1
EXHIBIT 10.13
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
This PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, dated as of June____,
1999, (this "Agreement") is entered into by and among XXXXXX.XXX, INC., a
Delaware corporation ("Company"), with its principal executive office at 0000
Xxxxxx Xxxx Xxxxx, Xxxxx #000, Xxxxxxxx, Xxxxxxxxxx 00000 and THE ENTITIES OR
PERSONS LISTED ON THE SCHEDULE OF PURCHASERS attached hereto as Schedule I (each
a "Purchaser," and collectively, the "Purchasers").
RECITALS
A. On the terms and subject to the conditions set forth herein, each
Purchaser is willing to purchase from Company, and Company is willing to sell to
such Purchaser, shares of Series A Convertible Preferred Stock (the "Preferred
Stock") in the principal amount set forth opposite such Purchaser's name on
Schedule I hereto and warrant(s) to purchase shares of the Company's Common
Stock.
B. The Company desires to enter into this Agreement for the purposes,
among others, of inducing the Purchasers to purchase the Preferred Stock and
warrants.
C. Capitalized terms not otherwise defined herein shall have the meaning
set forth in the Certificate of Designation attached hereto as Exhibit A. This
Agreement, the Certificate of Designation, and the Warrant are sometimes
collectively referred to as Transaction Documents.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the representations,
warranties, and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. THE PREFERRED STOCK AND WARRANTS.
(a) Issuance of Preferred Stocks. At the Closing (as defined below),
Company agrees to issue and sell to each of the Purchasers, and, subject to all
of the terms and conditions hereof, each of the Purchasers agrees to purchase a
number of shares of Preferred Stock issued pursuant to the Company's
Certificate of Designation attached hereto as Exhibit A (the "Certificate of
Designation") in the principal amount set forth opposite the respective
Purchaser's name on Schedule I hereto. The obligation of the Purchasers to
purchase Preferred Stock are several and not joint.
(b) Issuance of Warrants. In consideration for the purchase by the
Purchasers of the Preferred Stock and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the Company will issue to each
Purchaser a warrant in the form attached hereto as Exhibit B (each
individually, a "Warrant" and collectively, the "Warrants"), to purchase up to
the number of shares of Common Stock (the "Warrant Shares") as set forth on
Schedule I.
2
(c) Delivery. The sale and purchase of the Preferred Stock and the
Warrants shall take place at a closing (the "Closing") to be held at such place
and time as Company and the Purchasers may determine (the "Closing Date"). At
the Closing, Company will deliver to each of the Purchasers the respective
Preferred Stock and the Warrant to be purchased by such Purchaser, against
receipt by Company of the corresponding purchase price (by wire transfer of
immediately available funds) set forth on Schedule I hereto (the "Purchase
Price"). Each of the shares of Preferred Stock and Warrants will be registered
in such Purchaser's name in Company's records.
(d) Use of Proceeds. The proceeds of the sale and issuance of the
Preferred Stock and Warrants shall be used for capital to establish an
inventory of collectable merchandise, advertising, advances on royalties
related to exclusive memorabilia contracts with sports figures and celebrities
and other general corporate purposes.
(e) Interest Payments. Company will make all cash interest payments
due pursuant to the terms of the Preferred Stock in immediately available on
the date such payment is due in the manner and at the address for such purpose
specified below each Purchaser's name on Schedule I hereto, or at such other
address as a Purchaser or other registered holder of the Preferred Stock may
from time to time direct in writing; provided, however, that no payment shall
be due in the event of conversion of the Preferred Stock pursuant to the
Certificate of Designation.
(f) Piggyback Registration Rights. With respect to any shares of the
Company's Common Stock issued pursuant to this Agreement, the Purchaser will
receive Piggyback Registration Rights to include such shares in up to two (2)
registration statements filed by the Company to the extent the Company, any
underwriter and any other party to the registration statement deem it feasible
to include such shares.
2. REPRESENTATIONS AND WARRANTIES OF COMPANY. Parent and Company,
jointly and severally, represent and warrant to each Purchaser that:
(a) Due Incorporation, Qualification, etc. Company (i) is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation; (ii) has the power and authority to own,
lease and operate its properties and carry on its business as now conducted;
and (iii) is duly qualified, licensed to do business and in good standing as a
foreign corporation in each jurisdiction where the failure to be so qualified
or licensed could reasonably be expected to have a Material Adverse Effect.
(b) Authority. The execution, delivery and performance by Company of
each Transaction Document to be executed by Company and the consummation of the
transactions contemplated thereby (i) are within the power of Company and (ii)
have been duly authorized by all necessary actions on the part of Company.
(c) Enforceability. Each Transaction Document executed, or to be
executed, by Company has been, or will be, duly executed and delivered by
Company and constitutes, or will constitute, a legal, valid and binding
obligation of Company, enforceable against Company in accordance with its
terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and general principles of equity.
3
(d) Non-Contravention. The execution and delivery by Company of the
Transaction Documents executed by Company and the performance and consummation
of the transactions contemplated thereby do not and will not (i) violate the
Certificate of Incorporation or Bylaws of the Company or any material judgment,
order, writ, decree, statute, rule or regulation applicable to Company; (ii)
violate any provision of, or result in the breach or the acceleration of, or
entitle any other Person to accelerate (whether after the giving of notice or
lapse of time or both), any material mortgage, indenture, agreement, instrument
or contract to which Company is a party or by which it is bound; or (iii) result
in the creation or imposition of any Lien upon any property, asset or revenue of
Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of
any material permit, license, authorization or approval applicable to Company,
its business or operations, or any of its assets or properties.
(e) Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution and delivery of the Transaction
Documents executed by Company and the performance and consummation of the
transactions contemplated thereby.
(f) No Violation or Default. Company is not in violation of or in
default with respect to (i) its Certificate of Incorporation or Bylaws or any
material judgment, order, writ, decree, statute, rule or regulation applicable
to such Person; (ii) any material mortgage, indenture, agreement, instrument or
contract to which such Person is a party or by which it is bound (nor is there
any waiver in effect which, if not in effect, would result in such a violation
or default), where, in each case, such violation or default, individually, or
together with all such violations or defaults, could reasonably be expected to
have a Material Adverse Effect. No Event of Default or default, which after the
giving of notice or the lapse of time or both would constitute an Event of
Default, has occurred and is continuing.
(g) Litigation. No actions (including, without limitation,
derivative actions), suits, proceedings or investigations are pending or, to
the knowledge of Company, threatened against Company at law or in equity in any
court or before any other governmental authority which if adversely determined
(i) would (alone or in the aggregate) have a Material Adverse Effect or (ii)
seeks to enjoin, either directly or indirectly, the execution, delivery or
performance by Company of the Transaction Documents or the transactions
contemplated thereby.
(h) Title. Company owns and has good and marketable title in fee
simple absolute to, or a valid leasehold interest in, all real properties and
good title to its other respective assets and properties as reflected in the
most recent Financial Statements delivered to Purchasers (except those assets
and properties disposed of in the ordinary course of business since the date of
such Financial Statements) and all assets and properties acquired by Company
since such date (except those disposed of in the ordinary course of business).
Such assets and properties are subject to no Lien, except for Permitted Liens.
(i) Intellectual Property. To the best of their knowledge, Company
owns or possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information, processes
and other intellectual property rights necessary for its business as now
conducted and as proposed to be conducted without any conflict with, or
infringement of the rights of, others.
-3-
4
(j) Financial Statements. Except as set forth in Item 2(j) of
Schedule II hereto (the "Disclosure Schedule"), the Financial Statements of
Company which have been delivered to the Purchasers, (i) are in accordance with
the books and records of Company, which have been maintained in accordance with
good business practice; and (ii) fairly present the consolidated financial
position of Company as of the dates presented therein and the results of
operations, changes in financial positions or cash flows, as the case may be,
for the periods presented therein. Company has no contingent obligations,
liability for taxes or other outstanding obligations which are material in the
aggregate, except as disclosed in the unaudited Financial Statements as of April
30, 1999 furnished by Company to Purchasers prior to the date hereof.
(k) Equity Securities. Company's total authorized and issued
capitalization is as set forth in Item 2(k)(a) of the Disclosure Schedule. The
Equity Securities of Company have the respective rights, preferences and
privileges set forth in Company's Certificate of Incorporation in effect on the
date hereof. All of the outstanding Equity Securities of the Company have been
duly authorized and are validly issued, fully paid and nonassessable. Except as
expressly referenced herein or as set forth in Item 2(k)(a) of the Disclosure
Schedule, there are as of the date of this Agreement no options, warrants or
rights to purchase Equity Securities of the Company authorized, issued or
outstanding, nor is Company obligated in any other manner to issue shares of its
Equity Securities. There are no restrictions on the transfer of Equity
Securities of Company, other than those imposed by Company's Certificate of
Incorporation and Bylaws as of the date hereof, or relevant state and federal
securities laws, and no holder of any Equity Security of Company is entitled to
preemptive or similar statutory or contractual rights, either arising pursuant
to any agreement or instrument to which Company is a party or that are otherwise
binding upon Company. The offer and sale of all Equity Securities of Company
issued before the Closing Date complied with or were exempt from registration or
qualification under all applicable federal and state securities laws. No Person
has the right to demand or other rights to cause Company to file any
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), relating to any Equity Securities of Company presently
outstanding or that may be subsequently issued, or any right to participate in
any such registration statement.
(l) No Agreements to Sell Assets or Merge. Company has no legal
obligation, absolute or contingent, to any Person to sell the assets of Company
or Company's Subsidiaries (other than sales in the ordinary course of business),
or to effect any merger, consolidation or other reorganization of Company or to
enter into any agreement with respect thereto.
(m) Employee Benefit Plans.
(i) Neither Company nor any Person (each, an "ERISA Affiliate")
which is treated as a single employer with Company under section 414 of the
Internal Revenue Code of 1986, as amended (the "Code") has an employee benefit
plan (an "Employee Benefit Plan") within the meaning of the Employee Retirement
Income Security Act of 1974 (as the same may from time to time be amended or
supplemented, and including any rules or regulations issued in connection
therewith, "ERISA") that is an "employee pension benefit plan" (within the
meaning of section 3(2) of ERISA). Neither Company nor any ERISA Affiliate has
any liability with respect to any post-retirement benefit under any Employee
Benefit Plan which is a welfare plan (as defined in section 3(1) of ERISA),
other than liability for health plan continuation coverage described in Part 6
of Title I(B) of ERISA, which liability for health plan continuation coverage
cannot reasonably be expected to have a Material Adverse Effect.
-4-
5
(ii) Each Employee Benefit Plan complies, in both form and
operation, in all material respects, with its terms, ERISA and the Code, and no
condition exists or event has occurred with respect to any such Employee Benefit
Plan which would result in the incurrence by either Company or any ERISA
Affiliate of any material liability, fine or penalty. Each Employee Benefit
Plan, related trust agreement, arrangement and commitment of Company or any
ERISA Affiliate is legally valid and binding and in full force and effect. No
Employee Benefit Plan is being audited or investigated by any governmental
authority or is subject to any pending or threatened claim or suit. Neither
Company nor any ERISA Affiliate nor any fiduciary of any Employee Benefit Plan
has engaged in a prohibited transaction under sections 406 or 407 of ERISA or
section 4975 of the Code (other than transactions which are otherwise exempt
under either Section 408 of ERISA or 4975(d) of the Code).
(iii) Neither Company nor any ERISA Affiliate (A) has incurred
or expects to incur any liability under Title IV of ERISA or Section 412 of the
Code, or (B) contributes to any multiemployer plan within the meaning of ERISA
(a "Multiemployer Plan"). Neither Company nor any ERISA Affiliate has incurred
any material liability (including secondary liability) to any Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan
under section 4201 of ERISA or as a result of a sale of assets described in
section 4204 of ERISA. Neither Company nor any ERISA Affiliate has been notified
that any Multiemployer Plan is in reorganization or insolvent under and within
the meaning of section 4241 or section 4245 of ERISA or that any Multiemployer
Plan intends to terminate or has been terminated under section 4041A of ERISA.
(n) Other Regulations. Company is not subject to regulation under the
Investment Company Act of 1940, or to any federal or state statute or regulation
limiting its ability to incur Indebtedness.
(o) Governmental Charges and Other Indebtedness. Company has filed or
caused to be filed all tax returns which are required to be filed by it. Company
has paid, or made provision for the payment of, all taxes and other levies,
assessments, fees, claims or other charges imposed by any governmental authority
which have or may have become due pursuant to said returns and all other
Indebtedness, except such taxes, levies, assessments, fees, claims or other
charges or Indebtedness, if any, which are being contested in good faith and as
to which adequate reserves (determined in accordance with generally accepted
accounting principles) have been provided or which could not reasonably be
expected to have a Material Adverse Effect if unpaid.
(p) Subsidiaries, etc. Company has no Subsidiaries, and is not a
partner in any partnership or a joint venturer in any joint venture.
(q) Solvency, Etc. Company is Solvent (as defined below) and, after
the execution and delivery of the Transaction Documents and the consummation of
the transactions contemplated thereby, Company will be Solvent. "Solvent" shall
mean, with respect to any Person on any date, that on such date (a) the present
fair saleable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (b) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature and (c) such Person is not
engaged in business or a transaction, and is not about in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital.
-5-
6
(r) Catastrophic Events; Labor Disputes. Neither Company nor its
properties is or has been affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or other casualty that could reasonably be expected to have a Material
Adverse Effect. There are no disputes presently subject to grievance procedure,
arbitration or litigation under any of the collective bargaining agreements,
employment contracts or employee welfare or incentive plans to which Company is
a party, and there are no strikes, lockouts, work stoppages or slowdowns, or,
to the best knowledge of Company, jurisdictional disputes or organizing
activity occurring or threatened which could reasonably be expected to have a
Material Adverse Effect.
(s) No Material Adverse Effect. No event has occurred and no
condition exists which could reasonably be expected to have a Material Adverse
Effect since March 31, 1999.
(t) Accuracy of Information Furnished. None of the Transaction
Documents and none of the other certificates, statements or information
furnished to Purchasers by or on behalf of Company in connection with the
Transaction Documents or the transactions contemplated thereby contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Purchasers
recognize that all financial projections furnished to the Purchasers by or on
behalf of Company in connection with the Transaction Documents or the
transactions contemplated thereby are not to be viewed as facts and that actual
results during the period or periods covered by such projections may differ from
the projected or forecasted results.
(u) Certain Agreements of Officers, Employees and Consultants.
(i) No officer, employee or consultant of Company or Company's
Subsidiaries is, or is now expected to be, in violation of any term of any
employment contract, proprietary information agreement, nondisclosure
agreement, noncompetition agreement, or any other contract or agreement or any
restrictive covenant relating to the right of any such officer, employee or
consultant to be employed by Company because of the nature of the business
conducted or to be conducted by Company or relating to the use of trade secrets
or proprietary information of others, and to the best of Company's knowledge,
after due inquiry, the continued employment of Company's officers, employees
and consultants do not subject Company to any liability for any claim or claims
arising out of or in connection with any such contract, agreement, or covenant.
(ii) To the knowledge of Company, no officers of Company, and no
employee or consultant of Company whose termination, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect,
has any present intention of terminating his or her employment or consulting
relationship with Company.
(v) Contracts or Commitments; Indebtedness. Neither Company nor any
of its properties is subject to any material judgment, order, writ, decree,
statute, rule or regulation, or any material mortgage, indenture, agreement,
instrument or contract which could reasonably be expected to have a Material
Adverse Effect. Except for this Agreement and the other Transaction Documents,
and except as set forth in Item 2(v) of the Disclosure Schedule, neither
Company nor any of its Subsidiaries is a party to any contracts or commitments
(or group of related contracts or commitments) involving more than Fifty
-6-
7
Thousand Dollars ($50,000) or having a term (including renewals or extensions
optional with another party) of more than one (1) year from the date thereof.
Company and its Subsidiaries have no Indebtedness other than Permitted
Indebtedness.
(w) Transactions with Affiliates; Investments: Except as set forth
below or on the Disclosure Schedule, there are no loans, leases, royalty
agreements or other continuing transactions between Company and any Affiliate of
Company, except transactions in the ordinary course of business and on terms at
least as favorable to Company as would be the case in an arms-length transaction
with an unaffiliated Person. Company and its Subsidiaries have no Investments
other than Permitted Investments.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser, for
that Purchaser alone, represents and warrants to Company upon the acquisition
of the Note and Warrant as follows:
(a) Binding Obligation. Such Purchaser has full legal capacity,
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Each of this Agreement and the Preferred Stock and
Warrant issued to such Purchaser is a valid and binding obligation of the
Purchaser, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and general principles
of equity.
(b) Securities Law Compliance. Such Purchaser has been advised that
the Preferred Stock and Warrants have not been registered under the Securities
Act, or any state securities laws and, therefore, cannot be resold unless they
are registered under the Securities Act and applicable state securities laws or
unless an exemption from such registration requirements is available. Such
Purchaser is aware that Company is under no obligation to effect any such
registration with respect to the Preferred Stock and Warrants or to file for or
comply with any exemption from registration. Such Purchaser has not been formed
solely for the purpose of making this investment and is purchasing the Preferred
Stock and Warrant(s) to be acquired by such Purchaser hereunder for its own
account for investment, not as a nominee or agent, and not with a view to, or
for resale in connection with, the distribution thereof. Such Purchaser has such
knowledge and experience in financial and business matters that such Purchaser
is capable of evaluating the merits and risks of such investment, is able to
incur a complete loss of such investment and is able to bear the economic risk
of such investment for an indefinite period of time. Except as set forth on
Schedule III, such Purchaser is an accredited investor as such term is defined
in Rule 501 of Regulation D under the Securities Act.
(c) Access to Information. Such Purchaser acknowledges that Company
has given such Purchaser access to the corporate records and accounts of Company
and to all information in its possession relating to Company, has made its
officers and representatives available for interview by such Purchaser, and has
furnished such Purchaser with all documents and other information required for
such Purchaser to make an informed decision with respect to the purchase of the
Preferred Stock and Warrant, including without limitation the Company's business
plan.
4. CONDITIONS TO CLOSING OF THE PURCHASERS. Each Purchaser's obligations
at the Closing are subject to the fulfillment, on or prior to the Closing Date,
of all the following conditions, any of which may be waived in whole or in part
by all of the Purchasers:
-7-
8
(a) Representations and Warranties. The representations and
warranties made by Company in Section 2 hereof shall have been true and correct
when made, and shall be true and correct on the Closing Date.
(b) Governmental Approvals and Filings. Except for any notices
required or permitted to be filed after the Closing Date with certain federal
and state securities commissions, Company shall have obtained all governmental
approvals required in connection with the lawful sale and issuance of the Notes
and Warrants.
(c) Legal Requirements. At the Closing, the sale and issuance by
Company, and the purchase by the Purchasers, of the Preferred Stock and Warrants
shall be legally permitted by all laws and regulations to which the Purchasers
or Company are subject.
(d) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchasers.
(e) Transaction Documents. Company shall have duly executed and
delivered to the Purchasers the following documents:
(A) This Agreement;
(B) The shares of Preferred Stock issued hereunder; and
(C) Each Warrant issued hereunder.
(f) Corporate Documents. Company shall have delivered to the
Purchasers each of the following:
(i) The Certificate of Incorporation of Company, including the
Certificate of Designation, certified as of a recent date prior to the Closing
Date by the Secretary of State of Delaware.
(ii) A Certificate of Good Standing or comparable certificate as
to Company, certified as of a recent date prior to the Closing Date by the
Secretary of State of Delaware.
(iii) A certificate of the Secretary of Company, dated the
Closing Date, certifying (a) that the Certificate of Incorporation of Company,
delivered to Purchasers pursuant to Section 4(g)(i) hereof, is in full force and
effect and has not been amended, supplemented, revoked or repealed since the
date of such certification; (b) that attached thereto is a true and correct copy
of the Bylaws of Company as in effect on the Closing Date; (c) that attached
thereto are true and correct copies of resolutions duly adopted by the Board of
Directors of Company and continuing in effect, which authorize the execution,
delivery and performance by Company of this Preferred Stock and Warrant Purchase
Agreement and the Preferred Stock and Warrants and the consummation of the
transactions contemplated hereby and thereby; and (d) that there are no
proceedings for the dissolution or liquidation of Company (commenced or
threatened); and
-8-
9
(iv) A certificate of the Secretary of Company, dated the
Closing Date, certifying the incumbency, signatures and authority of the
officers of Company authorized to execute and deliver this Preferred Stock
and Warrant Purchase Agreement and the Preferred Stock and Warrants on
behalf of Company and perform the Company's obligations thereunder on
behalf of Company.
5. CONDITIONS TO OBLIGATIONS OF COMPANY. Company's obligation to issue
and sell the Notes and Warrants at the Closing is subject to the fulfillment, on
or prior to the Closing Date, of the following conditions, any of which may be
waived in whole or in part by Company:
(a) Representations and Warranties. The representations and
warranties made by the Purchasers in Section 3 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
(b) Governmental Approvals and Filings. Except for any notices
required or permitted to be filed after the Closing Date with certain federal
and state securities commissions, Company shall have obtained all governmental
approvals required in connection with the lawful sale and issuance of the
Preferred Stock and Warrants.
(c) Legal Requirements. At the Closing, the sale and issuance by
Company, and the purchase by the Purchasers, of the Preferred Stock and Warrants
shall be legally permitted by all laws and regulations to which the Purchasers
or Company are subject.
(d) Purchase Price. Each Purchaser shall have delivered to Company
the Purchase Price in respect of the Preferred Stock and Warrant(s) being
purchased by such Purchaser referenced in Section 1(b) hereof.
6. MISCELLANEOUS.
(a) Waivers and Amendments. Any provision of this Agreement may be
amended, waived or modified only upon the written consent of Company and a
Majority in Interest of the Purchasers.
(b) Governing Law. This Agreement and all actions arising out of or
in connection with this Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of law provisions of the State of Delaware or of any other state.
(c) Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution and delivery of this
Agreement.
(d) Successors and Assigns. Subject to the restrictions on transfer,
the rights and obligations of Company and the Purchasers of the Preferred Stock
shall be binding upon and benefit the successors, assigns, heirs, administrators
and transferees of the parties.
(e) Entire Agreement. This Agreement together with the Preferred
Stock and Warrants and other Transaction Documents constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
-9-
10
(f) Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail,
postage prepaid, or by recognized overnight courier or personal delivery,
addressed (i) if to a Purchaser, at such Purchaser's address set forth in the
Schedule of Purchasers attached as Schedule I, or at such other address as such
Purchaser shall have furnished Company in writing, or (ii) if to Company, at
its address set forth at the beginning of this Agreement, or at such other
address as Company shall have furnished to the Purchasers in writing.
(g) Expenses. Company shall pay on demand all reasonable fees and
expenses, including reasonable attorneys fees and expenses in connection with
the preparation, execution and delivery of this Agreement and the other
Transaction Documents. Company shall pay on demand all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by
Purchasers with respect to any amendment or waivers hereof requested by Company
or in the enforcement or attempted enforcement of any of the obligations of
Company to the Purchasers under the Transaction Documents or in preserving any
of the Purchasers' rights and remedies (including, without limitation, all such
fees and expenses incurred in connection with any "workout" or restructuring
affecting the Transaction Documents or the obligations thereunder or any
bankruptcy or similar proceeding involving Company or any of its Subsidiaries).
(h) Separability of Agreements; Severability of this Agreement.
Company's agreement with each of the Purchasers is a separate agreement and the
sale of the Preferred Stock and Warrants to each of the Purchasers is a
separate sale. Unless otherwise expressly provided herein, the rights of each
Purchaser hereunder are several rights, not rights jointly held with any of the
other Purchasers. Any invalidity, illegality or limitation on the
enforceability of the Agreement or any part thereof, by any Purchaser whether
arising by reason of the law of the respective Purchaser's domicile or
otherwise, shall in no way affect or impair the validity, legality or
enforceability of this Agreement with respect to other Purchasers. If any
provision of this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
(i) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-10-
11
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
date and year first written above.
COMPANY:
XXXXXX.XXX, INC.
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
PURCHASERS:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-12-
12
SCHEDULE I
SCHEDULE OF PURCHASERS
Share of Shares Subject
Name and Address Preferred Stock to Warrant Purchase Price
---------------- --------------- -------------- --------------
13
SCHEDULE II
DISCLOSURE SCHEDULE
14
A C U B I D . C O M I N C .
BALANCE SHEET
As of April 30, 1999
Apr 30, '99
-------------
ASSETS
Current Assets
Checking/Savings
1050 - WCMA 594,154.09
1575 - K Xxxx Trust Fund 402,848.00
-------------
Total Checking/Savings 997,000.09
Accounts Receivable
1200 - Accounts Rec. Trade 10,701.94
-------------
Total Accounts Receivable 10,701.94
Other Current Assets
1290 - Allowance for Doubtful Accounts (885.00)
1300 - Inventory - AcuVision 1000 5,858.89
1310 - Inventory - Computer Chips 100.00
1320 - Inventory - AcuVision VTA 10,969.80
1350 - Work-in-progress 6,589.45
1380 - Inventory Asset (2,500.00)
1405 - Prepaid Advance Royalties 1,614.00
-------------
Total Other Current Assets 21,648.14
-------------
Total Current Assets 1,029,350.17
Fixed Assets
1830 - Computer Equipment 3,000.00
1831 - Computer Equip - Accum Amort (1,950.00)
1840 - Equipment 18,905.72
1841 - Equipment - Accum Amort (11,222.17)
1850 - Furniture and Fixtures 2,214.85
1851 - Furn and Fix - Accum Amort (1,592.25)
1880 - Accum Amort (489.00)
-------------
Total Fixed Assets 8,714.15
-------------
TOTAL ASSETS 1,038,144.22
=============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
2100 - Accounts Payable Trade 26,919.13
-------------
Total Accounts Payable 26,919.13
Other Current Liabilities
2200 - Accrued Liabilities 5,000.00
2220 - Payroll Tax Liabilities 807.07
-------------
Total Other Current Liabilities 5,807.07
-------------
Total Current Liabilities 32,726.20
-------------
Total Liabilities 32,726.20
Equity
3010 - Common Shares - Class 5,578,388.83
3020 - Additional Paid in Capital 1,257,357.09
3700 - Retained Earnings (6,863,519.78)
Net Income (74,955.04)
-------------
Total Equity 1,005,418.12
-------------
TOTAL LIABILITIES & EQUITY 1,038,144.32
=============
Page 1
15
ITEM 2(j)
FINANCIAL STATEMENTS
16
ITEM 2(k)(a)
50,000,000 shares of Common Stock, par value $0.001
10,000,000 shares of Preferred Stock, par value $0.001
17
ITEM 2(k)(b)
Outstanding Options
# of Shares
Name Subject to Options Exercise Price
----------------- ------------------ --------------
Xxxxxxxx Xxxxxxxx 100,000 $0.45
Xxxxxx Xxxxxxxx 100,000 $0.45
Xxxxx Xxxxxxxxxx 100,000 $0.45
Xxxx Xxxxxxxx 200,000 $0.45
Xxx Xxxxxx 25,000 $0.45
Xxxxx Xxxxxxxxx 10,000 $0.45
Xxxxx Xxxxxxxxx 10,000 $0.45
18
EXHIBIT A
CERTIFICATE OF DESIGNATION
19
EXHIBIT B
FORM OF WARRANT
