SECURITIES PURCHASE AGREEMENT
SECURITIES
PURCHASE AGREEMENT (this “Agreement”),
dated
as of October 10, 2005, between Cenuco, Inc., a corporation organized under
the
laws of the State of Delaware (the “Company”),
and
each of the purchasers (individually, a “Purchaser”
and
collectively the “Purchasers”)
set
forth on the execution pages hereof (the “Execution
Pages”).
W
H E R E A
S:
A. The
Company desires to sell, the Purchasers desire to purchase, upon the terms
and
conditions stated in this Agreement, 6,578,947 units (the “Units”),
each
Unit consisting of (i) one ten thousandth of a share of the Company’s Series B
Junior Participating Convertible Preferred Stock, par value $0.001 per share
(the “Preferred
Shares”),
convertible into shares of the Company’s common stock, par value $0.001 per
share (the “Common
Stock”),
and
(ii) a warrant, in the form attached hereto as Exhibit
B
(the
“Warrants”),
to
acquire 0.3 shares of Common Stock. The rights, preferences and privileges
of
the Preferred Shares, including the terms upon which such Preferred Shares
are
convertible into shares of Common Stock, are set forth in the form of
Certificate of Designations, Preferences and Rights attached hereto as
Exhibit
A
(the
“Certificate
of Designation”).
The
shares of Common Stock issuable upon conversion of the Preferred Shares or
otherwise pursuant to the Certificate of Designation are referred to herein
as
the “Conversion
Shares”
and
the
shares of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants are referred to herein as the “Warrant
Shares.”
The
Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares
are
collectively referred to herein as the “Securities”
and
each of them may individually be referred to herein as a “Security.”
B. 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 of 1933, as amended (the “Securities
Act”)
and the
rules and regulations promulgated thereunder, and applicable state securities
laws.
NOW,
THEREFORE, the Company and the Purchasers hereby agree as follows:
1.
PURCHASE
AND SALE OF UNITS.
(a) Purchase
of Units.
On the
Closing Date (as defined below), subject to the satisfaction (or waiver) of
the
conditions set forth in Section 6 and Section 7 below, the Company shall issue
and sell to each Purchaser, and each Purchaser shall purchase from the Company,
such number of Units as is set forth on such Purchaser’s Execution Page attached
hereto. The purchase price (the “Purchase
Price”)
per
Unit shall be equal to Three Dollars and Eighty Cents ($3.80). Each Purchaser’s
obligation to purchase Units hereunder is distinct and separate from each other
Purchaser’s obligation to purchase Units and no Purchaser shall be required to
purchase hereunder more than the number of Units set forth on such Purchaser’s
Execution Page hereto notwithstanding any failure by any other Purchaser to
purchase Units hereunder nor shall any Purchaser have any liability by reason
of
any such failure by any other Purchaser.
(b) Form
of Payment.
On the
Closing Date, each Purchaser shall pay the aggregate Purchase Price for the
Units being purchased by such Purchaser on the Closing Date by wire transfer
to
the Company, in accordance with the Company’s written wiring instructions,
against delivery of duly executed certificates representing the Preferred Shares
and duly executed Warrants being purchased by such Purchaser and the Company
shall deliver such certificates and Warrants against delivery of such aggregate
Purchase Price.
(c) Closing
Date.
The
issuance and sale of the Units to each of the Purchasers pursuant to this
Agreement (the “Closing”)
shall
be at the offices of Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, on the date that
the closing occurs in connection with the Preferred Stock Purchase Agreement
and
the Debenture Purchase Agreement (as such terms are defined in Section 6 hereof
provided
that
all
of the conditions to Closing set forth in Section 6 and Section 7 shall have
been so satisfied or waived (other than those conditions that are intended
to be
satisfied at the Closing), or at such other place, time and day as shall be
agreed upon by the Company and the Purchasers (the “Closing
Date”).
2.
PURCHASERS’
REPRESENTATIONS AND WARRANTIES
Each
Purchaser severally, but not jointly, represents and warrants to the Company
as
follows:
(a) Purchase
for Own Account, etc.
Such
Purchaser is purchasing the Units for such Purchaser’s own account for
investment purposes only and not with a present view towards the public sale
or
distribution thereof, except pursuant to sales that are exempt from the
registration requirements of the Securities Act and/or sales registered under
the Securities Act. Such Purchaser understands that Purchaser 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 the resale of any such
Securities other than as contemplated by the Registration Rights Agreement.
Notwithstanding anything in this Section 2(a) to the contrary, by making the
representations herein, the Purchaser 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 the registration requirements under the
Securities Act.
(b) Accredited
Investor Status.
Such
Purchaser is an “Accredited
Investor”
as
that
term is defined in Rule 501(a) of Regulation D as promulgated by the United
States Securities and Exchange Commission (“SEC”)
under
the Securities Act.
(c) Reliance
on Exemptions.
Such
Purchaser understands that the Units are being offered and sold to such
Purchaser in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine
the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Securities.
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(d) Information.
Such
Purchaser and its counsel, if any, have been furnished all materials relating
to
the business, finances and operations of the Company and materials relating
to
the offer and sale of the Securities that have been specifically requested
by
such Purchaser or its counsel. Such Purchaser and its counsel have been afforded
the opportunity to ask questions of the Company and have received what such
Purchaser believes to be satisfactory answers to any such inquiries. Neither
such inquiries nor any other investigation conducted by such Purchaser or its
counsel or any of its representatives shall modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties
contained in Section 3 below. Such Purchaser understands that such Purchaser’s
investment in the Securities involves a high degree of risk.
(e) Governmental
Review.
Such
Purchaser 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.
(f) Transfer
or Resale.
Such
Purchaser understands that (i) except as provided in the Registration Rights
Agreement, the sale or resale of the Securities have not been and are not being
registered under the Securities Act or any state securities laws, and the
Securities may not be transferred unless (a) the resale of the Securities has
been registered thereunder; or (b) such Purchaser shall have delivered to the
Company an opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; or (c) sold under and in
compliance with Rule 144 promulgated under the Securities Act (or a successor
rule) (“Rule
144”);
or
(d) sold or transferred to an affiliate of such Purchaser who agrees to sell
or
otherwise transfer the Securities only in accordance with the provisions of
this
Section 2(f) and who is an Accredited Investor; and (ii) neither the Company
nor
any other person or entity is under any obligation to register such Securities
under the Securities Act or any state securities laws (other than pursuant
to
the Registration Rights Agreement). Notwithstanding the foregoing or anything
else contained herein to the contrary, the Securities may be pledged as
collateral in connection with a bona fide margin account or other lending
arrangement, provided such pledge is consistent with applicable laws, rules
and
regulations.
(g) Legends.
Such
Purchaser understands that the certificates for the Preferred Shares, Warrants
and, until such time as the Conversion Shares and Warrant Shares have been
registered under the Securities Act (including registration pursuant to Rule
416
thereunder) as contemplated by the Registration Rights Agreement or otherwise
may be sold by such Purchaser under Rule 144, the certificates for the
Conversion Shares and Warrant Shares may bear a restrictive legend in
substantially the following form:
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The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state of
the
United States or in any other jurisdiction. The securities represented hereby
may not be offered, sold or transferred in the absence of an effective
registration statement for the securities under applicable securities laws
unless offered, sold or transferred pursuant to an available exemption from
the
registration requirements of those laws.
The
Company agrees that it shall, immediately prior to the Registration Statement
(as defined in the Registration Rights Agreement) being declared effective,
deliver to its transfer agent an opinion letter of counsel, opining that at
any
time the Registration Statement is effective, the transfer agent shall issue,
in
connection with the issuance of the Conversion Shares and Warrant Shares,
certificates representing such Conversion Shares and Warrant Shares without
the
restrictive legend above, provided such Conversion Shares and Warrant Shares
are
to be sold pursuant to the prospectus contained in the Registration Statement.
Upon receipt of such opinion, the Company shall cause the transfer agent to
confirm, for the benefit of the holders, that no further opinion of counsel
is
required at the time of transfer in order to issue such shares without such
restrictive legend.
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it
is
stamped, if, unless otherwise required by state securities laws, (a) the sale
of
such Security is registered under the Securities Act (including registration
pursuant to Rule 416 thereunder) as contemplated by the Registration Rights
Agreement; (b) such holder provides the Company with an opinion of counsel,
in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security
may
be made without registration under the Securities Act; or (c) such holder
provides the Company with reasonable assurances that such Security can be sold
under Rule 144. In the event the above legend is removed from any Security
and
thereafter the effectiveness of a registration statement covering such Security
is suspended or the Company determines that a supplement or amendment thereto
is
required by applicable securities laws, then upon reasonable advance written
notice to such Purchaser the Company may require that the above legend be placed
on any such Security that cannot then be sold pursuant to an effective
registration statement or under Rule 144 and such Purchaser shall cooperate
in
the replacement of such legend. Such legend shall thereafter be removed when
such Security may again be sold pursuant to an effective registration statement
or under Rule 144.
(h) Authorization;
Enforcement.
This
Agreement and the Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of such Purchaser and are valid
and
binding agreements of such Purchaser enforceable against such Purchaser in
accordance with their terms.
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(i) Residency.
Such
Purchaser is a resident of or domiciled in the jurisdiction set forth under
such
Purchaser’s name on the Execution Page hereto executed by such
Purchaser.
(j) No
Short Position.
Neither
such Purchaser nor any affiliate of such Purchaser has an open short position
in
the Common Stock.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each Purchaser as follows:
(a) Organization
and Qualification.
The
Company and each of its subsidiaries is a corporation or limited liability
company duly organized and existing in good standing under the laws of the
jurisdiction in which it is organized, and has the requisite corporate or
limited liability company power to own its properties and to carry on its
business as now being conducted. The Company and each of its subsidiaries is
duly qualified as a foreign corporation or foreign limited liability company
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. “Material
Adverse Effect”
means
any material adverse effect on (i) the Securities, (ii) the ability of the
Company to perform its obligations hereunder or under the Certificate of
Designation, the Warrants or the Registration Rights Agreement or (iii) the
business, operations, properties or financial condition of the Company and
its
subsidiaries, taken as a whole.
(b) Authorization;
Enforcement.
(i) The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Warrants and the Registration
Rights Agreement, to issue and sell the Units in accordance with the terms
hereof, to issue the Conversion Shares upon conversion of the Preferred Shares
in accordance with the terms of the Certificate of Designation and to issue
the
Warrant Shares upon exercise of the Warrants in accordance with the terms of
such Warrants; (ii) the execution, delivery and performance of this Agreement,
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 issuance of the Preferred Shares and
Warrants and the issuance and reservation for issuance of the Conversion Shares
and 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, any or committee of the Board of Directors is required, and (iii)
this Agreement constitutes, and, upon execution and delivery by the Company
of
the Warrants and the Registration Rights Agreement, such agreements will
constitute, valid and binding obligations of the Company enforceable against
the
Company in accordance with their terms.
(c) Stockholder
Authorization.
Except
for the approval of (i) the issuance of the Conversion Shares and Warrant Shares
as required by Section 713 of the American Stock Exchange Guide and (ii) an
amendment to the Certificate of Incorporation of the Company increasing the
number of authorized shares of Common Stock, in each case by a majority of
the
votes cast at a duly convened meeting of the stockholders of the Company at
which a quorum is present, neither the execution, delivery or performance by
the
Company of this Agreement, the Warrants or the Registration Rights Agreement
nor
the consummation by it of the transactions contemplated hereby or thereby
(including, without limitation, the issuance of the Preferred Shares or Warrants
or the issuance or reservation for issuance of the Conversion Shares or Warrant
Shares) requires any consent or authorization of the Company’s
stockholders.
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(d) Capitalization.
The
capitalization of the Company as of the date hereof, 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
(other than the Preferred Shares and Warrants) exercisable or exchangeable
for,
or convertible into, any shares of capital stock and the number of shares to
be
reserved for issuance upon conversion of the Preferred Shares and exercise
of
the Warrants is set forth on Schedule
3(d).
All of
such outstanding shares of capital stock have been, or upon issuance in
accordance with the terms of any such warrants, options or preferred stock,
will
be, validly issued, fully paid and non-assessable. No shares of capital stock
of
the Company (including the Preferred Shares, the Conversion Shares and the
Warrant Shares) are subject to preemptive rights or any other similar rights
of
the stockholders of the Company or any liens or encumbrances. Except for the
Securities and as set forth on Schedule
3(d),
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
relating to, or 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 any of its subsidiaries, nor are any such issuances or arrangements
contemplated, 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). Schedule
3(d)
sets
forth all of the Company issued securities or instruments containing
antidilution or similar provisions that will be triggered by, and all of the
resulting adjustments that will be made to such securities and instruments
as a
result of, the issuance of the Securities in accordance with the terms of this
Agreement, the Certificate of Designation or the Warrants. The Company has
furnished to the Purchasers true and correct copies of the Company’s Certificate
of Incorporation as in effect on the date hereof (“Certificate
of Incorporation”),
the
Company’s 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. The Certificate
of
Designation, in the form attached hereto, will be duly filed prior to Closing
with the Secretary of State of the State of Delaware and, upon the issuance
of
the Preferred Shares in accordance with the terms hereof, each Purchaser shall
be entitled to the rights set forth therein.
(e) Issuance
of Shares.
The
Preferred Shares are, or on the Closing Date will be, duly authorized and,
upon
issuance in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, and free from all taxes, liens, claims and
encumbrances and will not be subject to preemptive rights, rights of first
refusal or other similar rights of stockholders of the Company and will not
impose personal liability on the holders thereof. The Conversion Shares and
Warrant Shares are duly authorized and reserved for issuance, and, upon
conversion of the Preferred Shares and exercise of the Warrants in accordance
with the terms thereof, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances and will not be subject
to preemptive rights, rights of first refusal or other similar rights of
stockholders of the Company and will not impose personal liability upon the
holder thereof.
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(f) No
Conflicts.
The
execution, delivery and performance of this Agreement, the Warrants and the
Registration Rights Agreement by the Company, the performance by the Company
of
its obligations under the Certificate of Designation, and the consummation
by
the Company of the transactions contemplated hereby and thereby (including,
without limitation, the issuance and reservation for issuance, as applicable,
of
the Preferred Shares, Warrants, Conversion Shares and Warrant Shares) will
not
(i) result in a violation of the Certificate of Incorporation or By-laws or
(ii)
conflict with, or constitute a default (or an event that with notice or lapse
of
time or both would become a default) under, or give to others any rights of
termination, amendment (including, without limitation, the triggering of any
anti-dilution provisions), acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is
a
party, or result in a violation of any law, rule, regulation, order, judgment
or
decree (including United States federal and state securities laws and
regulations and rules or regulations of any self-regulatory organizations to
which either the Company or its securities are subject) 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 that 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
or
other organizational documents and neither the Company nor any of its
subsidiaries is in default (and no event has occurred that, 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 that would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its subsidiaries are not being
conducted, and shall not be conducted so long as a Purchaser owns any of the
Securities, in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations 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 the Registration Rights
Agreement, the Company is not 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,
the
Warrants or the Registration Rights Agreement or to perform its obligations
under the Certificate of Designation, in each case in accordance with the terms
hereof or thereof. Except as disclosed in its Current Report on Form 8-K as
filed with the SEC (the “Form
8-K”),
the
Company is not in violation of the listing requirements of the American Stock
Exchange (“Amex”).
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(g) SEC
Documents, Financial Statements.
Except
as disclosed in the Form 8-K and except for the need to file an interim Annual
Report on Form 10-K for the period ended February 28, 2005, if required, since
January 1, 2004, the Company has timely filed (within applicable extension
periods) all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange
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 Purchaser true and complete copies of the
SEC
Documents. As of their respective dates, except as disclosed in the Form 8-K,
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. Except as disclosed in the Form 8-K, none of the statements made
in
any such SEC Documents is, or has been, required to be amended or updated under
applicable law (except for such statements as have been amended or updated
in
subsequent filings made prior to the date hereof). As of their respective dates,
except as disclosed in the Form 8-K, the financial statements of the Company
included in the SEC Documents complied as to form 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 U.S. generally accepted accounting principles
(“GAAP”),
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
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in
the
case of unaudited statements, to immaterial year-end audit adjustments). Except
as set forth in the financial statements of the Company included in the SEC
Documents filed prior to the date hereof, the Company has no liabilities,
contingent or otherwise, required to be disclosed in financial statements
prepared in accordance with GAAP, other than liabilities incurred in the
ordinary course of business subsequent to the date of such financial statements,
which liabilities and obligations, individually or in the aggregate, are not
material to the financial condition or operating results of the
Company.
(h) Absence
of Certain Changes.
Since
January 1, 2004, there has been no material adverse change in the business,
properties, operations, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, except as disclosed in the
SEC
Documents filed prior to the date hereof.
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(i) Absence
of Litigation.
Except
as disclosed in the SEC Documents filed prior to the date hereof, there is
no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body,
including, without limitation, the SEC or the Amex, pending or, to the knowledge
of the Company or any of its subsidiaries, threatened against or affecting
the
Company, any of its subsidiaries, or any of their respective directors or
officers in their capacities as such. To the knowledge of the Company, there
are
no facts that, if known by a potential claimant or governmental authority,
could
give rise to a claim or proceeding which, if asserted or conducted with results
unfavorable to the Company or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect.
(j) Intellectual
Property.
Each of
the Company and its subsidiaries owns or is licensed to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, permits, inventions, discoveries,
processes, scientific, technical, engineering and marketing data, object and
source codes, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures)
and
other similar rights and proprietary knowledge (collectively, “Intangibles”)
necessary for the conduct of its business as now being conducted. To the best
knowledge of the Company, neither the Company nor any subsidiary of the Company
infringes or is in conflict with any right of any other person with respect
to
any Intangibles. Neither the Company nor any of its subsidiaries has received
written notice of any pending conflict with or infringement upon such third
party Intangibles. The termination of the Company’s ownership of, or right to
use, any single Intangible would not reasonably be expected to result in a
Material Adverse Effect on the Company. Neither the Company nor any of its
subsidiaries has entered into any consent agreement, indemnification agreement,
forbearance to xxx or settlement agreement with respect to the validity of
the
Company’s or its subsidiaries’ ownership or right to use its Intangibles and, to
the best knowledge of the Company, there is no reasonable basis for any such
claim to be successful. 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 therefor are pending and in good standing. The Company and its
subsidiaries have complied, in all material respects, with their respective
contractual obligations relating to the protection of the Intangibles used
pursuant to licenses. To the best knowledge of the Company, no person is
infringing on or violating the Intangibles owned or used by the Company or
its
subsidiaries and no employee of the Company is infringing on or violating the
Intantibles of any other person. To the knowledge of the Company, none of the
employees of the Company is in violation of any covenant not to compete that
restricts the rights of such employee to conduct the activities on behalf of
the
Company that such employee presently conducts.
(k) Foreign
Corrupt Practices.
Neither
the Company, nor any of its subsidiaries, nor any director, officer, agent,
employee or other person acting on behalf of the Company or any subsidiary
has,
in the course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
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(l) Disclosure.
All
information relating to or concerning the Company set forth in this Agreement
or
provided to any Purchaser pursuant to Section 2(d) hereof or otherwise in
connection with the transactions contemplated hereby is true and correct in
all
material respects and the Company has 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.
(m) Acknowledgment
Regarding Purchasers’ Purchase of the Units.
The
Company acknowledges and agrees that none of the Purchasers is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity)
with
respect to this Agreement or the transactions contemplated hereby, the
relationship between the Company and the Purchasers is “arms-length” and any
statement made by any Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Purchaser’s purchase of Securities and has not been
relied upon by the Company, its officers or directors in any way. The Company
further acknowledges that the Company’s decision to enter into this Agreement
has been based solely on an independent evaluation by the Company and its
representatives.
(n) No
General Solicitation.
Neither
the Company nor any distributor participating on the Company’s behalf in the
transactions contemplated hereby (if any) nor any person acting for the Company,
or any such distributor, has conducted any “general solicitation,” as such term
is defined in Regulation D, with respect to any of the Securities being offered
hereby.
(o) No
Integrated Offering.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security
or
solicited any offers to buy any 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 for purposes of the Securities Act or any applicable
stockholder approval provisions, including, without limitation, Rule 4460(i)
of
the NASD or any similar rule.
(p) No
Brokers.
Except
for the engagement of Stanford Group Company and Hermes Group, the Company
has
taken no action which would give rise to any claim by any person for brokerage
commissions, finder’s fees or similar payments by any Purchaser relating to this
Agreement or the transactions contemplated hereby.
(q) Acknowledgment
Regarding Securities.
The
number of Conversion Shares issuable upon conversion of the Preferred Shares
may
increase in certain circumstances, including if the bid price of the Common
Stock declines. The Company’s executive officers have studied and fully
understand the nature of the Securities being sold hereunder. The Company
acknowledges that its obligation to issue Conversion Shares upon conversion
of
the Preferred Shares in accordance with the Certificate of Designation is
absolute and unconditional, regardless of the dilution that such issuance may
have on the ownership interests of other stockholders. Taking the foregoing
into
account, the Company’s Board of Directors has determined in its good faith
business judgment that the issuance of the Preferred Shares and Warrants
hereunder and the consummation of the other transactions contemplated hereby
are
in the best interests of the Company and its stockholders.
-10-
(r) Tax
Status.
Except
as set forth in the SEC Documents, the Company and each of its subsidiaries
has
made or filed all foreign, U.S. 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 and each of its
subsidiaries has set aside on its books provisions reasonably 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
reasonably adequate for the payment of all taxes for periods subsequent to
the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority
of
any jurisdiction, and the officers of the Company know of no basis for any
such
claim. The Company has not executed a waiver with respect to any statute of
limitations relating to the assessment or collection of any federal, state
or
local tax.
(s) Xxxxxxxx-Xxxxx.
The
Company is in compliance with the applicable requirements of the Xxxxxxxx-Xxxxx
Act of 2002, as amended, and the rules and regulations thereunder, that are
currently in effect and is actively taking steps to ensure that it will be
in
compliance with other applicable provisions of such act not currently in effect
at all times after the effectiveness of such provisions except where such
noncompliance would not have or reasonably be expected to result in a Material
Adverse Effect or that would be reasonably likely to have a material adverse
effect on the transactions contemplated hereby.
4. COVENANTS.
(a) Commercially
Reasonable Efforts.
The
parties shall use their commercially reasonable efforts timely to satisfy each
of the conditions described in Section 6 and Section 7 of this
Agreement.
(b) Reporting
Status.
So long
as any Purchaser beneficially owns any of the Securities, the Company shall
timely file (within applicable extension periods) all reports required to be
filed with the SEC pursuant to the Exchange Act, and the Company 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. In addition, the Company shall use its commercially
reasonable efforts to take all actions necessary to meet the “registrant
eligibility” requirements set forth in the general instructions to Form S-3 or
any successor form thereto, to be eligible to register the resale of its Common
Stock on a registration statement on Form S-3 under the Securities Act. The
Company shall use reasonable best efforts to cause all applicable officers
and
directors to comply with the beneficial ownership reporting requirements under
the Exchange Act in a timely manner.
-11-
(c) Use
of
Proceeds.
The
Company shall use the proceeds from the sale of the Preferred Shares and
Warrants as set forth in Schedule
4(c).
(d) Expenses;
Origination Fee.
The
Company has paid to Prencen, LLC (“Prentice
Capital”)
Twenty
Thousand Dollars ($20,000), the receipt of which is acknowledged by Prentice
Capital, and will pay to Prentice Capital at the Closing, an additional Twenty
Thousand Dollars ($20,000), in addition to reimbursement for the documented
expenses reasonably incurred by Prentice Capital and its affiliates and advisors
in connection with the negotiation, preparation, execution and delivery of
this
Agreement and the other agreements to be executed in connection herewith,
including, without limitation, Prentice Capital’s and its affiliates and
advisors’ reasonable due diligence expenses. In addition, the Company will pay
to Prentice Capital at the Closing an origination fee of Three Hundred Twelve
Thousand Five Hundred Dollars ($312,500). The parties acknowledge and agree
that
that Prentice Capital shall be permitted to deduct up to Three Hundred Thirty
Two Thousand Five Hundred Dollars ($332,500) from the Purchase Price payable
by
Prentice Capital hereunder in satisfaction of the obligations of the Company
pursuant to this Paragraph (d).
(e) Financial
Information.
The
Company shall send the following reports to each Purchaser until such Purchaser
transfers, assigns or sells all of its Securities: (i) within fifteen (15)
days
after the filing with the SEC, a copy of its Annual Report on Form 10-K, its
Quarterly Reports on Form 10-Q, its proxy or information statements and any
Current Reports on Form 8-K as well as any Form 3, 4 or 5 that is filed with
respect to the Common Stock; and (ii) within five (5) days after release, copies
of all press releases issued by the Company or any of its
subsidiaries.
(f) Special
Meeting of Stockholders.
The
Company, acting through its Board of Directors, shall, in accordance with
applicable law: (i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the “Special
Meeting”)
as soon
as reasonably practicable following the date of this Agreement for the purpose,
among other things, of considering and taking action upon the transactions
contemplated by this Agreement; (ii) prepare and file with the SEC a preliminary
proxy or information statement relating, among other things, to this Agreement
and use its commercially reasonable efforts to obtain and furnish the
information required to be included by the SEC in the Proxy Statement (as
defined below) and to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a definitive
proxy or information statement (the “Proxy
Statement”)
to be
mailed to its stockholders; (iii) subject to the fiduciary duties of the Board
of Directors of the Company, include in the Proxy Statement the recommendation
of the Board of Directors that stockholders of the Company vote in favor of
the
approval of the transactions contemplated by this Agreement; and (iv) use its
commercially reasonable efforts to solicit from holders of voting securities
of
the Company proxies in favor of the transactions contemplated by this Agreement
and shall take all other action reasonably necessary or advisable to secure
the
approval of stockholders required by the Delaware General Corporation Law and
the rules of the Amex to effect the transactions contemplated by this
Agreement.
-12-
(g) Reservation
of Shares.
The
Company shall at all times after the Special Meeting have authorized and
reserved for the purpose of issuance a sufficient number of shares of Common
Stock to provide for the full conversion of the outstanding Preferred Shares
and
issuance of the Conversion Shares in connection therewith, the full exercise
of
the Warrants and the issuance of the Warrant Shares in connection therewith
and
as otherwise required by the Certificate of Designation and the
Warrants.
(h) Listing.
Promptly following the Special Meeting, the Company shall us its commercially
reasonable efforts to maintain, so long as any Purchaser (or any of their
affiliates) own any Securities, the listing of all Conversion Shares and Warrant
Shares from time to time issuable upon conversion of the Preferred Shares and
exercise of the Warrants on each national securities exchange or automated
quotation system on which shares of Common Stock are currently listed. The
Company will use its commercially reasonable efforts to continue the listing
and
trading of its Common Stock on the Amex and will comply in all respects with
the
reporting, filing and other obligations under the bylaws or rules of the Amex.
The Company shall promptly provide to each holder of Preferred Shares and/or
Warrants copies of any notices it receives regarding the continued eligibility
of the Common Stock for trading on the Amex or, if applicable, any other
securities exchange or automated quotation system on which securities of the
same class or series issued by the Company are then listed or quoted, if
any.
(i) 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 the Securities to be integrated with any other offering of
securities by the Company for purposes of any stockholder approval provision
applicable to the Company or its securities.
(j) Legal
Compliance.
The
Company shall conduct its business and the business of its subsidiaries in
compliance with all laws, ordinances or regulations of governmental entities
applicable to such businesses, except where the failure to do so would not
have
a Material Adverse Effect.
(k) Board
of Directors.
So long
as Prentice Capital shall hold any Securities with a fair market value of Five
Million Dollars ($5,000,000) or more, upon the written request of Prentice
Capital, subject to the approval of the Board of Directors of the Company,
a
designee of Prentice Capital shall be appointed to the Board of Directors of
the
Company.
-13-
5. TRANSFER
AGENT INSTRUCTIONS.
(a) The
Company shall instruct its transfer agent to issue certificates, registered
in
the name of each Purchaser or its nominee, for the Conversion Shares and the
Warrant Shares in such amounts as specified from time to time by such Purchaser
to the Company upon conversion of the Preferred Shares or exercise of the
Warrants, as applicable. To the extent and during the periods provided in
Sections 2(f) and 2(g) of this Agreement, all such certificates shall bear
the
restrictive legend specified in Section 2(g) of this Agreement.
(b) The
Company warrants that no instruction other than such instructions referred
to in
this Section 5, and stop transfer instructions to give effect to Section 2(f)
hereof in the case of the transfer of the Conversion Shares or Warrant Shares
prior to registration of the Conversion Shares and Warrant Shares under the
Securities Act or without an exemption therefrom, will be given by the Company
to its transfer agent and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section shall affect in any way each Purchaser’s obligations and agreement
set forth in Section 2(g) hereof to resell the Securities pursuant to an
effective registration statement or under an exemption from the registration
requirements of applicable securities law.
(c) If
any
Purchaser provides the Company and the transfer agent with an opinion of
counsel, which opinion of counsel shall be in form, substance and scope
customary for opinions of counsel in comparable transactions, to the effect
that
the Securities to be sold or transferred may be sold or transferred pursuant
to
an exemption from registration, or any Purchaser provides the Company with
reasonable assurances that such Securities may be sold under Rule 144, the
Company shall permit the transfer and, in the case of the Conversion Shares
and
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such
Purchaser.
6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Units to each
Purchaser hereunder is subject to the satisfaction, at or before the Closing,
of
each of the following conditions thereto, provided that these conditions are
for
the Company’s sole benefit and may be waived by the Company at any time in its
sole discretion.
(a) Each
Purchaser shall have executed such Purchaser’s Execution Page to this Agreement
and the Registration Rights Agreement and delivered the same to the
Company.
(b) At
the
Special Meeting, the stockholders of the Company shall have approved an
amendment to the Certificate of Incorporation (i) increasing the number of
authorized shares of Common Stock and (ii) the issuance of the Preferred Shares,
Conversion Shares and the Warrant Shares as contemplated by this
Agreement.
-14-
(c) The
Company shall have consummated the transactions described on Exhibit
D
attached
hereto.
(d) Each
Purchaser shall have delivered such Purchaser’s Purchase Price for the Units in
accordance with Section 1(b) above.
(e) The
representations and warranties of each Purchaser shall be true and correct
in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which representations and warranties shall be true and
correct in all material respects as of such date), and such Purchaser 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 such Purchaser at or prior to the Closing Date.
(f) No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation
of any of the transactions contemplated by this Agreement.
7. CONDITIONS
TO EACH PURCHASER’S OBLIGATION TO PURCHASE.
The
obligation of each Purchaser hereunder to purchase the Units to be purchased
by
it at the Closing is subject to the satisfaction, at or before the Closing
Date,
of each of the following conditions, provided that such conditions are for
such
Purchaser’s sole benefit and may be waived by such Purchaser at any time in such
Purchaser’s sole discretion:
(a) The
Company shall have executed this Agreement, the Warrants and the Registration
Rights Agreement, and delivered executed original copies of the same to such
Purchaser.
(b) At
the
Special Meeting, the stockholders of the Company shall have approved an
amendment to the Certificate of Incorporation (i) increasing the number of
authorized shares of Common Stock and (ii) the issuance of the Conversion Shares
and the Warrant Shares as contemplated by this Agreement.
(c) The
Company shall have consummated the transactions described on Exhibit
D
attached
hereto.
(d) The
Certificate of Designation shall have been accepted for filing with the
Secretary of State of the State of Delaware and a copy thereof certified by
the
Secretary of State of Delaware shall have been delivered to such
Purchaser.
(e) The
Company shall have delivered to such Purchaser duly executed certificates and
Warrant agreements (each in such denominations as such Purchaser shall request)
representing the Preferred Shares and Warrants being so purchased by such
Purchaser in accordance with Section 1(b) above.
-15-
(f) The
Company shall have delivered to such Purchaser such documents as such Purchaser
shall reasonably request including a recent good standing certificate for the
Company from the State of Delaware, incumbency certificates and an officer’s
certification as to general corporate authorizations.
(g) The
Common Stock shall be listed on the Amex and trading in the Common Stock shall
not have been suspended by the SEC or the Amex.
(h) The
representations and warranties of the Company shall be true and correct in
all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as
of a
specific date, which representations and warranties shall be true and correct
in
all material respects as of such date) and the Company 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 at or prior to the Closing Date. Each Purchaser shall have
received a certificate, executed by the Chief Executive Officer of the Company
after reasonable investigation, dated as of the Closing Date to the foregoing
effect.
(i) No
statute, rule, regulation, executive order, decree, ruling, injunction, action
or proceeding shall have been enacted, entered, promulgated or endorsed by
any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
questions the validity of, challenges or prohibits the consummation of, any
of
the transactions contemplated by this Agreement.
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 New York applicable to contracts made and to be performed in the State
of New York. The Company and the Purchasers irrevocably consent to the
jurisdiction of the United States federal courts and the state courts located
in
the State of New York in any suit or proceeding based on or arising under this
Agreement and irrevocably agree that all claims in respect of such suit or
proceeding may be determined in such courts.
(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,
provided that the failure to so deliver any manually executed Execution Page
shall not affect the validity or enforceability of this
Agreement.
-16-
(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.
This
Agreement and the instruments referenced herein contain the entire understanding
of the Purchasers, the Company, their affiliates and persons acting on their
behalf with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Purchaser
makes any representation, warranty, covenant or undertaking with respect to
such
matters. No provision of this Agreement may be waived other than by an
instrument in writing signed by the party to be charged with enforcement and
no
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and each Purchaser.
(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, by responsible overnight carrier or by confirmed
facsimile, and shall be effective five (5) days after being placed in the mail,
if mailed, or upon receipt or refusal of receipt, if delivered personally or
by
responsible overnight carrier or confirmed facsimile, in each case addressed
to
a party. The addresses for such communications shall be:
|
If
to the Company:
|
|
Cenuco,
Inc.
0000
Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx,
Xxx Xxxxxx 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
Attn:
Xxxxxx X.
Xxxxxxxx
|
|
with
a copy simultaneously transmitted by like means
to:
|
|
Wolf,
Block, Xxxxxx and Xxxxx-Xxxxx LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
Xxxxxxx Xxxxxxxx
XX
|
-17-
If
to any
Purchaser, to such address set forth under such Purchaser’s name on the
Execution Page hereto executed by such Purchaser.
Each
party shall provide notice to the other parties of any change in
address.
(f) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. Except as provided herein or therein, neither
the
Company nor any Purchaser shall assign this Agreement or any rights or
obligations hereunder.
(g) Third
Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
(h) Survival.
The
representations and warranties of the Company and the agreements and covenants
set forth in Sections 3, 4, 5 and 8 hereof shall survive the Closing for a
period of one year.
(i) Publicity.
The
Company and each Purchaser shall have the right to approve before issuance
any
press releases with respect to the transactions contemplated
hereby.
(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 shall not have occurred on or before March 31, 2006,
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 Certificate of Designation, the Warrants and the Registration
Rights Agreement. 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.
(m) Additional
Acknowledgement.
Each
Purchaser acknowledges that has independently evaluated the merits of the
transactions contemplated by this Agreement, the Certificate of Designation,
the
Registration Rights Agreement and the Warrants, that it has independently
determined to enter into the transactions contemplated hereby and thereby,
that
it is not relying on any advice from or evaluation by any other Purchaser,
and
that it is not acting in concert with any other Purchaser in making its purchase
of securities hereunder. The Purchasers and, to its knowledge, the Company
agree
that the Purchasers have not taken any actions that would deem such Purchasers
to be members of a “group” for purposes of Section 13(d) of the Exchange
Act.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-18-
IN
WITNESS WHEREOF, the undersigned Purchaser and the Company have caused this
Agreement to be duly executed as of the date first above written.
| CENUCO, INC. | |||||
|
By:
|
|
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|
Name:
|
|||||
|
Title:
|
|||||
|
PURCHASER:
|
|||||
|
PRENCEN,
LLC
|
|||||
|
By:
|
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|
Name:
|
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Title:
|
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RESIDENCE:
ADDRESS:
with
copies of all notices to:
AGGREGATE
SUBSCRIPTION AMOUNT
Number
of
Units: 6,578,947
Purchase
Price ($3.80 per Unit): $25,000,000
