EXHIBIT 99.2
SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of February 12,
2003, by and among MEDIABUS NETWORKS, INC., a corporation organized under the
laws of the State of Florida (the "COMPANY"), PRESIDION SOLUTIONS, INC., a
corporation organized under the laws of Florida and a wholly-owned subsidiary of
the Company ("PRESIDION"), MERCATOR MOMENTUM FUND LP ("MOMENTUM FUND"), MERCATOR
MOMENTUM FUND III ("MOMENTUM FUND III") and MERCATOR FOCUS FUND LP ("FOCUS FUND"
and together with the Momentum Fund and Momentum Fund III, the "FUNDS").
WHEREAS:
A. The Company and the Funds are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Section 4(2) and Regulation D ("REGULATION D"), as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
B. The Company is issuing (i) 6.5% Secured Convertible Debentures in the
form attached hereto as Exhibit A (the "DEBENTURES") in the aggregate principal
amount of $2,000,000, pursuant to which shares of the Company's common stock
("COMMON STOCK") may be issued upon the conversion of the Debentures (the
"DEBENTURE SHARES"); and (ii) warrants in the form attached hereto as EXHIBIT B
(the "WARRANTS") to acquire shares of Common Stock ("WARRANT SHARES").
C. The Funds are purchasing, severally and not jointly, subject to the
terms and conditions in this Agreement, the Debentures and the Warrants.
D. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement in
the form attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
NOW, THEREFORE, the Company, Presidion and the Funds hereby agree as
follows:
1. CERTAIN DEFINITIONS.
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For purposes of this Agreement, the following terms shall have the meanings
ascribed to them as provided below:
"BUSINESS DAY" shall mean any day on which the principal United States
securities exchange or trading market on which the Common Stock is listed or
traded as reported by NTMS (as defined below) is open for trading.
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"INVESTMENT AMOUNT" shall mean the dollar amount of the Debentures
purchased by Momentum Fund, Momentum Fund III or Focus Fund at the Closing
pursuant to this Agreement, as set forth on the Execution Page hereto executed
by a representative of each Fund.
"MATERIAL ADVERSE EFFECT" shall mean any material adverse effect on (i) the
Securities, (ii) the ability of either the Company or Presidion to perform its
obligations hereunder (including the issuance of the Debentures and the
Warrants), under the Debentures and Warrants (including the issuance of the
Debenture Shares and Warrant Shares) or under the Registration Rights Agreement
or (iii) the business, operations, properties, prospects or financial condition
of the Company and its subsidiaries or Presidion and its subsidiaries, taken as
a whole.
"PRO RATA PERCENTAGE" shall mean, with respect to any Fund, a percentage
computed by dividing such Fund's Investment Amount by the aggregate Investment
Amounts of all Funds.
"SECURITIES" shall mean the Debentures, the Warrants, the Debenture Shares
and the Warrant Shares.
"SHARES" means the shares of Common Stock to be issued upon the conversion
of the Debentures or exercise of the Warrants.
2. PURCHASE AND SALE OF DEBENTURES AND WARRANTS.
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(a) GENERALLY. Except as otherwise provided in this Section 2 and subject
to the satisfaction (or waiver) of the conditions set forth in Section 6 and
Section 7 below, each Fund shall purchase the number of Debentures and Warrants
determined as provided in this Section 2, and the Company shall issue and sell
such number of Debentures and Warrants to each Fund for such Fund's Investment
Amount as provided below.
(b) Purchase of Debentures and Warrants; Form of Payment; Closing Date.
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(i) On the Closing Date (as defined below), the Company shall sell and
each Fund will purchase: (A) Debentures in the principal amount of
$2,000,000 with Momentum Fund purchasing $240,000 of Debentures, Momentum
Fund III purchasing $200,000 of Debentures and the Focus Fund purchasing
$1,560,000 of Debentures; and (B) Warrants exercisable for 102,000 Shares
in the case of Momentum Fund, 85,000 Shares in the case of Momentum Fund
III and 663,000 Shares in the case of Focus Fund. On the Closing Date, each
Fund shall pay the Company an amount equal to such Fund's Investment
Amount.
(ii) On the Closing Date, each Fund shall pay its Investment Amount to
the Company against delivery by the Company of duly executed Debentures and
Warrants being purchased by such Fund and all other items required to be
delivered as conditions to the closing under Section 7 below.
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(iii) Subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 6 and Section 7 below, the date and time of
the sale of the Debentures and the Warrants pursuant to this Agreement (the
"CLOSING") shall be 10:00 a.m. California time on February 12, 2003 or such
other date or time as Mercator Advisory Group, LLC ("MERCATOR") and the
Company may mutually agree ("CLOSING DATE"). The Closing shall occur at the
Los Angeles offices of Mercator, or at such other place as Mercator and the
Company may otherwise mutually agree.
3. THE FUNDS' REPRESENTATIONS AND WARRANTIES.
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Each Fund severally and not jointly represents and warrants to the Company
as follows:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Fund is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of California and has all the requisite power and authority to
carry on its business as now conducted and as proposed to be conducted.
(b) PURCHASE FOR OWN ACCOUNT. The Fund is purchasing the Securities for the
Fund's own account and not with a present view towards the distribution thereof.
The Fund understands that the Fund must bear the economic risk of this
investment indefinitely, unless the Securities are registered pursuant to the
Securities Act and any applicable state securities or blue sky laws or an
exemption from such registration is available, and that the Company has no
present intention of registering any such Securities other than as contemplated
by the Registration Rights Agreement. Notwithstanding anything in this Section
3(b) to the contrary, by making the foregoing representation, the Fund does not
agree to hold the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption from registration under the
Securities Act and any applicable state securities laws.
(c) INFORMATION. The Fund has been furnished all materials relating to the
business, finances and operations of the Company and its subsidiaries and
materials relating to the offer and sale of the Securities, which have been
requested by the Fund. The Fund has been afforded the opportunity to ask
questions of the Company and has received what the Fund believes to be
satisfactory answers to any such inquiries. The Fund understands that its
investment in the Securities involves a high degree of risk. Neither such
inquiries nor any other due diligence investigation conducted by the Fund or its
counsel or any of its representatives shall modify, amend or affect the Fund's
right to rely on the Company's representations and warranties contained in
Section 4 below.
(d) GOVERNMENTAL REVIEW. The Fund understands that no United States federal
or state agency or any other government or governmental agency has passed upon
or made any recommendation or endorsement of the Securities.
(e) ACCREDITED INVESTOR STATUS. The Fund is an "Accredited Investor" as
that term is defined in Rule 501(a) of Regulation D.
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(f) AUTHORIZATION; ENFORCEMENT. The Fund has the requisite power and
authority to enter into and perform its obligations under this Agreement and to
purchase the Debentures and the Warrants in accordance with the terms hereof.
This Agreement has been duly and validly authorized, executed and delivered on
behalf of the Fund and is a valid and binding agreement of the Fund enforceable
against the Fund in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other laws
affecting creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
(g) RESTRICTIONS ON TRANSFER. The Fund understands and acknowledges that
the Debentures and the Warrants have not been registered under the 1933 Act nor
have the Debenture Shares and Warrant Shares been registered under the 1993 Act.
Unless and until otherwise permitted, the Debentures and Warrants and each
certificate and other document evidencing any of the Debenture Shares and
Warrant Shares shall be endorsed with the legend substantially in the following
form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (A) COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT, (B) IN COMPLIANCE WITH
RULE 144 UNDER SUCH ACT, OR (C) THE COMPANY HAS BEEN FURNISHED
WITH AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
TO THE EFFECT THAT NO REGISTRATION IS REQUIRED FOR SUCH
TRANSFER."
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PRESIDION.
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The Company and Presidion, jointly and severally, represent and warrant to
each Fund as follows:
(a) ORGANIZATION AND QUALIFICATION. Each of them is a corporation duly
organized and existing under the laws of the State of Florida and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted. Each of them is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. SCHEDULE 4(a) sets
forth the names of each subsidiary of Presidion and of the Company (other than
Presidion) and its jurisdiction of incorporation. Other than Presidion, the
Company does not have any subsidiaries whose operations are material to the
Company on a consolidated basis.
(b) Authorization; Enforcement.
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(i) The Company has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement, the
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Debentures, the Warrants and the Registration Rights Agreement; to issue
the Debenture Shares upon conversion of the Debentures in accordance with
the terms of the Debentures; and to issue and sell the Warrant Shares upon
exercise of the Warrants in accordance with the terms of the Warrants. The
execution, delivery and performance of this Agreement, the Debentures, the
Warrants and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the reservation for issuance and issuance
of the Debenture Shares and the reservation for issuance and issuance of
the Warrant Shares) have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board
of Directors or its shareholders is required. This Agreement has been duly
executed and delivered by the Company. This Agreement constitutes, and,
upon execution and delivery by the Company and the other parties thereto,
the Debentures, Registration Rights Agreement and the Warrants will
constitute, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other laws affecting creditors' rights and remedies generally
and to general principles of equity.
(ii) Presidion has the requisite corporate power and authority to
enter into and perform its obligation under this Agreement and the
Debentures and to issue and sell the Debentures in accordance with the
terms hereof. The execution, delivery and performance of this Agreement and
the Debentures by Presidion and the consummation by Presidion of the
transactions contemplated hereby and thereby have been duly authorized by
Presidion's Board of Directors and shareholders and no further consent or
authorization by Presidion's Board of Directors or its shareholders is
required. This Agreement has been duly executed and delivered by Presidion.
This Agreement constitutes, and, upon execution and delivery by Presidion
and the other parties thereto, the Debentures will constitute, valid and
binding obligations of Presidion enforceable against Presidion in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other laws
affecting creditors' rights and remedies generally and to general
principles of equity.
(c) CAPITALIZATION. The capitalization of the Company and Presidion and
each of their subsidiaries as of the date hereof is set forth on SCHEDULE 4(c),
including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
the Company's stock option plans, the number of shares issuable and reserved for
issuance pursuant to securities exercisable for, or convertible into or
exchangeable for any shares of capital stock. All of such outstanding shares of
the capital stock of the Company and Presidion have been, or upon issuance will
be, validly issued, fully paid and nonassessable. Except as set forth on
SCHEDULE 4(c), no shares of capital stock of the Company (including the
Debenture Shares and the Warrant Shares) or any of the subsidiaries are subject
to preemptive rights or any other similar rights of the shareholders of the
Company or any liens or encumbrances. Except for the Securities and as disclosed
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in SCHEDULE 4(c), as of the date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever to which the Company or any of the subsidiaries is a party
relating to the issuance by the Company or any of its subsidiaries of securities
or rights convertible into or exercisable or exchangeable for, any shares of
capital stock of the Company or any of its subsidiaries, or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or such subsidiaries, and (ii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of its or their securities
under the Securities Act (except the Registration Rights Agreement). Except as
set forth on SCHEDULE 4(c), there are no securities or instruments containing
antidilution or similar provisions that may be triggered by the issuance of the
Securities in accordance with the terms of this Agreement, the Debentures, the
Warrants or the Registration Rights Agreement and the holders of the securities
and instruments listed on such SCHEDULE 4(c) have waived any rights they may
have under such antidilution or similar provisions in connection with the
issuance of the Securities in accordance with the terms of this Agreement, the
Debentures, the Warrants or the Registration Rights Agreement. The Company and
Presidion have made available to each Fund or its representative true and
correct copies of their Certificates of Incorporation as in effect on the date
hereof ("CERTIFICATES OF INCORPORATION"), their BY-LAWS as in effect on the date
hereof (the "By-laws") and all other instruments and agreements governing
securities convertible into or exercisable or exchangeable for capital stock of
the Company, except for stock options granted under any employee benefit plan or
director stock option plan of the Company.
(d) ISSUANCE OF SHARES. The Debenture Shares are duly authorized and upon
the conversion of the Debentures in accordance with the terms thereof, will be
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances (other than those imposed through acts or omissions of
the Funds), and will not be subject to preemptive rights or other similar rights
of shareholders of the Company and will not impose personal liability upon the
holder thereof. The Warrant Shares are duly authorized and reserved for
issuance, and, upon exercise of the Warrants in accordance with the terms
thereof, will be validly issued, fully paid and non-assessable and free from all
taxes and liens, claims and encumbrances (other than those imposed through acts
or omissions of the Funds thereof), and will not be subject to preemptive rights
or other similar rights of shareholders of the Company and will not impose
personal liability upon the holder thereof.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement, the Debentures, the Registration Rights Agreement and the Warrants by
the Company and the execution, delivery and performance of this Agreement and
the Debenture by Presidion, and the consummation by the Company and Presidion of
the transactions contemplated hereby and thereby (including, without limitation,
the reservation for issuance and issuance of the Debenture Shares and the
Warrant Shares and the issuance of the Warrants) will not (i) conflict with or
result in a violation of the Certificates of Incorporation or By-laws or (ii)
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 Company or any of its subsidiaries is a party, or
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result in a violation of any law, rule, regulation, order, judgment or decree
(including (assuming the accuracy of the representations and warranties of the
Funds) the United States federal and state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or affected (except,
with respect to clause (ii), for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation, By-laws and other organizational documents and neither the
Company nor any of its subsidiaries is in default (and no event has occurred
which, with notice or lapse of time or both, would put the Company or any of its
subsidiaries in default) under, nor has there occurred any event giving others
(with notice or lapse of time or both) any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for actual or possible
violations, defaults or rights as would not, individually or in the aggregate,
have a Material Adverse Effect. The businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except for actual or possible violations,
if any, the sanctions for which either singly or in the aggregate would not have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state securities
laws, neither the Company or Presidion is required to obtain any consent,
approval, authorization or order of, or make any filing or registration with,
any court or governmental agency or any regulatory or self regulatory agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement including without limitation the issuance and sale of the Debentures
and Warrants as provided hereby (including without limitation the issuance of
the Debenture Shares and Warrant Shares) or the Registration Rights Agreement.
(f) SEC Documents; Financial Statements.
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(i) Since January 1, 2001, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it
with the SEC pursuant to the Securities and Exchange Act of 1934, as
amended ("EXCHANGE ACT"), and has filed all registration statements and
other documents required to be filed by it with the SEC pursuant to the
Securities Act (all of the foregoing filed prior to the date hereof, and
all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being hereinafter
referred to herein as the "SEC DOCUMENTS"). The Company has made available
to each Fund true and complete copies of the SEC Documents, except for the
exhibits and schedules thereto and the documents incorporated therein. As
of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents,
at the time they were filed with the SEC, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any
statements made in any such SEC Documents that are or were required to be
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updated or amended under applicable law have been so updated or amended. As
of their respective dates, the financial statements of the Company included
in the SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
applicable with respect thereto. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles, consistently applied, 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 consolidated financial
position of the Company and its subsidiaries as of the dates thereof and
the results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring
year-end audit adjustments). Except as set forth in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to the
date of such SEC Documents and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in such SEC
Documents, which liabilities and obligations referred to in clauses (i) and
(ii), individually or in the aggregate, would not have a Material Adverse
Effect.
(ii) Presidion has made available to the Funds consolidated balance
sheets of Presidion and its subsidiaries as of November 30, 2002 and
consolidated statements of operations and cash flows for the periods then
ended (the "PRESIDION FINANCIAL STATEMENTS"). The Presidion Financial
Statements have been prepared in accordance with United States generally
accepted accounting principles, consistently applied, 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 consolidated financial position of Presidion and its
subsidiaries as of the dates thereof and the results of their operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal and recurring year-end audit adjustments).
Except as set forth in the Presidion Financial Statements, Presidion has no
liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to the date of the latest
balance sheet included in the Presidion Financial Statements and (ii)
obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles
to be reflected in the Presidion Financial Statements, which liabilities
and obligations referred to in clauses (i) and (ii), individually or in the
aggregate, would not have a Material Adverse Effect.
(g) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC Documents or
the Presidion Financial Statements, since January 1, 2001, there has been no
change or development, which individually or in the aggregate has had or could
have a Material Adverse Effect on the Company.
(h) ABSENCE OF LITIGATION. Except as disclosed in the SEC Documents, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
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public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or Presidion, threatened against or
affecting the Company, or any of its subsidiaries, or any of their directors or
officers in their capacities as such which would have a Material Adverse Effect.
(i) INTELLECTUAL PROPERTY. The Company and each of its subsidiaries owns or
is licensed to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, permits, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
other similar rights and proprietary knowledge (collectively, "INTANGIBLES")
necessary for the conduct of its business as now being conducted and as proposed
to be conducted. Neither the Company nor any of its subsidiaries has received
written notice that it is infringing upon or in conflict with any third party
Intangibles. Neither the Company nor any of its subsidiaries has entered into
any consent, indemnification, forbearance to xxx or settlement agreements with
respect to the validity of the Company's or such subsidiary's ownership or right
to use its Intangibles. The Intangibles are valid and enforceable, and no
registration relating thereto has lapsed, expired or been abandoned or canceled
or is the subject of cancellation or other adversarial proceedings, and all
applications therefore are pending and in good standing. The Company and its
subsidiaries have complied with their contractual obligations relating to the
protection of the Intangibles used pursuant to licenses. To the knowledge of the
Company and Presidion, no person is infringing on or violating the Intangibles
owned or used by the Company or any of its subsidiaries.
(j) ENVIRONMENT. Except as disclosed in the SEC Documents (i) there is no
environmental liability, nor factors likely to give rise to any environmental
liability, affecting any of the properties of the Company or any of its
subsidiaries that individually or in the aggregate, would have a Material
Adverse Effect and (ii) neither the Company nor any of the subsidiaries has
violated any environmental law applicable to it now or previously in effect,
other than such violations or infringements that, individually or in the
aggregate, have not had and will not have a Material Adverse Effect.
(k) TITLE. The Company and each of its subsidiaries has good title in fee
simple to all real property and good title to all personal property owned by it
which is material to its business, free and clear of all liens, encumbrances and
defects except for such defects in title that, individually or in the aggregate,
would not have a Material Adverse Effect. Any real property and facilities held
under lease by the Company or any of its subsidiaries are held by the Company or
such subsidiary under valid, subsisting and enforceable leases with such
exceptions, which have not had and will not have a Material Adverse Effect.
(l) INSURANCE. The Company and its subsidiaries maintain such insurance
relating to their business, operations, assets, key-employees and officers and
directors as is appropriate to their business, assets and operations, in such
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amounts and against such risks as are customarily carried and insured against by
owners of comparable businesses, assets and operations, and such insurance
coverages will be continued in full force and effect to and including the
Closing Date other than those insurance coverages in respect of which the
failure to continue in full force and effect could not reasonably be expected to
have a Material Adverse Effect.
(m) ACKNOWLEDGMENT REGARDING THE FUND'S PURCHASE OF THE SECURITIES. The
Company and Presidion acknowledge and agree that neither Fund is acting as a
financial advisor or is acting as a fiduciary of the Company or Presidion (or in
any similar capacity) with respect to this Agreement or the transactions
contemplated hereby, and the relationship between the Company and the Funds is
"arms length" and that any statement made by any Fund or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to such Fund's purchase of Securities and has not been relied upon by the
Company, Presidion, their officers or directors in any way. The Company and
Presidion further represent to the Funds that their decision to enter into this
Agreement has been based solely on an independent evaluation by the Company and
Presidion.
(n) NO BROKERS. The Company and Presidion have not engaged any person to
which or to whom brokerage commissions, finder's fees, financial advisory fees
or similar payments are or will become due in connection with this Agreement or
the transactions contemplated hereby except for Mercator, whose administrative
fee will be paid by the Company.
(o) TAX STATUS. The Company and each of its subsidiaries has made or filed
all material federal, state and local income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company or the applicable subsidiary has set aside
on its books provisions adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set
aside on its books provisions adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no material unpaid taxes claimed to be due by the taxing authority of
any jurisdiction. Neither the Company or Presidion has executed a waiver with
respect to any statute of limitations relating to the assessment or collection
of any federal, state or local tax. None of the tax returns of the Company or
Presidion have been or is being audited by any taxing authority.
(p) NO GENERAL SOLICITATION. Neither the Company or Presidion nor any
person participating on their behalf in the transactions contemplated hereby has
conducted any "general solicitation" or "general advertising" as such terms are
used in Regulation D, with respect to any of the Securities being offered
hereby.
(q) SECURITIES LAWS. Neither the Company or Presidion, nor any of their
affiliates, nor any person acting on their behalf, has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
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security under circumstances that would require registration of the Securities
being offered hereby under the Securities Act or cause this offering of
Securities to be integrated with any prior offering of securities of the Company
or Presidion for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, Rule 4460(i) of the National
Association of Securities Dealers ("NASD") or any similar rule. The offer, sale
and delivery of shares of Common Stock upon the conversion of the Debentures or
exercise of the Warrants will be exempt from the registration requirements of
Section 5 of the Securities Act. (r) Form S-3 Eligibility. The Company is
currently eligible to register the resale of its Common Stock on a registration
statement on Form S-3 under the Securities Act. There exist no facts or
circumstances (including without limitation any required approvals or waivers of
any circumstances that may delay or prevent the obtaining of accountant's
consents) that would prohibit or delay the preparation and filing of a
registration statement on Form S-3 with respect to the Registrable Securities
(as defined in the Registration Rights Agreement).
(s) DISCLOSURE. All information relating to or concerning the Company and
its subsidiaries set forth in this Agreement or provided to the Funds pursuant
to Section 3(b) hereof and otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects and the Company
and subsidiaries have not omitted to state any material fact necessary in order
to make the statements made herein or therein, in light of the circumstances
under which they were made, not misleading.
5. COVENANTS.
---------
(a) SATISFACTION OF CONDITIONS. The parties shall use their best efforts to
satisfy in a timely manner each of the conditions set forth in Section 6 and
Section 7 of this Agreement.
(b) FORM D; BLUE SKY LAWS. The Company agrees to file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to Mercator promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Funds pursuant to this
Agreement under applicable securities or "blue sky" laws of the states of the
United States or obtain exemption therefrom, and shall provide evidence of any
such action so taken to Mercator on or prior to the Closing Date.
(c) REPORTING STATUS. So long as a Fund beneficially owns any Securities or
has the right to acquire any Securities pursuant to this Agreement, the Company
shall timely file all reports required to be filed with the SEC pursuant to the
Exchange Act, and shall not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.
-11-
(d) USE OF PROCEEDS. The Company shall use the net proceeds from the sale
of the Debentures and the Warrants for the purposes set forth on Schedule 5(d).
(e) EXPENSES. At the Closing, the Company shall reimburse Mercator for the
out-of-pocket expenses reasonably incurred by Mercator and its affiliates and
advisors in connection with the negotiation, preparation, execution and delivery
of this Agreement, the Debenture, the Registration Rights Agreement, the
Warrants and the other agreements to be executed in connection herewith,
including, without limitation, in conducting Mercator's and its affiliates' and
advisors' reasonable due diligence and Mercator's and its affiliates' reasonable
attorneys' fees and expenses (the "EXPENSES").
(f) FINANCIAL INFORMATION. For a period of three (3) years following the
Closing, the Company agrees to send to each Fund (i) within ten days after the
filing with the SEC, to the extent not available through the SEC's XXXXX system,
a copy of its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q,
its proxy and information statements and any Current Reports on Form 8-K and
(ii) within one day after release, copies of all press releases issued by the
Company or any of its subsidiaries, if any.
(g) RESERVATION OF SHARES. The Company has and shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the issuance of the Shares as provided in
Section 2 hereof, and the full exercise of the Debentures and the issuance of
the Warrant Shares in connection therewith and as otherwise required hereby and
by the Warrants in accordance with the Registration Rights Agreement. The
Company shall not reduce the number of shares of Common Stock reserved for
issuance under this Agreement, the Debentures, the Warrants (except as a result
of the issuance of the Warrant Shares upon the exercise of the Warrants) or the
Registration Rights Agreement (except as a result of the termination or the
Company's obligations to issue Penalty Shares), without the consent of the
Funds.
(h) LISTING. On the Closing Date, the Company's Common Stock shall be
listed on the NASD Over the Counter Bulletin Board ("OTC"). The Company shall
use its best efforts to continue the listing and trading of its Common Stock on
the OTC, or alternatively, the Nasdaq National Market System, Nasdaq Small Cap
Market, the New York Stock Exchange ("NYSE") or the American Stock Exchange
("AMEX") (each a "SUBSEQUENT MARKET") and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the OTC or a Subsequent Market, as applicable.]
(i) ADDITIONAL EQUITY CAPITAL. The Company agrees that during the period
beginning on the date hereof and ending on the date which is one hundred eighty
(180) days following the Closing Date and for the ninety (90) day period
following any Automatic Mandatory Exercise Date under any Warrant (the "LOCK-UP
PERIOD"), the Company will not, without the prior written consent of the Funds
or their designees, contract with any party to obtain additional financing in
which any equity or equity-linked securities are issued (including any debt
financing with an equity component) (an "EQUITY FINANCING") pursuant to any
offering exempt from the registration requirements of the Securities Act which
grants any registration rights exercisable within one year of the Closing Date.
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The Company will not conduct any Equity Financing during the period beginning on
the Closing Date and ending one hundred eighty (180) days following the
expiration of the Lock-Up Period unless it shall have first delivered to the
Fund, at least ten (10) business days prior to the closing of such Equity
Financing, written notice describing the proposed Equity Financing, including
the terms and conditions thereof, and providing the Funds and their affiliates
an option during the ten (10) business day period following delivery of such
notice to purchase any or all of the securities being offered in the Equity
Financing on the same terms as contemplated by such Equity Financing. Such
option shall be exercised by each applicable Fund giving written notice to the
Company within such period of its agreement to buy a specified amount of the
offered securities. Closing of such sale shall be contemporaneous with the
closing of the offering with investors other than the Funds (or, if there are no
other such investors, on a date specified by the Company), provided that the
Company shall provide written notice to each applicable Fund at least five (5)
business days prior to any such closing. To the extent that the Funds, in the
aggregate, elect to purchase more than all of such securities, the amount that
each Fund shall be entitled to purchase shall be pro rated based on the Fund's
Pro Rata Percentage. To the extent that the terms of an additional Equity
Financing are changed in a manner that is at least partially favorable to
prospective investors, the Company shall notify the Funds of all changes in such
terms and the Funds shall have another ten (10) business day option to purchase
on the revised terms and otherwise in accordance with the provisions hereof. The
limitations referred to in this Section 5(i) shall not apply to (i) any
transaction involving issuances of securities as consideration in a merger,
consolidation or acquisition of assets, or in connection with any strategic
partnership, collaboration or joint venture (the primary purpose of which is not
to raise equity capital), or as consideration for the acquisition of a business,
product or license by the Company, (ii) the issuance of securities pursuant to a
widely distributed underwritten public offering, (iii) the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof as set forth in
SCHEDULE 4(c) or (iv) the grant of additional options or warrants, or the
issuance of additional securities, under any duly authorized Company stock
option, stock purchase or restricted stock plan for the benefit of the Company's
employees, consultants or directors.
(j) NO INTEGRATED OFFERINGS. The Company shall not make any offers or sales
of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities Act or cause this offering of Securities to be integrated with any
other offering of securities by the Company.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell Shares and
Warrants to a Fund at the Closing hereunder is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions thereto;
provided, however, that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion.
-13-
(a) The applicable Fund shall have executed the signature page to this
Agreement and the Registration Rights Agreement, and delivered the same to the
Company.
(b) The applicable Fund shall have delivered such Fund's Investment Amount
in accordance with Section 2(b) above.
(c) The representations and warranties of the applicable Fund shall be true
and correct as of the date when made and as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true and correct as
of such date), and the applicable Fund shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
applicable Fund at or prior to the Closing Date.
(d) No statute, rule, regulation, executive order, decree, ruling,
injunction; action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
7. CONDITIONS TO EACH FUND'S OBLIGATION TO PURCHASE DEBENTURES AND
WARRANTS.
The obligation of each Fund hereunder to purchase Debentures and Warrants
to be purchased by it hereunder is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for such Fund's sole benefit and may be waived by such Fund at
any time in such Fund's sole discretion:
(a) The Company and Presidion shall have executed the signature pages to
this Agreement and the Debenture, and delivered the same to Mercator on behalf
of the Fund. (b) The Company shall have executed the signature pages of the
Warrant and the Registration Rights Agreement, and delivered the same to
Mercator on behalf of the Fund.
(c) The Company and Presidion shall have delivered to Mercator on behalf of
the Fund a duly executed Debenture as provided in Sections 2(b) above.
(d) The Company shall have delivered to the Fund a duly executed Warrant as
provided in Sections 2 and 7 above.
(e) The Company and Presidion shall have delivered to Mercator on behalf of
the Fund: (i) documents entitled Payment Guaranty and Pledge Agreement, in the
forms of Exhibits D and F attached hereto, executed by Xxxx X. Xxxxxxx XX, Xxxxx
X. Xxxxxxxxxx and Xxxxx X. Xxxxxx, principal shareholders of the Company; (ii) a
document entitled Pledge Agreement, in the form of Exhibit F attached hereto,
executed by Taurus Global, LLC; (iii) a document entitled Subordination
-14-
Agreement in the form of Exhibit G attached hereto, executed by the holders of
all outstanding indebtedness of either the Company or Presidion, except that
such a document shall not be required with respect to Presidion's existing lines
of credit with Comerica Bank; and (iv) all additional instruments, documents and
other items required to be delivered under the Pledge Agreements referred to in
items (i) and (ii) above.
(f) The Shares shall be quoted on the OTC or authorized for quotation or
trading on a Subsequent Exchange and shall not have been suspended or be under
threat of suspension by the SEC or the NASD.
(g) The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and correct as of such
date) and the Company and Presidion shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Company and
Presidion at or prior to the Closing Date. Mercator shall have received
certificates, each executed on behalf of the Company and Presidion by its Chief
Financial Officer, dated as of the Closing Date, to the foregoing effect and
attaching true and correct copies of the resolutions adopted by the Board of
Directors of (A) the Company authorizing the execution, delivery and performance
by the Company of its obligations under this Agreement, the Debenture, the
Warrants and the Registration Rights Agreement and (B) Presidion authorizing the
execution, delivery and performance by Presidion of its obligations under this
Agreement and the Debentures.
(h) No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
(i) From the date of this Agreement through the Closing Date, there shall
not have occurred any Material Adverse Effect.
8. GOVERNING LAW MISCELLANEOUS.
---------------------------
(a) GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed in the State of California. Each of the
parties irrevocably consents to the jurisdiction of the United States federal
courts and the state courts located in the State of California in any suit or
proceeding based on or arising under this Agreement and irrevocably agrees that
all claims in respect of such suit or proceeding may be determined in such
courts. Each of the parties irrevocably waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding. Each of the parties further
agrees that service of process upon such party mailed by first class mail to the
address set forth in Section 8(f) shall be deemed in every respect effective
-15-
service of process upon such party in any such suit or proceeding. Nothing
herein shall affect the right of a Fund to serve process in any other manner
permitted by law. Each of the parties agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
(b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which 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. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS; WAIVER. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Funds make
any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the Company and by the Funds as provided in
Section 8(n) hereof. Any waiver by the Funds, on the one hand, or the Company,
on the other hand, of a breach of any provision of this Agreement shall not
operate as or be construed to be a waiver of any other breach of such provision
of or any breach of any other provision of this Agreement. The failure of the
Funds, on the one hand, or the Company, on the other hand to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(f) NOTICES. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five days after being placed in the mail, if mailed, or upon
receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
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If to the Company or Presidion:
MediaBus Networks
000 Xxxx Xxx Xxxxxx Xxxx
Xxxxx 0000
Xxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
If to a Fund, a copy should be sent to:
Mercator Advisory Group, LLC
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxx
Each party hereto may from time to time change its address or facsimile number
for notices under this Section 8 by giving at least ten (10) days' prior written
notice of such changed address or facsimile number, in the case of the Funds to
the Company, and in the case of the Company to all of the Funds.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. The Company and
Presidion shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each of the Funds.
(h) THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns,
and, except for Mercator, is not for the benefit of nor may any provision hereof
be enforced by any other person.
(i) SURVIVAL. The representations and warranties of the Company and the
agreements and covenants of the Company and Presidion shall survive the Closing
notwithstanding any due diligence investigation conducted by or on behalf of the
Funds. Moreover, none of the representations and warranties made by the Company
and Presidion herein shall act as a waiver of any rights or remedies a Fund may
have under applicable federal or state securities laws. The Company and
Presidion agree to indemnify and hold harmless each Fund and each of such Fund's
managers, officers, directors, employees, partners, members, agents and
affiliates for loss or damage relating to the Securities purchased hereunder
arising as a result of or related to any breach by the Company and Presidion of
any of their representations or covenants set forth herein, including
advancement of expenses as they are incurred.
-17-
(j) FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) TERMINATION. In the event that the Closing Date shall not have occurred
on or before February 13, 2003, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date. Notwithstanding
any termination of this Agreement, any party not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.
(l) JOINT PARTICIPATION IN DRAFTING. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement, the Debenture,
the Registration Rights Agreement and the Warrants. As such, the language used
herein and therein shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction will
be applied against any party to this Agreement, the Debenture, the Registration
Rights Agreement or the Warrants.
(m) EQUITABLE RELIEF. Each party acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the other parties by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, each party acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach or
threatened breach by such party of the provisions of this Agreement, that the
other parties shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required.
(n) DETERMINATIONS. Except as otherwise expressly provided herein, all
consents, approvals and other determinations to be made by the Funds pursuant to
this Agreement and all waivers and amendments to or of any provisions in this
Agreement prior to the Closing Date to be binding upon a Fund shall be made by
such Fund and except as otherwise expressly provided herein, all consents,
approvals and other determinations (other than amendments to the terms and
provisions of this Agreement) to be made by the Funds pursuant to this Agreement
and all waivers and amendments to or of any provisions in this Agreement after
the Closing Date shall be made by the Funds.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and Presidion have caused this
Agreement to be duly executed as of the date first above written.
COMPANY: PRESIDION:
MEDIA BUS NETWORKS, INC. PRESIDION SOLUTIONS, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Executive Vice President/ Title: Executive Vice President/
General Counsel General Counsel
THE FUNDS:
MERCATOR FOCUS FUND LP: MERCATOR MOMENTUM FUND LP:
By: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxx Xxxxxxxxx
------------------------------ -----------------------------
Name: Xxxxx Xxxxxxxxx Name: Xxxxx Xxxxxxxxx
Its: Managing Partner Its: Managing Partner
Investment Amount: $1,560,000 Investment Amount: $240,000
Address: 000 Xxxxx Xxxxxx Xxxxxx Address: 000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000 Xxxxx 0000
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000 Telecopy No.: (000) 000-0000
Attention: Xxxx Xxxx Attention: Xxxx Xxxx
MERCATOR MOMENTUM FUND III:
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Its: Managing Partner
Investment Amount: $200,000
Address: 000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxx Xxxx
-19-
