STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of November 7, 2001,
by and among iSecureTrac Corp., a Delaware corporation, with headquarters
located at 0000 Xxxxx 000xx Xxxxxx, Xxxxx, Xxxxxxxx 00000 (the "COMPANY"), and
the investors listed on the SCHEDULE OF BUYERS attached hereto (individually, a
"BUYER" and collectively, the "BUYERS").
WHEREAS, the Company and each Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act");
WHEREAS, the Company has authorized a new series of its Preferred Stock,
par value $0.01 per share, which shall be called the Company's Series A
Convertible Preferred Stock (the "PREFERRED STOCK"), which shall be convertible
into shares of the Company's common stock, par value $0.001 per share (the
"COMMON STOCK") (as converted, the "CONVERSION SHARES"), in accordance with the
terms of the Company's Certificate of Designations, Preferences and Rights of
the Preferred Stock in the form attached hereto as Exhibit A (the "CERTIFICATE
OF DESIGNATIONS");
WHEREAS, each Buyer wishes to purchase, upon the terms and conditions
stated in this Agreement, the number of shares of the Preferred Stock set forth
opposite such Buyer's name on the Schedule of Buyers (which number of shares to
be issued to all the Buyers in the aggregate shall equal ten thousand (10,000)
shares of Preferred Stock, collectively, the "PREFERRED SHARES");
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company and each Buyer is executing and delivering a Registration
Rights Agreement substantially in the form attached hereto as Exhibit B (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
(a) Purchase of Preferred Shares. Subject to satisfaction (or waiver) of
the conditions set forth in Sections 6 and 7, the Company shall issue
and sell to each Buyer and each Buyer agrees to purchase from the
Company the number of Preferred Shares set forth opposite such Buyer's
name on the Schedule of Buyers (the "CLOSING"). The purchase price
(the "PURCHASE PRICE") of each Preferred Share at the Closing shall be
$1,000.00.
(b) The Closing Date. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m., Central Time, within one (1) Business Day
following the date hereof, subject to satisfaction (or waiver) of the
conditions to the Closing set forth in Sections 6 and 7 (or such later
date as is mutually agreed to by the Company and the Buyer). The
Closing shall occur on the Closing Date at the offices of Xxxxxxxx &
Xxxxxxxxxx, P.C., 00000 Xxxxxxx Xxxxxxx Xxxxx, Xxxxx, Xxxxxxxx 00000.
"BUSINESS DAY" means any day other than Saturday, Sunday or other day
on which commercial banks in the city of Nebraska are authorized or
required by law to remain closed.
(c) Form of Payment. On the Closing Date (i) each Buyer shall pay the
Purchase Price as set forth in the Schedule of Buyers, and (ii) the
Company shall deliver to each Buyer stock certificates (in the
denominations as such Buyer shall request) (the "STOCK CERTIFICATES")
representing such number of the Preferred Shares which such Buyer is
then purchasing, duly executed on behalf of the Company and registered
in the name of such Buyer.
2. BUYER'S REPRESENTATIONS AND WARRANTIES. Each Buyer represents and warrants
with respect to only itself that:
(a) Investment Purpose. Such Buyer (i) is acquiring the Preferred Shares
and (ii) upon conversion of the Preferred Shares, will acquire the
Conversion Shares then issuable (the Preferred Shares and Conversion
Shares, collectively are referred to herein as the "SECURITIES"), for
its own account for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the
Securities Act; provided, however, that by making the representations
herein, such Buyer does not agree to hold any of 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 under the Securities Act.
(b) Accredited Investor Status. Such Buyer is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D.
(c) Reliance on Exemptions. Such Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of such Buyer
to acquire such Securities.
(d) Information. Such Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the
Securities which have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions
of the Company. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to
rely on the Company's representations and warranties contained in
Sections 3 and 9(m) below. Such Buyer understands that its investment
in the Securities involves a high degree of risk. Such Buyer has
sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Securities.
(e) No Governmental Review. Such Buyer understands that no United States
federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the
Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the
merits of the offering of the Securities.
(f) Transfer or Resale. Such Buyer understands that except as provided in
the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such
Buyer shall have delivered to the Company an opinion of counsel, in a
form reasonably satisfactory to the Company, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (C)
such Buyer provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the Securities Act (or a successor rule thereto)
("RULE 144"); (ii) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of the Securities
under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other
exemption under the Securities Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is
under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder. Notwithstanding the foregoing,
the Securities may be pledged in connection with a bona fide margin
account or other loan secured by the Securities.
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(g) Legends. Such Buyer understands that the certificates or other
instruments representing the Preferred Shares and, until such time as
the sale of the Conversion Shares have been registered under the
Securities Act as contemplated by the Registration Rights Agreement,
the stock certificates representing the Conversion Shares, except as
set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against
transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. SUCH
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A FORM REASONABLY SATISFACTORY
TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN SECURED BY SUCH SECURITIES.
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of the
Securities upon which it is stamped, if (i) such Securities are
registered for sale under the Securities Act, (ii) in connection with
a sale, assignment or transfer of such securities, such holder
provides the Company with an opinion of counsel, in a form reasonably
satisfactory to the Company, to the effect that such sale, assignment
or transfer may be made without registration under the Securities Act
or (iii) such holder provides the Company with reasonable assurance
that such Securities can be sold pursuant to Rule 144. Such Buyer
acknowledges, covenants and agrees to sell Securities represented by a
certificate(s) from which the legend has been removed, only pursuant
to (i) a registration statement effective under the Securities Act or
(ii) advice of counsel to such holder that such sale is exempt from
the registration requirements of Section 5 of the Securities Act,
provided that the Buyer gives written notice to the Company specifying
the amount of securities sold and the exemption relied on and,
provided further, that for sales pursuant to Rule 144 such notice will
be satisfied by the Buyer providing the Company with a copy of its
Form 144.
(h) Authorization; Enforcement. This Agreement and the Registration Rights
Agreement have been duly and validly authorized, executed and
delivered on behalf of such Buyer and are valid and binding agreements
of such Buyer enforceable against such Buyer in accordance with their
terms, subject as to enforceability to general principles of equity
and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and
remedies.
(i) Residency. Such Buyer is a resident of that jurisdiction specified on
the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to each of the Buyers that:
(a) Organization and Qualification. The Company and its "SUBSIDIARIES"
(which for purposes of this Agreement means any entity in which the
Company, directly or indirectly, owns the capital stock or holds an
equity or similar interest) (a complete list of which is set forth in
Schedule 3(a)) are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power and authorization
to own properties and to carry on their business as now being
conducted. Each of the
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Company and its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Agreement,
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, properties, assets, operations, results of operations or
financial condition of the Company and its Subsidiaries taken as a
whole, or on the transactions contemplated hereby or by the agreements
and instruments to be entered into in connection herewith, or on the
authority or ability of the Company to perform its obligations under
the Transaction Documents (as defined below) or the Certificate of
Designations.
(b) Authorization; Enforcement; Compliance with Other Instruments. The
Company has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement, the Registration
Rights Agreement, the Irrevocable Transfer Agent Instructions (as
defined in Section 5) and each of the other agreements entered into by
the parties hereto in connection with the transactions contemplated by
this Agreement (collectively, the "TRANSACTION DOCUMENTS"), and to
issue the Securities in accordance with the terms hereof and thereof.
The execution and delivery of the Transaction Documents by the Company
and the execution and filing of the Certificate of Designations 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 the reservation for issuance and the issuance of
the Conversion Shares issuable upon conversion thereof, have been duly
authorized by the Company's Board of Directors and no further consent
or authorization is required by the Company, its Board of Directors or
its stockholders. The Transaction Documents have been duly executed
and delivered by the Company. This Agreement and the Registration
Rights Agreement and, when executed and delivered, the other
Transaction Documents, constitute the valid and binding obligations of
the Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of creditors' rights and
remedies.
(c) Capitalization. The authorized capital stock of the Company consists
of (i) 50,000,000 shares of Common Stock, of which as of the date
hereof 25,584,714 shares are issued and outstanding and (ii) 1,000,000
shares of preferred stock, none of which are outstanding as of the
date hereof. All of such outstanding shares have been and are, or upon
issuance will be, validly issued, fully paid and nonassessable. Except
as disclosed in Schedule 3(c): (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company; (ii)
there are no outstanding debt securities issued by the Company; (iii)
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, any shares of capital stock of
the Company or any of its Subsidiaries, or contracts, commitments,
understandings 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 or options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into, any shares of capital stock of the Company or any of its
Subsidiaries; (iv) there are no agreements or arrangements under which
the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the Securities Act (except the
Registration Rights Agreement); (v) there are no outstanding
securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to redeem a security of
the Company or any of its Subsidiaries; (vi) there are no securities
or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities as described in
this Agreement; and (vii) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to each Buyer
true and correct copies of the Company's Certificate of Incorporation,
as amended and as in
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effect on the date hereof (the "CERTIFICATE OF INCORPORATION"), and
the Company's By-laws, as in effect on the date hereof (the
"BY-LAWS"), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the holders
thereof in respect thereto.
(d) Issuance of Securities. The Preferred Shares are duly authorized and,
upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all
taxes, liens and charges with respect to the issuance thereof and
(iii) entitled to the rights and preferences set forth in the
Certificate of Designations. At least 10,000,000 shares of Common
Stock (subject to adjustment pursuant to the Company's covenant set
forth in Section 4(f) below) have been duly authorized and reserved
for issuance upon conversion of the Preferred Shares. Upon conversion
or exercise in accordance with the Certificate of Designations, the
Conversion Shares will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the
issuance thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. The issuance by the Company of
the Securities is exempt from registration under the Securities Act.
The offer and sale by the Company of the Preferred Shares is being
made in reliance upon the exemption from registration set forth in
Rule 506 of Regulation D under the Securities Act and is only being
made to "accredited investors" that meet the requirements of Rule
501(a) of Regulation D and similar exemptions under state law.
(e) No Conflicts. Except as disclosed in Schedule 3(e), the execution,
delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the
Certificate of Designations and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without
limitation, the reservation for issuance and issuance of the
Conversion Shares) will not (I) result in a violation of the
Certificate of Incorporation, any certificate of designations of any
outstanding series of preferred stock of the Company or the By-laws;
(II) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party; or (III) result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which the
Common Stock is traded or listed) 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 as disclosed in
Schedule 3(e): neither the Company nor its Subsidiaries is in
violation of any term of (i) its Certificate of Incorporation, any
certificate of designations of any outstanding series of preferred
stock or its By-laws or their organizational charter or by-laws,
respectively, or (ii) any statute, rule or regulation applicable to
the Company or its Subsidiaries and neither the Company nor its
Subsidiaries is in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order, except
for such violations or defaults which would not, individually or in
the aggregate, have a Material Adverse Effect. The business of the
Company and its Subsidiaries is not being conducted, and shall not be
conducted, in violation of any law, ordinance or regulation of any
governmental entity except for such violations the sanctions for which
either individually or in the aggregate would not have a Material
Adverse Effect. Except as specifically contemplated by this Agreement
and except such as have been obtained as of the date hereof, the
Company is not required to obtain any consent, 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 or
contemplated by the Transaction Documents or the Certificate of
Designations in accordance with the terms hereof or thereof. Except as
disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof and such consents shall have been obtained
prior to the Closing. The Company and its Subsidiaries are unaware of
any facts or circumstances which might reasonably be expected to give
rise to any of the foregoing.
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(f) SEC Documents; Financial Statements. Since December 31, 1999, the
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the
reporting requirements of 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 as the "SEC
DOCUMENTS"). A list of the Company's significant SEC Documents is set
forth on Schedule 3(f). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents. 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. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements
of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
Neither the Company nor any of its Subsidiaries nor any of their
officers, directors, employees or agents have provided the Buyers with
any material, nonpublic information other than the Material
Information (as defined below).
(g) Absence of Certain Changes. Except as disclosed in Schedule 3(g),
since December 31,2000, there has been no material adverse change and
no material adverse development in the business, properties,
operations, financial condition, liabilities or results of operations
of the Company or its Subsidiaries, taken as a whole. The Company has
not taken any steps, and does not currently expect to take any steps,
to seek protection pursuant to any bankruptcy law nor does the Company
or any of its Subsidiaries have any knowledge that its creditors
intend to initiate involuntary bankruptcy proceedings or any knowledge
of any fact which would reasonably lead a creditor to do so.
(h) Absence of Litigation. Except as disclosed in Schedule 3(h), there is
no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company, the Common
Stock or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities
as such, except as expressly set forth in Schedule 3(h). Except as set
forth in Schedule 3(h), to the knowledge of the Company none of the
directors or officers of the Company have been involved in securities
related litigation during the past five years.
(i) Acknowledgment Regarding the Buyer's Purchase of Preferred Shares. The
Company acknowledges and agrees that each of the Buyers is acting
solely in the capacity of arm's length purchaser with respect to the
Transaction Documents and the Certificate of Designations and the
transactions contemplated thereby. The Company further acknowledges
that none of the Buyers is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the
Transaction Documents and the Certificate of Designations and the
transactions contemplated thereby and any advice given by any of the
Buyers or any of their respective representatives or agents in
connection with the Transaction Documents and the Certificate of
Designations and the transactions contemplated thereby is merely
incidental to such Buyer's purchase of the Securities. The Company
further represents to each Buyer that the Company's decision to enter
into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.
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(j) No Undisclosed Events, Liabilities, Developments or Circumstances.
Except for the issuance of the Preferred Shares contemplated by this
Agreement and except for the disclosure of the Company's quarterly
financial results for the period ended September 30, 2001 (the
"Material Information"), no event, liability, development or
circumstance has occurred or exists with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations or
financial condition, that would be required to be disclosed by the
Company under applicable securities laws on a registration statement
(including by way of incorporation by reference) filed with the SEC
relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly disclosed.
(k) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with
the offer or sale of the Securities.
(l) 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 any of the Securities under the Securities Act or
cause this offering of Securities to be integrated with prior
offerings by the Company for purposes of the Securities Act or any
applicable stockholder approval provisions, nor will the Company or
any of its Subsidiaries take any action or steps that would require
registration of the Securities under the Securities Act or cause the
offering of the Securities to be integrated with other offerings.
(m) Employee Relations. Neither the Company nor any of its Subsidiaries is
involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened.
None of the Company's or its Subsidiaries' employees is a member of a
union, neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries
believe that their relations with their employees are good. No
executive officer (as defined in Rule 501(f) of the Securities Act)
has notified the Company's Board of Directors that such officer
intends to leave the Company or otherwise terminate such officer's
employment with the Company and the Company does not have any plans,
as of the date hereof, to terminate any such officer during the six
months following the date of this Agreement.
(n) Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade
names, service marks, service xxxx registrations, service names,
issued patents, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted. Except as set
forth on Schedule 3(n), none of the Company's trademarks, trade names,
service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, government
authorizations, trade secrets or other intellectual property rights
have expired or terminated, or are expected to expire or terminate
within two years from the date of this Agreement except where such
expiration or termination would not have, either individually or in
the aggregate, a Material Adverse Effect. The Company and its
Subsidiaries do not have any knowledge of any infringement by the
Company or its Subsidiaries of trademarks, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secrets or other
similar rights of others, or of any such development of similar or
identical trade secrets or technical information by others and, except
as set forth on Schedule 3(n), no claim, action or proceeding has been
made or brought against, or to the Company's knowledge, has been
threatened against, the Company or its Subsidiaries regarding
trademarks, trade name rights, patents, patent rights, inventions,
copyrights, licenses, service names, service marks, service xxxx
registrations, trade secrets or other infringement; and the Company
and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company and its
Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their intellectual
properties except where
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the failure to do so would not have either individually or in the
aggregate a Material Adverse Effect.
(o) Regulatory Permits. Except where the absence of which would not have a
Material Adverse Effect, the Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses. Neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.
(p) Internal Accounting Controls. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(q) Tax Status. The Company and each of its Subsidiaries has made or filed
all federal and state 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 for which
the Company has set aside on its books provision 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.
(r) Transactions With Affiliates and Employees. Except as set forth on
Schedule 3(r) or in the SEC Documents filed at least ten days prior to
the date hereof and other than the grant or exercise of stock options
disclosed on Schedule 3(c), none of the officers, directors or
employees of the Company is presently a party to any transaction with
the Company or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner.
(s) Dilutive Effect. The Company understands and acknowledges that the
number of Conversion Shares issuable upon conversion of the Preferred
Shares may increase in certain circumstances. The Company further
acknowledges that its obligation to issue Conversion Shares upon
conversion of the Preferred Shares in accordance with this Agreement
and the Certificate of Designations is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the
ownership interests of other stockholders of the Company.
(t) Application of Takeover Protections. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or
other similar anti-takeover provision under the Certificate of
Incorporation or the laws of the state of its incorporation which is
or could become applicable to the Buyers as a result of the Buyers and
the Company fulfilling their obligations under the Transaction
Documents and the Certificate of
8
Designations, including, without limitation, the Company's issuance of
the Securities and the Buyers' ownership of the Securities.
(u) Title. The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to
all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of
all liens, encumbrances and defects except such as are described in
Schedule 3(u) or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company and any of its Subsidiaries. Any
real property and facilities held under lease by the Company and any
of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
(v) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to
be prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. Neither the Company nor any such
Subsidiaries has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the
earnings, business or operations of the Company and its Subsidiaries,
taken as a whole.
(w) No Other Agreements. The Company has not, directly or indirectly, made
any agreements with any Buyer relating to the terms or conditions of
the transactions contemplated by the Transaction Documents except as
set forth in the Transaction Documents.
(x) No Materially Adverse Contracts. Except as specifically disclosed in
the SEC Documents, or as set forth in Schedule 3(x), neither the
Company nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company's officers has
or is expected in the future to have a Material Adverse Effect. Except
as specifically disclosed in the SEC Documents, or as set forth in
Schedule 3(x), neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the
Company's officers has or is expected to have a Material Adverse
Effect.
4. COVENANTS.
(a) Best Efforts. Each party hereto shall use its best efforts to satisfy
timely each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file a Form D with respect
to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall,
on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or
obtain exemption for the Securities for, sale to each Buyer at the
Closing pursuant to this Agreement under applicable securities or
"Blue Sky" laws of the states of the United States, and shall provide
evidence of any such action so taken to such Buyer on or prior to the
Closing Date. The Company shall make all filings and reports relating
to the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States
following the Closing Date.
(c) Reporting Status. Until the earlier of (i) the date which is one year
after the date on which each Buyer (as that term is defined in the
Registration Rights Agreement) may sell all of the Conversion Shares
acquired by such Buyer without restriction pursuant to Rule 144(k)
promulgated under the Securities Act (or successor thereto) and (ii)
the date on which (A) each
9
Buyer shall have sold all the Conversion Shares acquired by such Buyer
and (B) none of the Preferred Shares is outstanding (the "REPORTING
PERIOD"), the Company shall file 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 otherwise permit such termination.
(d) Use of Proceeds. The Company will use the proceeds from the sale of
the Preferred Shares for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
(e) Financial Information. The Company agrees to send the following to
each Buyer during the Reporting Period: (i) unless filed and available
through the SEC's XXXXX system, within two (2) Business Days after the
filing thereof with the SEC, a copy of its Annual Reports on Form
10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form
8-K and any registration statements (other than on Form S-8) or
amendments thereto filed pursuant to the Securities Act; (ii) on the
same day as the release thereof, facsimile copies of all press
releases issued by the Company or any of its Subsidiaries (or the day
after, if released through a recognized wire service) and (iii) copies
of any notices and other information made available or given to the
stockholders of the Company generally, contemporaneously with the
making available or giving thereof to the stockholders.
(f) Reservation of Shares. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of Common Stock
needed to provide for the issuance of the Conversion Shares.
(g) Transactions With Affiliates. So long as (i) at least 1,650 Preferred
Shares are outstanding or (ii) any Buyer owns Conversion Shares with a
market value of at least $1,650,000, the Company shall not, and shall
cause each of its Subsidiaries not to, enter into, amend, modify or
supplement, or permit any Subsidiary to enter into, amend, modify or
supplement, any agreement, transaction, commitment or arrangement with
any of its or any Subsidiary's officers, directors, persons who were
officers or directors at any time during the previous two years,
stockholders who beneficially own 5% or more of the Common Stock, or
Affiliates or with any individual related by blood, marriage or
adoption to any such individual or with any entity in which any such
entity or individual owns a 5% or more beneficial interest (each a
"RELATED Party"), except for (a) customary employment arrangements,
benefit programs and outside director compensation arrangements on
reasonable terms, (b) any agreement, transaction, commitment or
arrangement which is approved by a majority of the disinterested
directors of the Company or (c) any agreement, transaction, commitment
or arrangement on an arms-length basis on terms no less favorable than
terms which would have been obtainable from a person other than such
Related Party. For purposes hereof, any director who is also an
officer of the Company or any Subsidiary of the Company shall not be a
disinterested director with respect to any such agreement,
transaction, commitment or arrangement. "AFFILIATE" for purposes
hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a 5% or more equity
interest in that person or entity, (ii) has 5% or more common
ownership with that person or entity, (iii) controls that person or
entity, or (iv) shares common control with that person or entity.
"CONTROL" or "controls" for purposes hereof means that a person or
entity has the power, direct or indirect, to conduct or govern the
policies of another person or entity.
(h) Filing of Form 8-K. On or before the first (1st) Business Day
following the Closing Date, the Company shall file a Form 8-K with the
SEC describing the terms of the transaction contemplated by the
Transaction Documents and consummated at the Closing and including as
exhibits to such Form 8-K this Agreement, the Certificate of
Designations and the Registration Rights Agreement, in the form
required by the Exchange Act.
(i) Corporate Existence. So long as any Buyer beneficially owns any
Preferred Shares, the Company shall maintain its corporate existence
and shall not sell all or substantially all of the Company's
10
assets, except in the event of a merger or consolidation or sale of
all or substantially all of the Company's assets, where the surviving
or successor entity in such transaction (i) assumes the Company's
obligations hereunder and under the agreements and instruments entered
into in connection herewith and (ii) is a publicly traded corporation
whose common stock is listed for trading on the OTC Bulletin Board.
5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates, registered in the name of each Buyer or its respective nominee(s),
for the Conversion Shares in such amounts as specified from time to time by each
Buyer to the Company upon conversion of the Preferred Shares unless such
issuance is prohibited by the Certificate of Designations. Prior to registration
of the Conversion Shares under the Securities Act, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior
to registration of the Conversion Shares under the Securities Act) will be given
by the Company to its transfer agent with respect to the Conversion Shares 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. If a Buyer provides the Company with an opinion
of counsel, in a form reasonably satisfactory to the Company, that registration
of a resale by such Buyer of any of such Securities is not required under the
Securities Act or such Buyer provides the Company with reasonable assurance that
the Securities can be sold pursuant to Rule 144, the Company shall permit the
transfer, and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by such Buyer and without any restrictive legends.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the affected Buyer by vitiating the intent and purpose
of the transactions contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section 5
would be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section 5, that the affected Buyer shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the
Company hereunder to issue and sell the Preferred Shares to each Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, 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 by providing each Buyer with prior written notice thereof:
(a) Such Buyer shall have executed each of this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(b) Such Buyer shall have delivered to the Company the Purchase Price for
the Preferred Shares being purchased by such Buyer at the Closing by
wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
(c) The representations and warranties of such Buyer contained herein
shall be true and correct as of the date when made and as of the
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer shall
have performed, satisfied and complied with the covenants, agreements
and conditions required by the Transaction Documents to be performed,
satisfied or complied with by such Buyer at or prior to the Closing
Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation of each
Buyer hereunder to purchase the Preferred Shares at the Closing is subject to
the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for such Buyer's sole benefit and
may be waived by such Buyer at any time in its sole discretion by providing the
Company and each Buyer with prior written notice thereof:
11
(a) The Company shall have executed each of the Transaction Documents, and
delivered the same to such Buyer.
(b) The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware, and a copy thereof
certified by the Secretary of State of the State of Delaware shall
have been delivered to such Buyer.
(c) The Common Stock shall be designated for quotation on the OTC Bulletin
Board and shall not have been suspended from trading on or delisted
therefrom nor shall delisting or suspension therefrom have been
threatened either (A) in writing by such exchanges or (B) by falling
below the minimum listing maintenance requirements thereof.
(d) The representations and warranties of the Company contained herein
shall be true and correct as of the date when made and as of the
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied with the covenants, agreements
and conditions required by the Transaction Documents and the
Certificate of Designations to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. Such Buyer shall
have received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as such Buyer may reasonably request,
including, without limitation, an update as of the Closing Date
regarding the representation contained in Section 3(c) above.
(e) The Company shall have executed and delivered to such Buyer the Stock
Certificates for the Preferred Shares being purchased by such Buyer at
the Closing.
(f) The Board of Directors of the Company shall have adopted resolutions
consistent with Section 3(b) above in a form reasonably acceptable to
such Buyer (the "RESOLUTIONS").
(g) As of the Closing Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Preferred Shares, at least 10,000,000
shares of Common Stock.
(h) The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
Subsidiary in such corporation's state of organization issued by the
Secretary of State of such state as of a date within ten days of the
Closing Date.
(i) The Company shall have delivered to such Buyer a secretary's
certificate, dated as of the Closing Date, certifying as to (A) the
Resolutions, (B) the Certificate of Incorporation and (C) the By-laws,
each as in effect at the Closing Date.
(j) The Company shall have delivered to such Buyer a certified copy of its
Certificate of Incorporation as certified by the Secretary of State of
the State of Delaware within ten days of the Closing Date.
(k) The Company shall have delivered to such Buyer a letter from the
Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Closing Date.
(l) The Company shall have delivered to such Buyer such other documents
relating to the transactions contemplated by the Transaction Documents
as such Buyer or its counsel may reasonably request.
8. INDEMNIFICATION. In consideration of each Buyer's execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company's other obligations under the Transaction
Documents and the Certificate of Designations, the Company shall
12
defend, protect, indemnify and hold harmless each Buyer and each other holder of
the Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable and documented attorneys' fees and disbursements (the "INDEMNIFIED
LIABILITIES"), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents or Certificate of
Designations or any other certificate, instrument or document contemplated
hereby or thereby, (b) any breach of any covenant, agreement or obligation of
the Company contained in the Transaction Documents or the Certificate of
Designations or any other certificate, instrument or document contemplated
hereby or thereby or (c) any cause of action, suit or claim brought or made
against such Indemnitee (other than a cause of action, suit or claim which is
(x) brought or made by the Company and (y) is not a shareholder derivative suit)
and arising out of or resulting from (i) the execution, delivery, performance or
enforcement of the Transaction Documents or the Certificate of Designations,
(ii) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (iii) solely
the status of such Buyer or holder of the Securities as an investor in the
Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. The corporate laws of the
State of Delaware shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State
of Nebraska, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Nebraska or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Nebraska. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of Omaha for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding
is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in two or more identical
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 parties; provided that
a facsimile signature shall be considered due execution and shall be
binding upon the signatory thereto with the same force and effect as
if the signature were an original, not a facsimile signature.
(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.
13
(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 in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between each Buyer, the Company,
their affiliates and persons acting on their behalf with respect to
the matters discussed herein. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and the
Buyers which purchased at least two-thirds (2/3) of the Preferred
Shares on the Closing Date, or their assigns or, if prior to the
Closing Date, the Buyers listed on the Schedule of Buyers as being
obligated to purchase at least two-thirds (2/3) of the Preferred
Shares. No provision hereof may be waived other than by an instrument
in writing signed by the party against whom enforcement is sought. No
such amendment shall be effective to the extent that it applies to
less than all of the holders of the Preferred Shares then outstanding.
No consideration shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of any of the
Transaction Documents or the Certificate of Designations unless the
same consideration also is offered to all of the parties to the
Transaction Documents or holders of the Securities, as the case may
be.
(f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(iii) one (1) Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for
such communications shall be:
If to the Company:
iSecureTrac Corp.
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxx, Chairman
With a copy to:
Xxxxxxxx & Xxxxxxxxxx, P.C.
00000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
If to the Transfer Agent:
Atlas Stock Transfer Corporation
0000 Xx. Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxx
If to a Buyer, to it at the address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer's representatives as
set forth on the Schedule of Buyers, or at such other address and/or
facsimile number and/or to the attention of such other person(s) as
the recipient party has specified by written notice given to each
other party five days prior to the effectiveness
14
of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communications, (B)
mechanically or electronically generated by the sender's facsimile
machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by a
nationally recognized overnight delivery service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. The Company
shall not assign this Agreement or any rights or obligations
hereunder, including by merger or consolidation, except pursuant to a
Change of Control (as defined in Section 5(b) of the Certificate of
Designations) with respect to which the Company is in compliance with
its obligations under Sections 5(a) and 5(b) of the Certificate of
Designations and Section 4(l) of this Agreement without the prior
written consent of the Buyers which purchased at least two-thirds
(2/3) of the Preferred Shares on the Closing Date, or their assigns.
The rights under this Agreement are assignable by a Buyer without the
consent of the Company; provided, however, that any such assignment
shall not release such Buyer from its obligations hereunder unless
such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, which consent shall not
be unreasonably withheld. Notwithstanding anything to the contrary
contained in the Transaction Documents or the Certificate of
Designations, Buyers shall be entitled to pledge the Securities in
connection with a bona fide margin account or other loan secured by
the Securities.
(h) No 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.
(i) Survival. Unless this Agreement is terminated under Section 9(l), the
representations and warranties of the Company and each Buyer contained
in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in
Section 8, shall survive the Closing. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
(j) Publicity. The Company and each Buyer shall have the right to approve
before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with
respect to such transactions as the Company reasonably believes, after
consulting with its counsel, to be required by applicable law and
regulations (although each Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure
prior to its release and shall be provided with a copy thereof).
(k) 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.
(l) Termination. In the event that the Closing shall not have occurred
with respect to a Buyer on or before one (1) Business Day after the
date hereof due to the Company's or a Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the non-breaching
party's failure to waive such unsatisfied condition(s)), the
non-breaching party shall have the option to terminate this Agreement
with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided,
however, that if this Agreement is terminated
15
pursuant to this Section 9(l), the Company shall remain obligated to
reimburse a non-breaching Buyer for expenses up to the amount
described in Section 4(i) above.
(m) Placement Agent. The Company acknowledges that it has not engaged a
placement agent in connection with the sale of the Preferred Shares.
The Company shall be responsible for the payment of any placement
agent's fees or brokers' commissions relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each
Buyer harmless against, any liability, loss or expense (including,
without limitation, attorneys' fees and out of pocket expenses)
arising in connection with any such claim.
(n) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.
(o) Remedies. Each Buyer and each holder of the Securities shall have all
rights and remedies set forth in the Transaction Documents and the
Certificate of Designations and all rights and remedies which such
holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law.
Any person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any breach
of any provision of this Agreement and to exercise all other rights
granted by law.
IN WITNESS WHEREOF, each Buyer and the Company have caused this STOCK
PURCHASE AGREEMENT to be duly executed as of the date first written above.
ISECURETRAC CORP.
By:
------------------------------------------
16
BUYER(S) SIGNATURE PAGE
----------------------------------------------------
Signature of Buyer
----------------------------------------------------
Name of Buyer
----------------------------------------------------
Mailing Address
----------------------------------------------------
City, State, ZIP Code
----------------------------------------------------
No. of Shares of Preferred Stock Purchased
----------------------------------------------------
Date
EXHIBIT "A"
SCHEDULE OF BUYERS
WARRANTS DEBT
-------- ----
NO. OF
PRINCIPAL ACCRUED SERIES A
SSAN OR TAX NO. RELEASED OR INTEREST AS OF PREFERRED
NAME AND ADDRESS ID NO. EXCHANGED VALUE ASSUMED CLOSING TOTAL SHARES
---------------- ----------- ---------- ------------ ----------- -------------- ------------ ---------
Total Tech LLC 00-0000000 9,043,920 1,830,951.40 4,784,519 73,581.00 6,689,052.00 6,689.1
XX Xxx 000
Xxxxx, XX 00000
Xxxxx Xxxxx ###-##-#### 903,809 87,938.91 184,996 45,213.94 318,148.85 318.15
XX Xxx 000
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxx ###-##-#### 261,506 3,288 250,000 253,287.50 253.29
000 Xxxx Xxx.
Xxxxxxx, XX 00000
Xxxxxx Xxxxxx ###-##-#### 261,506 3,288 250,000 253,287.50 253.29
000 X. Xxxxxxxx Xxxxx
Xx., Xxx 00
Xxxxxxx, XX 00000
Xxxxx Xxxxx ###-##-#### 261,506 3,288 250,000 253,287.50 253.29
XX Xxx 000
Xxxxxxx, XX 00000
Xxxxx Partners 00-0000000 261,506 3,288 250,000 253,287.50 253.29
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxx ###-##-#### 225,000 32,315.07 257,315.07 257.32
000 X. 0xx Xxxxxx
Xxxxxxx, XX 00000
Xxxxx and Xxxxxxxx Xxxxxx ###-##-#### 291,666 39,611.79 331,277.79 331.28
as trustees of the Xxxxx
X. Xxxxxx 1992 Revocable
Trust U/TA 3-13-92
000 X. Xxxxxxxx Xxxxx Xx.
Xxxxxxx, XX 00000
Xxxxxx Xxxxxx ###-##-#### 77,963 846.46 846.46 0.85
000 X. Xxxxxxxx Xxxxx Xx.,
Xxx 00
Xxxxxxx, XX 00000
SCHEDULE 3(a)
SUBSIDIARIES
ABS
NEBRASKA, INC.
SCHEDULE 3(c)
EXCEPTIONS TO SECTION 3(c)
None except as disclosed in documents listed at Schedule 3(f)
SCHEDULE 3(e)
CONFLICTS
None
SCHEDULE 3(f)
SEC DOCUMENTS
-------------------------------------------------------------------------------------------------------------
FORM FILING DATE
-------------------------------------------------------------------------------------------------------------
Form 10-QSB for quarter ending 9/30/2001 11/13/2001
-------------------------------------------------------------------------------------------------------------
Form 10-QSB for quarter ending 6/30/200 8/14/2001
-------------------------------------------------------------------------------------------------------------
Form 8-K 7/10/2001
-------------------------------------------------------------------------------------------------------------
Form S-8 6/28/2001
-------------------------------------------------------------------------------------------------------------
Form 10-QSB for quarter ending 3/31/2001 5/15/2001
-------------------------------------------------------------------------------------------------------------
Definitive Proxy under Schedule 14A 5/14/2001
-------------------------------------------------------------------------------------------------------------
Form 10-KSB for year ending 12/31/2000 3/27/2001
-------------------------------------------------------------------------------------------------------------
Form 10-KSB for year ending 12/31/1999 3/30/2000
-------------------------------------------------------------------------------------------------------------
SCHEDULE 3(g)
EXCEPTIONS TO SECTION 3(g)
None
SCHEDULE 3(h)
EXCEPTIONS TO SECTION 3(h)
None except as disclosed in documents listed at Schedule 3(f).
SCHEDULE 3(n)
EXCEPTIONS TO SECTION 3(n)
None except as disclosed in documents listed at Schedule 3(f).
SCHEDULE 3(r)
EXCEPTIONS TO SECTION 3(r)
None
SCHEDULE 3(u)
EXCEPTIONS TO SECTION 3(u)
None
SCHEDULE 3(x)
EXCEPTIONS TO SECTION 3(x)
None
