of the Buyer's Representations and Warranties. The
representations and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except that representations and warranties that are made as
of a specific date need be true in all material respects only as of such date);
(b) Performance by the Buyer. The Buyer shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by it at or prior to the Closing; and
Article V
Closing
Section 5.1. Date and Time of Closing
The Closing will take place at the offices of the Buyer immediately
following the receipt by the Escrow Agent from QCOM's transfer agent of
certificates registered in the name of the Buyer and which do not contain any
restrictions on the sale or transferability of the Debentures, Escrow Shares and
the Common Stock.
Section 5.2 No. Adjustments.
The parties herein agree that all adjustments have been made and that the
Purchase Price reflects same as of the Closing Date.
Section 5.3 All Representations and Warranties Survive Closing.
All representations and warranties contained in this Agreement shall
survive the closing of sale.
Article VI
Miscellaneous Provisions
Section 6.1 Amendment, Waiver and Modification.
The provisions of this Agreement may not be amended, supplemented, waived
or changed orally, but only by a writing signed by the party as to whom
enforcement of any such amendment, supplement, waiver or modification is sought
and making specific references to this Agreement.
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Section 6.2. Assignment.
This Agreement and any rights under this Agreement may not be assigned by
Seller or Buyer without the written approval of the party. Any attempt to make
an assignment without written approval shall be null, void and of no legal
effect.
Section 6.3. Notices.
All notices hereunder shall be in writing given to the parties at their
addresses indicated above sent United States mail postpaid as registered or
certified mail with return receipt requested or by national overnight express
courier service; with copies of all notices sent to Xxxx X. Xxxxxxxxxx, Esq.,
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000. Any
notice so given shall be deemed given on the second day after mailing as
evidenced by a stamped U.S. Postal Service receipt or on the next day after
delivery to the overnight courier service.
Section 6.4. Successors, Legal Representative and Assigns.
The terms and conditions of this Agreement shall bind, and inure to the
benefit of, the parties hereto and their respective successors, legal
representatives and permitted assigns.
Section 6.5. Entire Agreement.
This Agreement embodies the entire agreement between the parties with
respect to the transactions contemplated, and supersedes all other prior
agreements and understandings between the parties with reference to the subject
matter herein. There have been no agreements, representations or warranties
other than those set forth in this Agreement. Buyer is purchasing the Debentures
and Common Stock "as is".
Section 6.6. Additional Documents.
All of the parties agree to execute any documents and take any action
necessary or helpful to carry out the terms of this Agreement.
Section 6.7. Counterpart Signatures.
This Agreement may be executed in one or more counterparts, all of which
when taken together shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page were an original
thereof.
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Section 6.8. Headings.
The headings in the sections of this Agreement have been inserted for
convenience only and shall not constitute a part of this Agreement.
Section 6.9. Governing Law.
This Agreement shall be construed according to the laws of the State of
New York.
[ SIGNATURE PAGE FOLLOWS ]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement.
SELLER: BUYER:
GEM INVESTMENTS, LTD. GEM GLOBAL YIELD FUND LIMITED
By: /s/ [ILLEGIBLE] By:
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Name: [ILLEGIBLE] Name:
Title: President Title:
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IN WITNESS WHEREOF, the parties have duly executed this Agreement.
SELLER: BUYER:
GEM INVESTMENTS, LTD. GEM GLOBAL YIELD FUND LIMITED
By: By: Xxxxxx Xxxxxxxx
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Name: Name: XXXXXX XXXXXXXX
Title: Title: DIRECTOR
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SCHEDULE 2.6
CONSENT AND APPROVALS
None.
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SCHEDULE 2.7
LITIGATION; PROCEEDINGS
None.
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