================================================================================
C3D INC.
$1,600,000
8.0% Series C Convertible Note due October 31, 2001
-----------------------------
PURCHASE AGREEMENT
------------------------------
Dated as of December 24, 1999
================================================================================
TABLE OF CONTENTS
-----------------
Page
----
1. AUTHORIZATION OF ISSUE OF THE CONVERTIBLE NOTE.........................................................1
2. PURCHASE AND SALE OF THE CONVERTIBLE NOTE..............................................................1
2A. Purchase and Sale.................................................................................1
2B. Registration Rights Agreement.....................................................................1
2C. Closing...........................................................................................1
3. CONDITIONS OF CLOSING..................................................................................2
3A. Registration Rights Agreement.....................................................................2
3B. Articles of Incorporation and By-laws.............................................................2
3C. Purchase Permitted by Applicable Laws.............................................................2
3D. Compliance with Securities Laws...................................................................3
3E. Proceedings.......................................................................................3
3F. Material Changes..................................................................................3
4. SCHEDULED PAYMENTS AND PREPAYMENTS OF THE CONVERTIBLE NOTE.............................................3
4A. Prepayments in General............................................................................3
4B. Mandatory Payments of the Convertible Note........................................................3
4C. Optional Prepayments of the Convertible Note......................................................3
4D. Notice of Optional Prepayments....................................................................3
5. AFFIRMATIVE COVENANTS..................................................................................4
5A. Use of Proceeds...................................................................................4
5B. Additional Financing..............................................................................4
5C. Prior Convertible Note............................................................................4
5D. Books and Records; Inspection of Property.........................................................4
5E. Stock to be Reserved..............................................................................4
5F. Corporate Existence; Maintenance of Properties....................................................5
5G. Further Assurances................................................................................5
6. EVENTS OF DEFAULT......................................................................................5
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................6
7A. Organization Qualification and Xxxxxxxxx..........................................................0
0X. Xxxxxxx Xxxxx and Related Matters.................................................................6
7C. Offering of the Convertible Note..................................................................7
7D. Broker's or Finder's Commissions..................................................................7
8. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.........................................................7
9. CONVERSION OF THE CONVERTIBLE NOTE.....................................................................7
9A. Conversion Price..................................................................................7
-i-
9B. Fractional Shares; Accrued Interest; Partial Conversion...........................................8
9C. Adjustment of Price and Adjustment of Number of Shares of Common Stock Issuable upon Conversion...8
9D. Stock to be Reserved..............................................................................9
9E. Listing of Common Stock..........................................................................10
9F. Closing of Books.................................................................................10
10.DEFINITIONS...........................................................................................10
11.MISCELLANEOUS.........................................................................................11
11A. Provisions Applicable if the Convertible Note is Sold............................................11
11B. Restrictive Legends..............................................................................11
11C. Persons Deemed Owners............................................................................11
11D. Successors and Assigns...........................................................................11
10E. Notices..........................................................................................12
11F. Descriptive Headings.............................................................................12
11G. Governing Law; Consent to Jurisdiction...........................................................12
11H. Entire Agreement.................................................................................12
11I. Severability.....................................................................................13
11J. Amendments.......................................................................................13
11K. Payment Date.....................................................................................13
11L. Counterparts.....................................................................................13
11M. Delivery by Facsimile............................................................................13
11N. Dispute Resolution...............................................................................13
EXHIBITS
Exhibit A Form of Convertible Note
Exhibit B Form of Registration Rights Agreement
-ii-
C3D INC.
PURCHASE AGREEMENT
----------------
Dated as of
December 24, 1999
----------------
To the Investor:
The undersigned, C3D INC., a Florida corporation (the "Company"), and
the investor listed on the signature page hereto (the "Investor"), hereby agree
as follows:
1. AUTHORIZATION OF ISSUE OF THE CONVERTIBLE NOTE
The Company will authorize the issuance, sale and delivery of its
8.0% Series C Convertible Note (the "Convertible Note") in the principal amount
of $1,600,000 and convertible into that number of shares of Common Stock of the
Company, par value $.001 per share (the "Common Stock"), as set forth in Section
8 hereof, to mature on October 31, 2001 (the "Maturity Date") and to bear
interest on the unpaid balances thereof from the date of the Convertible Note at
the rate of 8.0% per annum payable in arrears in shares of Common Stock until
the principal thereof shall become due and payable. Such Convertible Note shall
be substantially in the form of Exhibit "A" attached hereto.
2. PURCHASE AND SALE OF THE CONVERTIBLE NOTE
2A. Purchase and Sale. The Company hereby agrees to sell to the
Investor and, subject to the terms and conditions herein set forth, the Investor
agrees to purchase from the Company, the Convertible Note. The purchase price of
the Convertible Note purchased and sold hereunder shall be 100% of the principal
amount thereof.
2B. Registration Rights Agreement. The Convertible Note shall be
issued pursuant to the terms and conditions of that certain Registration Rights
Agreement, of even date herewith, by and between the Company and the Investor
(the "Registration Rights Agreement") under which the Investor has been granted
certain rights with respect to the registration of Common Stock.
2C. Closing. The purchase and delivery of the Convertible Note shall
take place at a closing (the "Closing") at the offices of Blank Rome Xxxxxxx &
XxXxxxxx LLP, at 10:00 a.m., local time, on December 24, 1999 (or at such other
time and place or on such other Business Day thereafter as the parties hereto
shall agree) (herein called the "Closing Date"). On or before December 22, 1999,
the Investor shall deliver by wire transfer a portion of the purchase price
totaling $500,000 to the Company pursuant to the wire instructions set forth in
the following sentence. On the Closing Date, the Company will deliver the
Convertible Note payable to or registered in the name of the Investor and/or the
Investor=s nominee or other designee specified on the signature page hereof,
against receipt of the remaining $1,100,000 of the purchase price therefor by
wire transfer to the Company c/o Blank Rome Xxxxxxx & XxXxxxxx LLP, Commerce
Bank New Jersey, Attention: CBPA, Account Number 00000000, ABA Routing Number
000000000. If at the Closing, the Company shall, in breach of this Agreement,
fail to tender to the Investor the Convertible Note or if any of the conditions
specified in Section 3 hereof shall not have been satisfied or waived by the
Investor, the Investor shall, at its election, be relieved of all further
obligations under this Agreement without thereby waiving any other rights it may
have by reason of such failure or such non-fulfillment. Notwithstanding anything
to the contrary, the obligation of the Company to deliver the Convertible Note
to the Investor at the Closing shall be conditioned on the concurrent receipt by
the Company of the purchase price of the Convertible Note from the Investor.
3. CONDITIONS OF CLOSING
The Investor's obligation to purchase and pay for the Convertible
Note to be purchased by it hereunder is subject to the satisfaction, on or
before the Closing Date, of the following conditions:
3A. Registration Rights Agreement. The Investor shall have received
a fully executed counterpart of the Registration Rights Agreement, substantially
in the form of Exhibit "B" attached hereto, and such Registration Rights
Agreement shall be in full force and effect and no term or condition thereof
shall have been amended, waived or modified.
3B. Articles of Incorporation and By-laws. The Investor shall have
received a certificate, dated the Closing Date, of the Secretary of the Company
attaching (i) true and complete copies of the Articles of Incorporation of the
Company as filed with the appropriate state officials of its jurisdiction of
incorporation with all amendments thereto, (ii) true and complete copies of the
By-laws of the Company in effect as of such date, (iii) certificates of good
standing of the appropriate officials of the jurisdiction of incorporation of
the Company, and (iv) resolutions of the Board of Directors of the Company
authorizing (a) the execution, delivery and performance of this Agreement, (b)
the authorization, issuance and delivery of the Convertible Note and (c) the
reservation for issuance of a sufficient number of shares of Common Stock into
which the Convertible Note may be converted to permit such conversion.
3C. Purchase Permitted by Applicable Laws. The purchase of and
payment for the Convertible Note shall not be prohibited by any applicable law
or governmental regulation (including, without limitation, Regulations G, T and
X of the Board of Governors of the Federal Reserve System) and shall not subject
the Investor to any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation.
-2-
3D. Compliance with Securities Laws. The offering and sale of the
Convertible Note under this Agreement shall have complied with all applicable
requirements of federal and state securities laws.
3E. Proceedings. All required corporate and other proceedings taken
or required to be taken in connection with the transactions contemplated hereby
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Investor and its counsel.
3F. Material Changes. Since October 15, 1999, there shall not have
been any changes in the business of the Company which could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect,
nor shall there have been any development or discovery or any material
contingency or other liability which could have such effect.
4. SCHEDULED PAYMENTS AND PREPAYMENTS OF THE CONVERTIBLE NOTE.
4A. Prepayments in General. The Convertible Note shall be subject to
prepayment only under the circumstances set forth in this Section 4.
4B. Mandatory Payments of the Convertible Note. On the Maturity
Date, the principal amount of the Convertible Note outstanding, together with
all accrued and unpaid interest thereon to such date, shall become due and
payable and shall be paid by the Company to the Investor.
4C. Optional Prepayments of the Convertible Note. Subject to the
rights of the holder of the Convertible Note to convert such Convertible Note
pursuant to the provisions thereof and of Section 9 hereof, the Convertible Note
shall be subject to prepayment at the Company's option, in whole or in part, at
any time.
4D. Notice of Optional Prepayments. The Company shall give the
holder of the Convertible Note written notice (the "Prepayment Notice") of the
prepayment pursuant to subsection4C specifying the prepayment date (the
"Prepayment Date"), which date shall be a date occurring not earlier than 60
days nor more than 180 days after the date on which the Prepayment Notice is
delivered, the amount of the Convertible Note to be prepaid on such date and
that such prepayment is to be made pursuant to subsection 4C. Notice of
prepayment having been given as aforesaid, the prepayment amount due in respect
of the Convertible Note specified in such notice shall become due and payable on
such Prepayment Date unless (i) the holder of such Convertible Note shall have
converted the Convertible Note prior to such Prepayment Date pursuant to the
terms thereof, or (ii) unless the filing by the Company of a registration
statement under the Securities Act relating to the Common Stock obtainable upon
conversion of the Convertible Note shall have been requested by a holder thereof
(either before or after receipt of such notice) pursuant to the Registration
Rights Agreement, in which case the prepayment shall be effected 30 days after
the declaration of effectiveness of such registration statement by the United
States Securities and Exchange Commission.
-3-
5. AFFIRMATIVE COVENANTS
All covenants contained herein shall be given independent effect so that
if a particular action or condition is not permitted by any such covenant, the
fact that such action or condition would be permitted by an exception to, or
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or condition exists. The
provisions of this Section 5 are for the benefit of the Investor so long as it
holds the Convertible Note and for the benefit of each other successor holder of
the Convertible Note.
5A. Use of Proceeds. The proceeds of the sale of the Convertible
Note shall be used to fund (i) capital expenditures, payroll and working capital
requirements for the completion of prototype development and the commercial
release of the Clear Card and mass storage product(s), (ii) costs associated
with the creation of new facilities in the United States and the relocation of
existing facilities and certain key scientists to the United States, and (iii)
expenditures for maintaining existing patents and for filing new patent
applications.
5B. Additional Financing. The Company covenants that it will not
accept any additional financing from either Moorwood Investment Limited, a
British Virgin Islands corporation ("Moorwood"), or Wilbro Nominees Limited, an
English corporation ("Wilbro"), or any affiliated parties thereof, on terms and
conditions less favorable to the Company than those contained herein and in the
Related Agreements.
5C. Prior Convertible Note. The Company covenants that prior to May
11, 2000, to the extent that sufficient financing is available, it will repay
that certain 8.0% Series C Convertible Note due October 31, 2001 in principal
amount of $500,000 (the "Prior Convertible Note") issued to Wilbro pursuant to
that certain Purchase Agreement, dated as of November 11, 1999, by and between
the Company and Wilbro; provided that, the Company shall repay the Prior
Convertible Note in the event that the Investor provides financing necessary to
make such prepayment on terms no less favorable to the Company than those
contained herein and in the Related Agreements.
5D. Books and Records; Inspection of Property. The Company will keep
proper books of record and account in which full, true and correct entries in
conformity in all material respects with GAAP shall be made of all dealings and
transactions in relation to their business and activities. The Company will,
upon reasonable advance notice, permit any Person representing the holder of the
Convertible Note and designated in writing by such holder, at such holder=s
expense, to visit and inspect any of the properties of the Company during normal
business hours in a manner which does not unduly interrupt the normal course of
business, to examine the corporate, financial and operating records of the
Company and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such corporations with the directors,
officers and independent accountants of the Company, all at such reasonable
times and as often as the holders may reasonably request.
5E. Stock to be Reserved The Company covenants that all shares of
Common Stock that may be issued upon conversion of the Convertible Note will,
-4-
upon issuance, be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof. The Company
further covenants that during the period within which the Convertible Note may
be converted, the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock to permit the conversion of the
Convertible Note.
5F. Corporate Existence; Maintenance of Properties. The Company (i)
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises, (ii) will cause
its properties and the properties to be maintained and kept in good condition,
repair and working order (ordinary wear and tear excepted) and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereto, and (iii) will qualify and remain qualified to conduct business in each
jurisdiction where the nature of the business of or ownership of property by the
Company may require such qualification and where the failure to be so qualified
would have a Material Adverse Effect.
5G. Further Assurances The Company shall cooperate with the Investor
and execute such further instruments and documents as the Investor shall
reasonably request to carry out to the satisfaction of the Investor the
transactions contemplated by this Agreement.
6. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing for any
reason whatsoever (and whether such occurrence shall be voluntary or involuntary
or come about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any principal or
interest of or premiums (if any) on the Convertible Note when the same shall
become due, either by the terms thereof or otherwise as herein provided and such
default shall continue unremedied for ten (10) or more days after notice by the
Investor;
(ii) the Company defaults, in the performance or observance of
any of the agreements contained in Section 5 or in the performance or observance
of any other agreement, term or condition contained herein or in the Related
Agreements and any such default shall not have been remedied within thirty (30)
days (or if such default is not reasonably capable of cure within thirty (30)
days, the Company will have taken steps reasonably calculated to cure such
default within such thirty (30) day period) after such default shall first
become known to any officer of the Company;
(iii) any decree or order for relief in respect of the Company
is entered under any Bankruptcy Law of any jurisdiction; or the Company
petitions or applies to any tribunal for, or consents to, the appointment of, or
taking possession by, a trustee, receiver, custodian, liquidator or similar
official of the Company, of any substantial part of the assets of the Company,
or commences a voluntary case under the Bankruptcy Law of the United States or
any proceedings relating to the Company under the Bankruptcy Law of any other
jurisdiction;
then upon the occurrence and during the continuation of (a) any Event of Default
described in clause (i) above with respect to the Convertible Note, the holder
-5-
of the Convertible Note may, by written notice to the Company, declare the
Convertible Note to be, and the same shall thereupon be and become, forthwith
due and payable, together with the interest accrued thereon, without
presentment, further demand, protest or other requirements of any kind, all of
which are hereby expressly waived by the Company; (b) any Event of Default
described in clause (ii) above with respect to the Convertible Note, the holder
of the unpaid principal amount of the Convertible Note may, at its option and in
addition to any right, power or remedy permitted by law or equity, by notice in
writing to the Company, declare the Convertible Note to be, and the same shall
thereupon be and become, forthwith due and payable, together with interest
accrued thereon; and (c) any Event of Default described in clause (iii) above
with respect the Convertible Note, the unpaid principal amount of and accrued
interest on the Convertible Note outstanding shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that:
7A. Organization Qualification and Authority The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and is duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction in which the character of
its properties or the nature of its business makes such qualification necessary,
except where the failure to so qualify would not have a Material Adverse Effect.
The Company has the corporate power to own its properties and to carry on its
business as now being conducted. The Company has all requisite corporate power
and authority to enter into this Agreement, to issue and sell the Convertible
Note hereunder, and to issue the shares of Common Stock upon conversion of the
Convertible Note and has the requisite corporate power and authority to carry
out the transactions contemplated hereby and thereby to be performed by it, and
the execution, delivery and performance hereof and thereof have been duly
authorized by all necessary corporate action. This Agreement constitutes, and
each other agreement or instrument (including the Convertible Note) executed and
delivered by the Company pursuant hereto or thereto or in connection herewith or
therewith will constitute, legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws or by the
application of principles of equity.
7B. Capital Stock and Related Matters. The authorized capital stock
of the Company consists of 50,000,000 shares of Common Stock. As of December 24,
1999, not more than 15,000,000 shares of Common Stock will be issued and
outstanding. Except for (i) the options granted to General Itzhak Xxxxxx and
Xxxxxxx Xxxxxxxx, each directors of the Company, to purchase 100,000 shares and
75,000 shares, respectively, of Common Stock (the "Options") pursuant to a
resolution of the Compensation Committee of the Board of Directors dated June
17, 1999, and (ii) the warrants to purchase 100,000 shares of Common Stock (the
"Warrants") granted to Moorwood pursuant to that certain Letter Agreement, dated
as of November 11, 1999, by and between the Company and Moorwood (the "Letter
Agreement") (the exercise of such Warrants is subject to certain conditions set
forth therein), there are no outstanding subscriptions, options, warrants,
-6-
convertible securities in regard to the authorized but unissued Common Stock.
All issued and outstanding shares of Common Stock shall have been duly and
validly issued, fully paid and nonassessable.
7C. Offering of the Convertible Note The offer, sale and issuance of
the Convertible Note pursuant to this Agreement does not require registration of
such security under the Securities Act or registration or qualification under
any applicable state "blue sky" or securities laws (or if so required, has been
so registered or qualified).
7D. Broker's or Finder's Commissions. No broker=s or finder=s fee or
commission will be payable by the Company with respect to the issuance and sale
of the Convertible Note or the transactions contemplated hereby.
8. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants that: (i) it is acquiring the
Convertible Note to be purchased by it hereunder for its own account for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof; provided, however, that nothing herein contained shall
prevent the Investor, upon written notice to the Company explaining in
reasonable detail the transfer or proposed transfer, from selling or
transferring the Convertible Note in any transaction that, in the opinion of its
special counsel, is exempt from the registration provisions of the Securities
Act; (ii) it has full power and authority to enter into and perform its
obligations under this Agreement and that this Agreement has been duly
authorized, executed and delivered by a Person authorized to do so; (iii) it has
carefully reviewed the representations and warranties concerning the Company,
its business and its personnel; the Company has made available to it any and all
written information which it has requested and has answered to such Investor=s
satisfaction all inquiries made by it; (iv) it has adequate net worth and means
of providing for its current needs and personal contingencies to sustain a
complete loss of its investment in the Company; (v) its overall commitment to
investments which are not readily marketable is not disproportionate to its net
worth; (vi) its investment in the Convertible Note will not cause such overall
commitment to become excessive; (vii) it has not relied upon any financial
projections received from the Company in connection with the transactions
contemplated by this Agreement; (viii) it is an Accredited Investor within the
definition set forth in Rule 501(a) promulgated under the Securities Act; (ix)
it is not making this investment as a result of any form of general solicitation
or general advertising; (x) this Agreement constitutes the valid and binding
obligation of the Investor enforceable in accordance with its terms; and (xi)
the execution of and performance of the transactions contemplated by this
Agreement and compliance with its provisions by it will not violate any
provision of law applicable to the Investor and will not conflict with or result
in any breach of any of the terms, conditions or provisions of, or constitute a
default under any agreement or other instrument to which such Investor is a
party or by which he is bound, or any decree, judgment, order, statute, rule or
regulation application to it.
9. CONVERSION OF THE CONVERTIBLE NOTE
9A. Conversion Price (i) Subject to and upon compliance with the
provisions hereof, the holder of the Convertible Note shall have the right, at
-7-
such holder's option, at any time or, in the event that the Convertible Note has
been called for prepayment pursuant to Section 4, then until, but (unless the
Company shall default in the payment due upon the Prepayment Date) not after,
the close of business on the last Business Day before the Prepayment Date, to
convert all or any part of the principal amount of such Convertible Note into
Common Stock at the price of the greater of (A) the average Market Price of the
Common Stock as posted on the NASD OTC Bulletin Board over a period of twenty
(20) trading days preceding any applicable date of conversion (the "Conversion
Date"), or (B) Fifty Dollars ($50) (such price being referred to herein as the
"Initial Conversion Price"), provided, that in case an adjustment of such price
has taken place pursuant to the further provisions of this Section 9, then at
the price as last adjusted and in effect at the date such Convertible Note is
surrendered for conversion (such Conversion Price or (if any adjustment has been
made pursuant to this Section 9) such price as last adjusted, as the case may
be, being referred to herein as the "Conversion Price").
(ii) In order to exercise such conversion right the holder shall
surrender (in person or by mail) the Convertible Note to the Company at its
office designated in subsection 11 (or such other office or agency as the
Company may designate by notice in writing to the holder of the Convertible
Note), together with a written notice that the holder elects to convert the
Convertible Note, or a specified principal amount thereof, in accordance with
the provisions of this Section 9. Such notice shall also state the name or names
(with addresses) in which the certificate or certificates for Common Stock shall
be issued. To the extent permitted by law, such conversion shall be deemed to
have been effected and the Conversion Price shall be determined as of the close
of business on the date by which the events set forth in this subsection 9A(ii)
have occurred. The Convertible Note surrendered for conversion shall be
accompanied by the necessary instruments of transfer thereof.
9B. Fractional Shares; Accrued Interest; Partial Conversion. No
fractional shares shall be issued upon conversion of the Convertible Note. At
the time of the conversion, the Company shall pay in cash all interest accrued
and unpaid on the principal amount of the Convertible Note or specified portion
thereof surrendered for conversion to the date upon which the conversion is
deemed to take place as provided in subsection 9A.
9C. Adjustment of Price and Adjustment of Number of Shares of Common
Stock Issuable upon Conversion
(i) If the number of shares of Common Stock outstanding at any
time hereafter is increased by a stock dividend payable in shares of Common
Stock or by a subdivision or split-up of shares of Common Stock, then, following
the record date fixed for the determination of holders of Common Stock entitled
to receive such stock dividend, subdivision or split-up, the Conversion Price
shall be appropriately decreased so that the number of shares of Common Stock
issuable on conversion of the Convertible Note shall be increased in proportion
to such increase in outstanding shares.
(ii) If at any time hereafter the number of shares of Common
Stock outstanding is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date for such combination, the
-8-
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable on conversion of the Convertible Note shall be
decreased in proportion to such decrease in outstanding shares.
(iii) If at any time hereafter any reorganization,
reclassification of the capital stock of the Corporation (other than a change in
par value or from par value to no par value or from no par value to par value or
as a result of a stock dividend or subdivision, split-up or combination
of-shares), consolidation or merger (including a merger in which the Company is
the surviving entity), then the Convertible Note shall (in lieu of being
convertible for shares of Common Stock) after such reorganization,
reclassification, consolidation or merger be exercisable into the kind and
number of shares of stock or other securities or property (including cash) of
the Company or of the corporation resulting from such consolidation or surviving
such merger to which the holder of the number of shares of Common Stock
deliverable (immediately prior to the time of such reorganization,
reclassification, consolidation or merger) upon conversion of the Convertible
Note would have been entitled upon such reorganization, reclassification,
consolidation or merger. The provisions of this subsection shall similarly apply
to successive reorganizations, reclassifications and other transactions
contemplated above.
(iv) All calculations under this subsection 9C shall be made to
the nearest cent ($.01) or to the nearest one-tenth of a share, as the case may
be.
(v) In any case in which the provisions of this subsection 9C
shall require that an adjustment of the Conversion Price shall become effective
immediately after a record date for an event, the Company may, until the
occurrence of such event, defer issuing to the holder of the Convertible Note
converted after such record date and before the occurrence of such event the
additional shares of capital stock issuable upon such conversion by reason of
the adjustment required by such event over and above the shares of capital stock
issuable upon conversion before giving effect to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder=s right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(vi) (a) If any event occurs of the type contemplated by the
provisions of this subsection 9C but not expressly provided for by such
provisions, the Board of Directors of the Company will make appropriate
adjustments to the terms and conditions of the Convertible Note as may be
necessary fully to carry out the adjustments contemplated by this subsection 8D.
(b) The Company will not, by amendment of its Articles
of Incorporation or Bylaws or through any reorganization, transfer of assets,
reclassification, merger, dissolution, issue or sale of securities or otherwise,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by the Company hereunder but will at all times in good
faith assist in the carrying out of all the provisions hereof and in the taking
of all such actions as may be necessary or appropriate in order to protect the
rights of the holder of the Convertible Note against impairment.
9D. Stock to be Reserved The Company will at all times reserve, free
from any preemptive rights, and keep available out of its authorized Common
-9-
Stock, solely for the purpose of issue upon the exercise of Convertible Note as
herein provided, such number of shares of Common Stock as shall then be issuable
upon the conversion of the Convertible Note. The Company covenants and agrees
that all shares of Common Stock which shall be so issuable will, upon issuance,
be duly authorized and issued, fully paid and nonassessable and, where required
pursuant to Subsection 9A(ii), registered under the Securities Act.
9E. Listing of Common Stock. If any shares of Common Stock
required to be reserved for purposes of conversion of the Convertible Note
hereunder require listing on any securities exchange before such shares may be
issued upon exercise, the Company will cause such Common Stock to be duly listed
on such securities exchange immediately prior to the issuance of such shares.
9F. Closing of Books The Company will not close its books
against the issuance or transfer of any shares of Common Stock issuable upon
conversion of the Convertible Note.
10. DEFINITIONS.
For the purpose of this Agreement, and in addition to terms defined
elsewhere in this Agreement, the following terms shall have the following
meanings. In addition, all terms of an accounting character not specifically
defined herein shall have the meanings assigned thereto by accounting principles
generally accepted in the United States of America.
"Bankruptcy Law" shall mean any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect.
"Business Day" shall mean any day which is not a Saturday, Sunday or
day on which banks are authorized by law to close in the State of New York.
"Default" shall mean any of the events specified in Section 6 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any of these conditions, event or act has been satisfied.
"Events of Default" shall mean any of the events specified in Section
6, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act.
"Market Price" shall mean the average of the high and low bid prices
for the Common Stock on a given trading day as reported on the NASD OTC Bulletin
Board.
"Material Adverse Effect" shall mean (i) a material adverse effect on
the business, condition (financial or other), assets, properties, rights,
operations or prospects of the Company or (ii) any effect which could materially
adversely affect the ability of the Company to perform its obligations under
this Agreement.
-10-
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Related Agreements" shall mean the Convertible Note and the
Registration Rights Agreement.
"Securities Act" shall mean the United States Securities Act of 1933,
as amended.
11. MISCELLANEOUS
11A. Provisions Applicable if the Convertible Note is Sold. The
parties acknowledge that, subject to compliance with applicable securities laws,
the Investor shall be free to transfer the Convertible Note without restriction.
In the event that the Investor should sell or otherwise transfer the Convertible
Note or any part thereof to any Person other than the Company, and such holder
shall have designated in writing the address to which communications with
respect to the Convertible Note shall be mailed, all notices, certificates,
requests, statements and other documents required to be delivered to the
Investor by any provision hereof by reason of the holding of the transferred
Convertible Note shall also be delivered to such holder at such address.
11B. Restrictive Legends The Convertible Note shall bear the
following (or substantially equivalent) legend on the face or reverse side
thereof:
"THE CONVERTIBLE NOTE REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS, AND THIS CONVERTIBLE NOTE MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND SUCH LAWS AND THE RESPECTIVE
RULES AND REGULATIONS THEREUNDER."
In addition, the shares of Common Stock issuable upon conversion of the
Convertible Note shall bear at the time of issuance a legend in substantially
the form set forth above and any legend required by the state securities or
ABlue Sky@ laws of any state in which a registered holder thereof is resident,
unless such shares have been registered under the Securities Act.
11C. Persons Deemed Owners Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name the
Convertible Note is registered as the owner and holder of such Convertible Note
for the purpose of receiving payment of principal of (and premium, if any) and
interest on such security and for all other purposes whatsoever, whether or not
such Convertible Note shall be overdue, and the Company shall not be affected by
notice to the contrary.
11D. Successors and Assigns Except as otherwise provided herein,
all covenants and agreements in this Agreement contained by or on behalf of the
-11-
parties hereto shall bind and inure to the benefit of the respective successors,
transferees and assigns of the parties hereto whether so expressed or not.
11E. Notices. All communications provided for hereunder shall be
sent by first class mail, overnight courier or by fax with hard copy by first
class mail or overnight courier and, if to the Investor, addressed to it c/o
Xxxxx Xxxxxx at World Trade Center, 10, route de l'Aeroport, X.X. Xxx 000, 0000
Xxxxxx 00, Xxxxxxxxxxx, telecopy number (00) 000 000 0000; if to the Company,
addressed to it at 000 Xxxx 00xx Xxxxxx, Xxxxx 0X, Xxx Xxxx, Xxx Xxxx 00000,
telecopy number (000) 000-0000, with a copy (which shall not constitute notice)
to Xxxx X. Xxxxxx, Esquire, at Blank Rome Xxxxxxx & XxXxxxxx LLP, Xxx Xxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, telecopy number (000) 000-0000; or to
such other address with respect to any party as such party shall notify the
other in writing; provided, however, that any such communication to the Company
may also, at the option of the Investor, be either delivered to the Company at
its address set forth above or to any executive officer of the Company.
11F. Descriptive Headings. The descriptive headings of the several
Sections and subsections of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement.
11G. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS
BEING DELIVERED AND IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE LAW OF SUCH STATE WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW OR CONFLICTS OF LAW PRINCIPLES THEREOF. THIS AGREEMENT IS
EFFECTIVE ONLY WHEN DELIVERED AND ENTERED INTO BY THE INVESTOR IN THE STATE OF
NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY
AT ITS ADDRESS SET FORTH IN SUBSECTION 10E, SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE INVESTOR OR ANY HOLDER OF A SECURITY TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
11H. Entire Agreement This Agreement and the other writings
referred to herein or delivered pursuant hereto contain the entire agreement
-12-
among the parties with respect to the subject matter hereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto.
11I. Severability Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11J. Amendments. This Agreement may not be changed orally, but only
by an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
11K. Payment Date Notwithstanding any provision of this Agreement
to the contrary, any payment on account of principal of (and premium, if any) or
interest on the Convertible Note which is due on a date which is not a Business
Day shall be paid on the next succeeding Business Day, and the amount of
interest included in any such payment shall be computed to the date on which
such payment is actually made.
11L. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
11M. Delivery by Facsimile. This Agreement, the Related Agreements,
and each other agreement or instrument entered into in connection herewith or
therewith or contemplated hereby or thereby, and any amendments hereto or
thereto, to the extent signed and delivered by means of a facsimile machine,
shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. At the request
of any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall reexecute original forms thereof and deliver them to all
other parties. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of a facsimile machine as a defense to the formation or enforceability of a
contract and each such party forever waives any such defense.
11N. Dispute Resolution. All claims, demands, disputes,
controversies, differences, or misunderstandings between the parties arising out
of, by virtue of, or in connection with, this Agreement shall first be
negotiated, in good faith, by the parties, and, if an acceptable resolution does
not result, shall then be submitted to, determined and finally settled by
arbitration before the International Chamber of Commerce (the "ICC"), in
accordance with the provisions of this Section 11N. The parties agree that the
rules of the ICC then obtaining for commercial arbitration shall govern any
arbitration under this Agreement, except that to the extent there is any
conflict between this Section 11N and such rules, this Section shall govern. The
panel shall be composed of three (3) arbitrators, with one (1) arbitrator being
appointed by each party. The two arbitrators so appointed shall appoint the
third. In the event that the arbitrators can not, after good faith discussions,
-13-
agree upon a third arbitrator, the third arbitrator shall be appointed by the
ICC. The decision and award of a majority of the arbitrators shall be the
decision and award of the panel. Such decision and award shall be final and
binding by the parties. All hearings and proceedings in the arbitration shall
take place in New York City, New York and shall be governed by the substantive
law of the State of New York. This agreement to arbitrate may be specifically
enforced by any party. At any time before a decision of the arbitration panel
has been rendered, the parties may resolve the matter before the panel by
settlement. Each party shall bear the fees of such party's witnesses and such
party's own counsel. The other fees and expenses of the arbitration shall be
borne in accordance with the arbitration award. In the absence of any award or
designation within the award, such costs and fees shall be borne equally by the
parties.
* * *
-14-
IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to
be executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
C3D INC.,
a Florida corporation
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx
President and Chief Executive Officer
WINNBURN ADVISORY,
a Nevis corporation
By: /s/ Xxxxx Hamouth
-------------------------------------
Name: Xxxxx Hamouth
Title:
[SIGNATURE PAGE TO SERIES C CONVERTIBLE NOTE PURCHASE AGREEMENT
DATED DECEMBER 24, 1999]
-15-
