Exhibit 10.13
EQUITY LINE PURCHASE AGREEMENT
Between
COMPOSITE INDUSTRIES OF AMERICA, INC.
and
BURLINGTON STREET LLC
EQUITY LINE PURCHASE AGREEMENT dated as of December 3, 2001 (this
"Agreement"), by and between Burlington Street LLC, a British Virgin Islands
company (the "Investor"), and Composite Industries of America, Inc., a Nevada
corporation (formerly known as World Homes, Inc.) (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company may issue and sell to Investor from
time to time as provided herein and pursuant to Rule 506 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and Section 4(2)
thereunder, shares of its Common Stock (as defined below) for an aggregate
purchase of up to $10,000,000. All references in this Agreement to $
(dollars) shall be to US$ (United States Dollars) unless otherwise specified.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
agree as follows:
ARTICLE I
Certain Definitions
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control," when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Bid Price" means the closing bid price of the Common Stock as
reported on the Principal Market for its regular trading session on the date
in question, or if there is no such price on such date, then the closing bid
price as reported on the date nearest preceding such date.
"Blackout Payments" shall have the meaning set forth in Section 2.4.
"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be a federal legal holiday in the United States or a day on which
banking institutions in the State of New York or Nevada are authorized or
required by law or other governmental action to close.
"Capital Shares" means the Common Stock and any shares of any other
class of common stock whether now or hereafter authorized, having the right to
participate in the distribution of earnings and assets of the Company.
"Capital Shares Equivalents" means any securities, rights, or
obligations that are directly or indirectly convertible into or exchangeable
for or give any right to subscribe for or otherwise receive Capital Shares of
the Company or any warrants, options or other rights to subscribe for or
purchase Capital Shares.
"Closing" has the meaning ascribed to it in Section 2.2(a).
"Closing Date" has the meaning ascribed to it in Section 2.2(a).
"Commission" means the Securities and Exchange Commission.
"Commitment Period" means the period commencing on the date of this
agreement and expiring on the earliest to occur of: (x) the date on which the
Investor shall have paid an aggregate of $10,000,000 in Investment Amounts
pursuant to this Agreement, (y) the date this Agreement is terminated in
accordance with the terms hereof, or (z) the date occurring 24 months after
the date of this agreement.
"Common Stock" means the Company's common stock, par value $.001 per
share, or such securities into which such stock shall hereafter be
reclassified.
"Company Required Items" has the meaning ascribed to it in Section
2.2(a).
"Effective Date" means the date on which the Commission first declares
effective a Registration Statement meeting the requirements of the
Registration Rights Agreement and registering the resale by the Investor of
the Put Shares and Warrant Shares.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Investment Amount" means the dollar amount to be invested by the
Investor to purchase Put Shares as specified in a Put Notice.
"Investor Warrants" means the Common Stock purchase warrants, in the
form of Exhibit C-1 and Exhibit C-2 hereto, each to be delivered to the
Investor, concurrently with the execution of this Agreement entitling the
Investor to purchase from time to time in accordance with the terms of each
warrant, shares of Common Stock. "Market Price" on any date means the average
of the three lowest Bid Prices during the Valuation Period relating to such
date, subject to equitable adjustment in the event of a Valuation Event during
such Valuation Period.
"Outstanding" when used with reference to shares of Common Stock or
Capital Shares, means, at any date as of which the number of such Shares is to
be determined, all issued and outstanding shares of Common Stock or Capital
Shares, and shall include all such shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such shares;
provided, that "Outstanding" shall not mean any shares of Common Stock or
Capital Shares directly or indirectly owned or held by or for the account of
the Company.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Principal Market" means whichever of the Nasdaq National Market,
Nasdaq SmallCap Market, American Stock Exchange, New York Stock Exchange or
Over-The-Counter Bulletin Board that is then the principal trading exchange,
market or quotation system for the Common Stock.
"Purchase Price" means with respect to Put Shares, an amount equal to
92.5% of the Market Price for the Valuation Period for a Put.
"Put" means the exercise by the Company of its right to require the
Investor to purchase Put Shares pursuant to the terms of this Agreement.
"Put Date"means the date that a Put Notice is deemed delivered in
accordance with Section 2.1(a).
"Put Notice" means the written notice from the Company, in the form of
Exhibit A, to the Investor, specifying the Investment Amount that the Company
intends to sell to the Investor.
"Put Shares" means the number of shares of Common Stock intended to be
issued and sold to the Investor pursuant to a Put.
"Registrable Securities" has the meaning set forth in the Registration
Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement between the Company and the Investor, dated the date hereof, in the
form of Exhibit B.
"Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"Securities" means, collectively, the Put Shares, Warrants and Warrant
Shares.
"SEC Documents" has the meaning set forth in Section 4.7. "Subsidiary"
has the meaning set forth in Section 4.1.
"Trading Day" means a day on which the Common Stock is traded on the
Principal Market on which the Common Stock is then listed or quoted; provided,
that in the event that the Common Stock is not listed or quoted as set forth
above, then Trading Day shall mean any Business Day.
"Transaction Documents" has the meaning set forth in Section 4.1.
"Transfer Agent Instructions" has the meaning set forth in Section
2.2.
"Valuation Event" means an action by the Company during the Commitment
Period to:
(a) subdivide or combine the Common Stock;
(b) pay a dividend on its Capital Shares or make
any other distribution of its Capital Shares; or
(c) issue any additional Capital Shares
("Additional Capital Shares") at a price per share less, or for other
consideration lower, than the Bid Price in effect immediately prior to such
issuance, or without consideration (other than pursuant to this Agreement);
(d) issue any warrant, option, right or other
security to subscribe for or purchase Additional Capital Shares at a price per
share at any time over the life of such security (whether by reset, adjustment
or otherwise) that is less than the Bid Price in effect immediately prior to
such issuance of such warrant, option, right or other security;
(e) issue any securities convertible into or
exchangeable for Capital Shares at a price per Additional Capital Share that
is at any time over the life of such security (whether by reset, adjustment or
otherwise) less than the Bid Price on the date of issuance of such convertible
or exchangeable security;
(f) make a distribution of its assets or evidences
of its indebtedness to the holders of its Capital Shares as a dividend in
liquidation or by way of return of capital or other than as a dividend payable
out of earnings or surplus legally available for dividends under applicable
law or any distribution to such holders made in respect of the sale of all or
substantially all of the Company's assets (other than under the circumstances
provided for in the foregoing subsections (a) through (e)); or
(g) take any other action affecting the number of
Outstanding Capital Shares, which in the opinion of the Company's Board of
Directors, determined in good faith, would have a Material Adverse Effect upon
the rights of the Investor at the time of a Put.
"Valuation Period" means the period of ten Trading Days commencing on
the Put Date.
"Warrants" means the Investor Warrants.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II
Purchase and Sale of Common Stock
Section 2.1 Investments.
(a) Puts. Subject to the conditions and
limitations set forth herein, the Company may make a Put at any time during
the Commitment Period by the delivery of a duly completed Put Notice. The
number of Put Shares shall be determined by dividing the Investment Amount
specified in the Put Notice by the Purchase Price for the Valuation Period for
such Put. A Put Notice shall be deemed delivered on: (i) the Trading Day it
is received by facsimile or otherwise by the Investor if such notice is
received prior to 12:00 noon (New York time), or (ii) the immediately
succeeding Trading Day if it is received by facsimile or otherwise after 12:00
noon (New York time) on a Trading Day or at any time on a day which is not a
Trading Day.
(b) Limitations on Puts and Common Stock Issuable.
(i) The number of Put Shares that the
Company may issue and sell to the Investor under a Put Notice may not result
in the Investor and its Affiliates beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act) in excess of 4.999% of the
shares of Common Stock that will be outstanding upon the Closing of such Put.
By the second Trading Day following the Put Date, the Investor will notify the
Company to what extent, if any, that the cap contained in this subsection
would otherwise be exceeded as a result of the Put Notice. In such case, the
number of Put Shares subject to such Put Notice shall be deemed automatically
revised to a number that would not exceed such cap.
(ii) The maximum Investment Amounts for all
Puts is an aggregate of $10,000,000.
(iii) The Investment Amount for each Put
shall be neither less than $50,000 nor more than the lesser of (x) $500,000
and (y)125% of the weighted average daily price for the twenty Trading Day
period prior to the applicable Put Date multiplied by the weighted average
daily trading volume for such twenty Trading Day period.
(iv) The Company may not deliver a Put
Notice during the continuation of any of the events specified in Section 5.4.
(v) For the ten Trading Days immediately
preceding the applicable Put Date, the average Bid Price shall be greater than
$0.50 (as equitably adjusted for stock splits, recombinations and similar
events).
(vi) At least 15 Trading Days shall have
elapsed since the immediately preceding Closing Date.
(vii) The Company's right to deliver a Put
Notice is subject to the satisfaction or waiver by the Investor, of the
conditions set forth in Section 6.1.
Section 2.2 Closings.
(a) Subject to the satisfaction of the conditions
set forth in Section 6.1 hereof, the closing of the purchase by the Investor
of Put Shares following a Put (a "Closing") shall occur on the first Business
Day following the end of the Valuation Period for such Put (a "Closing Date").
On each Closing Date, the Company shall deliver (or cause to be delivered) to
the Investor: (1) the certificate contemplated by Section 6.1(c); (2) the
legal opinion contemplated by Section 6.1(e); (3) the calculation notice in
the form of Exhibit E (which shall be countersigned by the Investor) setting
forth: (x) the calculation of the total number of Put Shares that are to be
issued and sold at such Closing and (y) the calculation of the Investment
Amount for the Put Shares issuable at such Closing, (4) a copy of a supplement
to the Registration Statement stating the applicable Purchase Price and the
amount of Put Shares sold on such Closing Date, in the form to be filed with
the Commission and (5) all other documents, instruments and writings required
to be delivered by it pursuant to the Transaction Documents in order to effect
a Closing hereunder (the items contemplated by clauses (1) through (5) above
are collectively referred to as the "Company Required Items"). At least one
Business Day prior to each Closing Date, the Company shall deliver to the
Investor's account through the Depository Trust Company DWAC system, per
written account instructions delivered by the Investor to the Company (the
"Investor's Account"), the Put Shares to be issued and sold to the Investor at
such Closing and meeting the requirements of Section 5.3 which Put Shares
shall be held in escrow pending delivery to the Company of the Investment
Amount for the Put Shares to be issued and sold at such Closing pursuant to
the terms hereof.
(b) Upon receipt of the Company Required Items and
subject to the satisfaction or waiver of the conditions to the Investor's
obligation to purchase Put Shares at such Closing as provided in Section 6.1,
on each Closing Date the Investor shall deliver (or cause to be delivered) to
the Company, the agreed Investment Amount for the Put Shares to be issued and
sold at such Closing, less (1) any cash fee owed to any broker or finder
engaged by the Company in connection with the transactions contemplated by
this Agreement (a "Broker") plus (2) the amount of any Blackout Payments,
together with all accrued interest thereon, then owed and for which full
payment shall not have previously been made. In the event that: (i) any
Company Required Item shall not have been delivered, (ii) the Investor's
Account shall not have been credited with the Put Shares to be issued and sold
to the Investor at such Closing or (iii) any condition set forth in Section
6.1 shall not have been fulfilled by the Company or waived by the Investor or
(iv) the Investor shall for any reason fail to make payment of the Investment
Amount to the Company, such Closing shall be canceled and any Company Required
Items delivered to the Investor and any Put Shares credited to the Investor's
Account, in both cases, in connection with such Closing, shall be returned to
or as directed by the Company.
Section 2.3 Termination of Obligation.
(a) Notwithstanding anything to the contrary
contained herein, the obligation of the Investor to purchase Put Shares shall
terminate permanently if the Company breaches in any material respect its
obligations under the Transaction Documents and such breach is not cured by
the 15th day following notice thereof. The Company agrees that it may not
deliver a Put Notice between the time of Investor's delivery of a notice of
such default and the date of cure of such default. In addition,
notwithstanding anything to the contrary contained herein, if (A) after the
Effective Date, the Registration Statement ceases to be effective (or the
prospectus thereunder is not available for use by the Investor) for the resale
of all Put Shares then held by the Investor or Warrant Shares issuable to the
Investor for more than ten consecutive Trading Days or an aggregate of 30
Trading Days, and (B) the Company shall fail to cure the event described in
clause (A) of this sentence by the tenth Trading Day following delivery by the
Investor of a written demand to cure such event, then the obligation of the
Investor to purchase Put Shares shall terminate permanently.
(b) The obligation of the Company to sell Put
Shares to the Investor following delivery of a Put Notice shall terminate if
the Investor fails to honor such Put Notice under circumstances where the
conditions to the Closing of such Put have been satisfied within two Trading
Days following the Closing Date scheduled for such Put, and the Company
notifies Investor of such termination. Notwithstanding any such termination,
the Company shall maintain the Registration Statement in effect (and shall
permit the Investor to use the prospectus thereunder to sell Registrable
Securities) for not less than 45 Trading Days following the date of any such
termination.
Section 2.4 Blackout Payments. If for any reason an Investor is
not permitted for more than an aggregate of ten consecutive days during the
period commencing on the Effective Date and ending on the 30th Trading Day
following the expiration of the Commitment Period to use the prospectus under
the Registration Statement to dispose of all Registrable Securities issued to
it hereunder or if such Registration Statement shall not be effective, then
the Company shall pay to such Investor on the following Business Day and on
the Business Day following each such additional ten day period in excess of
the initial ten day period, as liquidated damages and not as a penalty, cash
in an amount equal to 2% of the Purchase Price of the Put Shares issued to and
then held by such Investor. The amounts that may become due and payable
pursuant to this Section are sometimes referred to herein as "Blackout
Payments." Late interest on any unpaid Blackout Payments shall accrue from
and after the date due at the rate of 12% per annum (or such lesser maximum
amount as shall be permitted under applicable law) until all Blackout
Payments, plus all accrued interest thereon, shall have been paid in full.
Section 2.5 Delisting; Suspension. If at any time prior to the
30th Trading Day following the expiration of the Commitment Period the Common
Stock shall fail to be listed or quoted for trading on a Principal Market or
shall have been suspended from trading thereon (excluding suspensions of not
more than one Trading Day as a result of material announcements by the
Company) (a "Repurchase Event"), the Investor shall have the right,
exercisable within 30 days of a Repurchase Event, to put to the Company, and
the Company shall purchase, all or such portion of the Put Shares issued to
and then held by the Investor. The purchase price for such shares shall equal
the higher of (x) the Purchase Price paid for such shares and (y) the product
of (1) the number of such shares and (2) the higher of the closing sales price
of the Common Stock on the date of the demand by the Investor of such put and
the closing sales price of the Common Stock (as reported by Bloomberg L.P. or
any successor to its function of reporting bid prices) on the date of payment
(if there shall no longer be a reported closing sales price for the Common
Stock, the amount under this clause (y) shall equal the last reported closing
sale price of the Common Stock on the Principal Market). The purchase price
under this Section shall be paid in cash and shall be due in full by the 10th
Business Day following the demand therefor. Late interest on any unpaid
portion of the amounts that are due from the Company under this Section shall
accrue from and after the date due at the rate of 12% per annum (or such
lesser maximum amount as shall be permitted under applicable law) until all
such amounts, plus all accrued interest thereon, shall have been paid in full.
The Investor shall have the right to rescind ab initio any demand for a put
hereunder at any time prior to the payment in full of the applicable purchase
price by the Company.
Section 2.6 Deliveries on the Date of Execution. Concurrently
with their execution and delivery of this Agreement, the parties shall deliver
or cause to be delivered the following: (1) the Company shall deliver to (i)
the Investor, executed original copies of this Agreement, the Registration
Rights Agreement, the Investor Warrants, and the legal opinion of Xxxxx X.
Xxxxx, Esq., outside counsel to the Company in agreed form, and (ii) Xxxxxxxx
Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, $25,000 for reimbursement of the
Investor's legal expenses in connection with the preparation of the
Transaction Documents, and (2) the Investor shall deliver to the Company
executed original copies of this Agreement and the Registration Rights
Agreement.
ARTICLE III
Representations and Warranties of Investor
The Investor represents and warrants to the Company as follows:
Section 3.1 Intent. The Investor is entering into this Agreement
for its own account and has no present arrangement at any time to sell or
distribute the Put Shares or Warrant Shares to or through any Person or
entity; provided, however, that by making the representations herein, the
Investor does not agree to hold Securities for any minimum or other specific
term and reserves the right to dispose of Put Shares and Warrant Shares at any
time in accordance with federal and state securities laws applicable to such
disposition and the terms and conditions, if any, relating thereto as set
forth in this Agreement and the Registration Rights Agreement.
Section 3.2 Status. The Investor is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501(a) of Regulation D), and Investor has such experience
in business and financial matters that it has the capacity to protect its own
interests in connection with this transaction and is capable of evaluating the
merits and risks of an investment in the Securities. The Investor
acknowledges that an investment in the Securities is speculative and involves
a high degree of risk. The Investor is not a registered broker-dealer under
the Exchange Act nor is such Investor an Affiliate of a registered broker-
dealer.
Section 3.3 Authority. The Investor has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Registration Rights Agreement and
otherwise to carry out its obligations thereunder. The execution and delivery
of each of this Agreement and the Registration Rights Agreement by the
Investor and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary corporate action on the part of the
Investor. Each of this Agreement and the Registration Rights Agreement has
been duly executed by the Investor and, when delivered in accordance with the
terms hereof, will constitute the valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms.
Section 3.4 Organization and Standing. The Investor validly
exists, and is in good standing under the laws of the jurisdiction of its
organization.
Section 3.5 Manner of Sale. The Investor is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice
or other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.
Section 3.6 Financial Capacity. The Investor currently has the
financial capacity to meet its obligations to the Company hereunder, and the
Investor has no present knowledge of any circumstances which could cause it to
become unable to meet such obligations in the future.
Section 3.7 Underwriter Liability. The Investor understands that
it is the position of the Commission that with respect to any disposition of
Put Shares and Warrant Shares through a Registration Statement the Investor
will be treated as an underwriter within the meaning of Section 2(11) of the
Securities Act. The Investor agrees to be identified as an underwriter of the
Registrable Securities sold by it in the Registration Statement.
Section 3.8 Access to Information. The Investor acknowledges that
it has reviewed the SEC Documents and has been afforded: (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of
the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment; and (iii)
the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment and to verify the accuracy and completeness of the information
contained in the SEC Documents. Neither such inquiries nor any other
investigation conducted by or on behalf of the Investor or its representatives
or counsel shall modify, amend or affect Investor's right to rely on the
truth, accuracy and completeness of the SEC Documents and the Company's
representations and warranties contained in the Transaction Documents.
The Company acknowledges and agrees that the Investor has not
made and does not make any representations or warranties with respect to the
transactions contemplated hereby other than as specifically set forth in this
Article III.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to the Investor on the date of
this Agreement, on each Put Date and on each Closing Date as follows:
Section 4.1 Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. The Company has no subsidiaries other than as set forth
in Schedule 4.1 (the "Subsidiary"). The Subsidiary is an entity, duly
incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
The Company is duly qualified to do business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could, individually or in the aggregate, (x) adversely affect
the legality, validity or enforceability of the Securities or any of this
Agreement, the Registration Rights Agreement or the Warrants (collectively,
the "Transaction Documents"), (y) have or result in a material adverse effect
on the results of operations, assets, prospects, or condition (financial or
otherwise) of the Company and the Subsidiary, or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Documents (any of (x), (y) or (z), a "Material Adverse
Effect").
Section 4.2 Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise
to carry out its obligations thereunder. The execution and delivery of each
of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company. Each of the Transaction
Documents has been duly executed by the Company and, when delivered (or filed,
as the case may be) in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms. The Company is not in violation of any of the
provisions of its respective certificate or articles of incorporation, by-laws
or other organizational or charter documents.
Section 4.3 Capitalization. As of October 3, 2001, the Company
had 200,000,000 shares of Common Stock authorized and 40,065,281 shares of
Common Stock issued and outstanding. As of October 22, 2001, the Company had
options to purchase 775,000 shares of Common Stock and warrants outstanding to
purchase 213,675 shares of Common Stock. The Company owns all of the capital
stock of its Subsidiary. No shares of Common Stock are entitled to preemptive
or similar rights, nor is any holder of securities of the Company or any
Subsidiary entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company or any Subsidiary by virtue of any
of the Transaction Documents. Except as a result of the purchase and sale of
the Securities and except as disclosed in the SEC Documents or as set forth in
Schedule 4.3, there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings, or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares
of Common Stock. The issue and sale of the Securities hereunder will not
obligate the Company to issue shares of Common Stock or other securities to
any Person other than to the Investor and the Brokers and will not result in a
right of any holder of the Company's securities to adjust the exercise or
conversion or reset price under such securities.
Section 4.4 Issuance of the shares of Common Stock. When issued
and paid for in accordance with the terms hereof and the Warrants (as
applicable), the Put Shares and Warrant Shares will be duly and validly
issued, fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of first refusal of any kind (collectively, "Liens").
The Company has on the date hereof and will, at all times during the
Commitment Period and while the Warrants are outstanding, maintain an adequate
reserve of duly authorized shares of Common Stock, reserved for issuance to
the Investor and the holders of the Warrants, to enable it to perform its
exercise and other obligations under this Agreement and the Warrants.
Section 4.5 Filings, Consents and Approvals. Neither the Company
nor any Subsidiary is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) the filing of the
Registration Statement with the Commission, (ii) filings as may be required
under state securities laws, and (iii) in all other cases where the failure to
obtain such consent, waiver, authorization or order, or to give such notice or
make such filing or registration would not reasonably be expected to have or
result in, individually or in the aggregate, a Material Adverse Effect
(collectively, the "Required Approvals").
Section 4.6 No Default or Violation. Except as described in the
SEC Documents, neither the Company nor any Subsidiary (i) is in default under
or in violation of (and no event has occurred which has not been waived which,
with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of,
any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound, (ii)
is in violation of any order of any court, arbitrator or governmental body, or
(iii) is in violation of any statute, rule or regulation of any governmental
authority, in each case of clauses (i), (ii) or (iii) above, except as would
not reasonably be expected to individually or in the aggregate, have or result
in a Material Adverse Effect.
Section 4.7 SEC Reports; Financial Statements. The Company has
filed all reports required to be filed by it under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), including, without limitation, all
filings required pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required
by law to file such material) (the foregoing materials being collectively
referred to herein as the "SEC Reports" and, together with the Schedules to
this Agreement, the "Disclosure Materials") on a timely basis or has received
a valid extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
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. All material agreements to which the Company is a party or to
which the property or assets of the Company are subject have been filed as
exhibits to the SEC Reports as required under the Exchange Act. The financial
statements of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. Since January
1, 2000, except as specifically disclosed in the SEC Documents, (a) there has
been no event, occurrence or development that has resulted or that could
result in a Material Adverse Effect, (b) the Company has not incurred any
liabilities (contingent or otherwise) other than (x) liabilities incurred in
the ordinary course of business consistent with past practice and (y)
liabilities not required to be reflected in the Company's financial statements
pursuant to GAAP or required to be disclosed in filings made with the
Commission, (c) the Company has not altered its method of accounting or the
identity of its auditors and (d) the Company has not declared or made any
payment or distribution of cash or other property to its stockholders or
officers or directors (other than in compliance with existing Company stock
option plans or employee benefit plans (as defined in Rule 405 of Regulation
C)) with respect to its capital stock, or purchased, redeemed (or made any
agreements to purchase or redeem) any shares of its capital stock.
Section 4.8 Investment Company. The Company is not, and is not an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 4.9 Certain Fees. Other than fees payable to the Broker,
no fees or commissions will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this Agreement.
The Investor shall have no obligation with respect to any fees or with respect
to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall indemnify and
hold harmless the Investor, its employees, officers, directors, agents, and
partners, and their respective Affiliates, from and against all claims,
losses, damages, costs (including the costs of preparation and attorney's
fees) and expenses suffered in respect of any such claimed or existing fees,
as such fees and expenses are incurred.
Section 4.10 Private Offering. Assuming the accuracy of the
representations and warranties of the Investors set forth in Sections 3.1-3.8,
the offer, issuance and sale of the Securities to the Investors as
contemplated hereby are exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf has
taken or is contemplating taking any action which could subject the offering,
issuance or sale of the Securities to the registration requirements of the
Securities Act including soliciting any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.
Section 4.11 Listing and Maintenance Requirements Compliance.
Except as set forth in the SEC Reports, the Company has not, in the two years
preceding the date hereof, received notice (written or oral) from any stock
exchange, market or trading facility on which the Common Stock is or has been
listed (or on which it has been quoted) to the effect that the Company is not
in compliance with the listing or maintenance requirements of such exchange,
market or trading facility. The Company is, and has no reason to believe that
it will not in the foreseeable future continue to be, in compliance with the
listing and maintenance requirements for continued trading of the Common Stock
on the OTC Bulletin Board.
Section 4.12 Patents and Trademarks. The Company and its
Subsidiary have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses and rights which are necessary or material for use in connection with
their respective business as described in the SEC Documents and which the
failure to so have would have a Material Adverse Effect (collectively, the
"Intellectual Property Rights"). Neither the Company nor the Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or its Subsidiary violates or infringes upon the rights of any Person.
To the best knowledge of the Company, all such Intellectual Property Rights
are enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights.
Section 4.13 Registration Rights; Rights of Participation. Except
as set forth on Schedule 6(b) to the Registration Rights Agreement, the
Company has not granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority which has
not been satisfied. Except as set forth on Schedule 6(b) to the Registration
Rights Agreement, no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.
Section 4.14 Regulatory Permits. The Company and its Subsidiary
possess all certificates, authorizations and permits issued by the appropriate
Federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the
failure to possess such permits could not, individually or in the aggregate,
have or result in a Material Adverse Effect ("Material Permits"), and neither
the Company nor the Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.
Section 4.15 Title. The Company and the Subsidiary have good and
marketable title in fee simple to all real property owned by them which is
material to the business of the Company and the Subsidiary and good and
marketable title in all personal property owned by them which is material to
the business of the Company and its Subsidiary, in each case free and clear of
all Liens, except for Liens 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 its Subsidiary. Any real property and
facilities held under lease by the Company and its Subsidiaries are held by
them under valid, subsisting and enforceable leases of which the Company and
its Subsidiary are in compliance and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiary.
Section 4.16 Litigation. There is no action, suit, inquiry,
notice of violation, proceeding or investigation pending or, to the knowledge
of the Company, threatened against or affecting the Company or the Subsidiary
or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an "Action") which (i) adversely
affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or result in a
Material Adverse Effect.
Section 4.17 Taxes. Except as set forth on Schedule 4.17, all
Federal, state, local and foreign tax returns, information returns, reports
and estimated Tax returns have been timely filed on behalf of the Company and
all Taxes shown on any such return or report have been paid on a timely basis.
There is no action, suit, proceeding, investigation, audit or claim now
proposed or pending with respect to any Tax of the Company and the Company is
not aware of any threatened claim for Tax deficiencies. There are no
outstanding agreements or waivers for the extension of time for assessment of
any Tax payable by the Company, nor has any such waiver or agreement been
requested by the Internal Revenue Service or any other taxing authority. The
Company has not filed or been included in a consolidated, unitary or combined
Tax return with another person. The Company has collected or withheld all
material amounts required to be collected or withheld by it for any Taxes, and
all such material amounts have been paid to the appropriate governmental
agencies or set aside in appropriate accounts for future payment when due.
The Company is in material compliance with, and its records contain all
material information and documents necessary to comply with, all applicable
information reporting and Tax withholding requirements. As used herein, the
terms "Tax" and "Taxes" shall mean (i) any income, alternative or add-on
minimum tax, gross income, gross receipts, franchise, profits, including
estimated taxes relating to any of the foregoing, or other similar tax or
other like assessment or charge of similar kind whatsoever, (ii) any sales,
use, ad valorem, business license, withholding, payroll, employment, excise,
stamp, transfer, recording, occupation, premium, property, value added, custom
duty, severance, windfall profit tax, license, or other tax, governmental fee
or other similar assessment or charge, and (iii) any interest and any penalty,
addition to tax or additional amount imposed by any federal, state, local or
foreign governmental authority responsible for the imposition of any such tax
(domestic or foreign).
Section 4.18 No Conflicts. The execution, delivery and performance
of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated thereby do not and will not (i)
conflict with or violate any provision of the Company's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), 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
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or subsidiary debt or
otherwise) or other understanding to which the Company or any subsidiary is a
party or by which any property or asset of the Company or any subsidiary is
bound or affected, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a subsidiary is
subject (including federal and state and foreign securities laws and
regulations), or by which any property or asset of the Company or a subsidiary
thereof is bound or affected; except in the case of each of clauses (ii) and
(iii), as could not, individually or in the aggregate, have or result in a
Material Adverse Effect. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental authority,
except for violations which, individually or in the aggregate, could not have
or result in a Material Adverse Effect.
Section 4.19 Disclosure. The Company confirms that neither it nor
any other Person acting on its behalf has provided the Investor or its agents
or counsel with any information that constitutes or might constitute material
non-public information. The Company understands and confirms that the
Investor shall be relying on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Investor regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf
of the Company are true and correct in all material respects and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 4.20 Absence of Certain Proceedings. Except as specified
in Schedule 4.20, none of the following has occurred to the Company (or any
predecessor entity), the Subsidiary, or any of executive officer, director or
control person of the Company:
(a) A filing by or against the Company, the
Subsidiary or such other Person of a petition under federal bankruptcy or
state insolvency laws, or the appointment by a governmental authority (with or
without consent) of a receiver, trustee, fiscal agent or similar Person for
the business or property of the Company, such Subsidiary or such other Person,
or any partnership in which it was a general partner or corporation or
business association in which it was an executive officer or director either
at the time of such petition or appointment or during the two years prior to
that time.
(b) A conviction in a criminal Action or being
named a subject of a pending criminal Action (excluding traffic violations and
other minor offenses).
(c) Being found or otherwise judged by a court of
competent jurisdiction in a non-criminal Action or by the Commission, a stock
market or another self-regulatory organization, to have violated any
securities law or to have breached a fiduciary duty, where such finding or
judgment has not been subsequently reversed, suspended, or vacated.
(d) Being subject to any order, judgment or decree
(not subsequently reversed, suspended or vacated) of any court of competent
jurisdiction, stock market authority or other self-regulatory organization,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting, any of the following activities:
(i) Engaging in any type of business
practice; or
(ii) Engaging in any activity in connection
with the purchase, sale, investment management or underwriting of securities
or commodities.
(e) Being subject of a pending Action involving a
claim or investigation of a breach of fiduciary duty or violation of
securities laws (including any investigation by or on behalf of the
Commission).
(f) The pendency before the Commission of a
request for confidential treatment of information.
Section 4.21 Solvency. Based on the financial condition of the
Company as of the Closing Date, (i) the Company's fair saleable value of its
assets exceeds the amount that will be required to be paid on or in respect of
the Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account the timing
and amounts of cash to be payable on or in respect of its debt).
Section 4.22 Labor Relations. No material labor problem exists or,
to the knowledge of the Company, is imminent with respect to any of the
employees of the Company.
Section 4.23 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 Company's Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Investors as a result
of the Investors and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation the
Company's issuance of the Securities and the Investors ownership of the
Securities.
ARTICLE V
Other Agreements of the Parties
Section 5.1 Listing of Common Stock. The Company shall maintain
the listing of the Common Stock on a Principal Market, and as soon as
practicable (but in any event prior to the commencement of the Commitment
Period) shall list on such Principal Market all of the Put Shares and all
potentially issuable Warrant Shares. The Company further agrees, if the
Company applies to have the Common Stock traded on any other Principal Market,
it will include in such application the issued and issuable Put Shares and
Warrant Shares. The Company will take all action to continue the listing and
trading of its Common Stock on the Principal Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market.
Section 5.2 Exchange Act Registration; Rule 144 Compliance. The
Company will cause its Common Stock to continue to be registered under Section
12(g) or 12(b) of the Exchange Act, will use its best efforts to timely comply
in all respects with its reporting and filing obligations under the Exchange
Act, and will not take any action or file any document (whether or not
permitted by Exchange Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations thereunder. During the Commitment Period, the Company will notify
the Investor immediately following each filing by the Company under the
Exchange Act. As long as the Investor own Securities, if the Company is not
required to file reports pursuant to such sections, it will prepare and
furnish to the Investor and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act such information as is required
for the Investor to sell the Securities under Rule 144 promulgated under the
Securities Act. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell such Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act,
including causing its attorneys to render and deliver any legal opinion
required in order to permit such Person to sell its Securities under Rule 144
upon notice of an intention to sell on Form 144 or other form of notice having
a similar effect. Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized officer as
to whether it has complied with such requirements.
Section 5.3 Legends. The certificates evidencing the Common Stock
to be sold or otherwise issued to the Investor hereunder (including the
Warrant Shares) at any time while a Registration Statement is then effective
shall be issued and delivered to the Investor free of restrictive legends of
any kind and no instructions or "stop transfer orders," so called, "stock
transfer restrictions," or other restrictions have been or shall be given to
the Company's transfer agent with respect thereto. Prior to the first
Closing, the Company will issue to the transfer agent for its Common Stock
(and to any substitute or replacement transfer agent for its Common Stock upon
the Company's appointment of any such substitute or replacement transfer
agent) instructions to deliver the Put Shares and Warrant Shares without
restrictive legends as required by this Section and shall cause its counsel to
deliver to such transfer agent any legal opinion required in order for the
transfer agent to deliver shares in such manner. Unless such instructions
cover Securities issuable at future Closings, the Company must deliver new
such instructions prior to each Closing.
Section 5.4 Notice of Certain Events Affecting Registration;
Suspension of Right to Make a Put. The Company will immediately notify the
Investor upon the occurrence of any of the following events in respect of a
Registration Statement or related prospectus in respect of an offering of
Registrable Securities; (i) receipt of any request for additional information
from the Commission or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement the response
to which would require any amendments or supplements to the registration
statement or related prospectus; (ii) the issuance by the Commission or any
other federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; (iv) the happening of any
event that makes any statement made in the Registration Statement or related
prospectus or any document incorporated by reference untrue in any material
respect or that requires the making of any changes in the Registration
Statement, related prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case
of the related prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the prospectus or
Registration Statement, as the case may be, would be appropriate; and the
Company will promptly make available to the Investor any such supplement or
amendment to the related prospectus or Registration Statement.
Section 5.5 Subsequent Financing; Limitation on Registrations.
(a) From the date of this Agreement through the 360th day following the
first Closing Date, other than to the Investor pursuant to this Agreement and
the Warrants, the Company will not offer, sell, grant any option to purchase
or any right to reprice securities, or otherwise dispose of (or announce any
offer, sale, grant or any option to purchase or other disposition) any Common
Stock or Capital Shares Equivalents, and the Company will cause each of its
Subsidiaries not to offer, sell or issue during such period any Capital Shares
Equivalents. The restriction contained in this Section 5.5(a) shall not limit
the right of the Company to offer and sell shares of Common Stock or Capital
Shares Equivalents at a price per share that is not less than the Bid Price on
the date of such offer or sale (the "Threshold Price"), provided, that, (i)
such securities are not at any time entitled to any reset, repricing, or other
purchase price adjustment or other purchase price protection (including, in
the case of Capital Shares Equivalents, variable or reset rate conversion or
exchange pricing), whether contractually or through one or more ancillary
securities such as a repricing warrant or purchase right that could result in
the issuance of Common Stock following the initial issuance of such shares or
Capital Shares Equivalents at less than the Threshold Price.
(b) In furtherance of the restriction contained in Section
5.5(a) above, other than to the Investors or Affiliates thereof, prior to the
expiration of the Commitment Period the Company may not enter into any equity
line or similar financing arrangement or issue or agree to issue any shares of
its Common Stock or any Capital Shares Equivalents pursuant to any equity line
or similar type of financing, unless otherwise agreed to in writing by the
Company and the Investors.
(c) Except for (x) Registrable Securities, (y) securities
of the Company permitted pursuant to Section 6(c) of the Registration Rights
Agreement to be registered in the Registration Statement, and (z) Common Stock
permitted to be issued pursuant to Section 5.5(e), the Company may not until
the 90th day after the Effective Date file a registration statement to
register any of its securities other than the Registration Statement.
(d) With respect to Section 5.5(a), (b) and (c) the
restrictive periods shall be extended for the number of Trading Days during
such period (A) in which trading in the Common Stock is suspended by any
securities exchange or market or quotation system on which the Common Stock is
then listed, or (B) that the Registration Statement is not effective following
the Effective Date, or (C) that the prospectus included in the Registration
Statement may not be used by the holders thereof for the resale of Registrable
Securities following the Effective Date.
(e) The restrictions contained in Section 5.5 (a)-(c)
shall not apply to: (i) the issuance of Common Stock to a bona fide bank,
landlord, or other lending institution whose primary business is lending money
or leasing real property and not the trading or investment of securities under
the terms of any loan, credit or lease facility, (ii) the issuance of any
Common Stock or Common Stock Equivalents to a merger partner as consideration
in connection with a merger and/or acquisition or consolidation with another
entity in which the Company is the surviving entity, (iii) a bona fide
underwritten public offering of the Common Stock that is not at any actual or
implied discount (other than the customary underwriter's discount) to the then
market price of the Common Stock resulting in net proceeds to the Company in
excess of $10,000,000 (it being understood that equity line transactions,
including any on-going warrant financing, or any similar arrangements shall
not constitute a bona fide underwritten public offering of the Common Stock
for the purposes hereof), (iv)the granting of options or warrants to
employees, officers and directors of the Company, and the issuance of Common
Stock upon exercise of such options or warrants granted under any stock option
plan or employee benefit plan (as defined in Rule 405 of Regulation C)
heretofore or hereinafter duly adopted by the Company, (v) the issuance of
shares of Common Stock issuable upon exercise of any currently outstanding
warrants and other outstanding convertible securities of the Company, in each
case as and to the extent disclosed in Schedule 4.3 (but not as to any
amendments or modifications of the terms of such securities after the date of
this Agreement, including "back-dated" agreements), (vi) shares of Common
Stock issuable in connection with a Strategic Transaction (as defined below),
and (vii) any issuances of Common Stock or Common Stock Equivalents from and
after the Closing Date, if any, on which the Purchase Price paid for Put
Shares, when aggregated with the Purchase Price paid at all other prior
Closings, shall equal or exceed $1,000,000. For purposes of this Section
5.5(e), a "Strategic Transaction" shall mean a transaction or relationship in
which the Company issues shares of Common Stock to an entity which is, itself
or through its subsidiaries, an operating company in a business related to the
business of the Company and in which the Company receives material benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.
Section 5.6 Integration. The Company shall not, and shall use its
best efforts to ensure that, no affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the
Securities hereunder to the Investor.
Section 5.7 Certain Securities Laws Disclosures; Publicity. The
Company shall: (i) within 10 days of the date of this Agreement, issue a press
release acceptable to the Investor disclosing the transactions contemplated
hereby, (ii) file with the Commission a Report on Form 8-K disclosing the
transactions contemplated hereby within ten Business Days after the date of
this Agreement, and (iii) timely file with the Commission a Form D promulgated
under the Securities Act. The Company shall, no less than two Business Days
prior to the filing of any disclosure required by clauses (ii) and (iii)
above, provide a copy thereof to the Investor for its review. The Company
and the Investor shall consult with each other in issuing any other press
releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or stock market
or trading facility with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications without the prior written
consent of the other, except that if such disclosure is required by law or
stock market regulation, in which such case the disclosing party shall
promptly provide the other party with prior notice of such public statement,
filing or other communication. Notwithstanding the foregoing, the Company
shall not publicly disclose the name of the Investor, or include the names of
the Investor in any filing with the Commission, or any regulatory agency,
trading facility or stock market without the prior written consent of the
Investor, except to the extent such disclosure (but not any disclosure as to
the controlling Persons thereof) is required by law or stock market
regulations, in which case the Company shall provide the Investor with prior
notice of such disclosure.
Section 5.8 Use of Proceeds. The Company will use the net
proceeds from the sale of the Securities for working capital purposes;
however, the Company will not use any of the proceeds from the sale of
Securities to fund the businesses or finances of M.J.B. Towers or Tribal
Electric Association - 2000, both of which the Company represents as "self-
funded" as of the date of this Agreement. The Company may not use any of the
proceeds from the sale of Securities hereunder to repay or otherwise satisfy
any portion of the Company's debt, except the payment of trade payables in the
ordinary course of the Company's business and prior practices and except for
the repayment of the Company's 6% Convertible Debenture Due November 13,
2002, in the original principal amount of $750,000, issued to the Investor.
In furtherance of the foregoing, the Company agrees that it will not use any
proceeds from the sale of Securities hereunder to repay amounts owed by the
Company to any management member of the Company. The Company may not use any
of the proceeds from the sale of Securities hereunder to redeem any securities
of the Company other than securities held by the Investor.
Section 5.9 Indemnification. (a)(1) The Company agrees to
indemnify and hold harmless the Investor, its shareholders, partners,
officers, directors, employees, agents and representatives and their
respective Affiliates against any and all damages, claims, losses,
liabilities, costs and expenses (including reasonable counsel fees and
expenses) which may be suffered or incurred by any of them as a result of or
relating to any misrepresentation, breach or inaccuracy, or any allegation by
a third party that, if true, would constitute a breach or inaccuracy, of any
of the representations, warranties or covenants made by the Company in this
Agreement or any other Transaction Document.
(2) The Investor, agrees to indemnify the Company,
its shareholders, partners, officers, directors, employees, agents and
representatives and their respective Affiliates against any and all damages,
claims, losses, liabilities, costs and expenses (including reasonable counsel
fees and expenses) which may be suffered or incurred by any of them as a
result of or relating to any misrepresentation, breach or inaccuracy, or any
allegation by a third party that, if true, would constitute a breach or
inaccuracy, of any of the representations, warranties or covenants made by the
Investor in this Agreement or any other Transaction Document.
(3) In case any action, litigation, proceeding or
investigation (a "Proceeding") shall be instituted involving any Person in
respect of which indemnity may be sought pursuant to this Section, such Person
(the "indemnified party" shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing of the
occurrence of the facts and circumstances giving rise to such claim. The
failure of any Person to deliver the notice required by this Section5.9 shall
not in any way affect the indemnifying party's indemnification obligation
hereunder except and only to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and
materially adversely prejudiced the indemnifying party. In case any such
Proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party and shall pay as incurred the fees and expenses of such counsel related
to such proceeding. In any such Proceeding, any indemnified party shall have
the right to retain its own counsel or pay its own expenses. Notwithstanding
the foregoing, the indemnifying party shall pay as incurred the fees and
expenses of the counsel retained by the indemnified party in the event (i)the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii)the named parties to any such proceedings
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any
Proceeding effected without its written consent (which consent may not be
unreasonably withheld) but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment and the indemnifying party shall obtain a full release
of the indemnified party.
(b) If (i) the Investor becomes involved in any capacity
in any Proceeding brought by any stockholder of the Company in connection with
or as a result of the consummation of the transactions contemplated by any
Transaction Document (including any action in which it is alleged that the
Investor or others on behalf of or in concert with the Investor improperly
traded any of the Company's securities or manipulated the price of any of the
Company's securities), or if the Investor is impleaded in any such Proceeding
by any Person, or (ii) the Investor becomes involved in any capacity in any
Proceeding brought by the Commission or any stock market, trading facility,
any other self-regulatory organization or other body having jurisdiction,
against or involving the Company or in connection with or as a result of the
consummation of the transactions contemplated by any Transaction Document, or
if the Investor is impleaded in any such Proceeding by any Person, then in any
and each such case, the Company agrees to indemnify, defend and hold harmless
the Investor from and against and in respect of all losses, claims,
liabilities, damages and expenses (including the cost of any investigation and
preparation and all reasonable legal fees and expenses) resulting from,
imposed upon or incurred by the Investor directly or indirectly, in connection
therewith, as such expenses are incurred. The indemnification and
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have (other than
matters specifically addressed in the Registration Rights Agreement, which
shall be governed solely by that agreement), shall extend upon the same terms
and conditions to any Affiliates of the Investor who are actually named in
such Proceeding and the partners, directors, agents, employees and
representatives and controlling persons (if any), as the case may be, of the
Investor and any such Affiliates, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Investor, any such Affiliate and any such Persons. The Company
also agrees that neither the Investor nor any such Affiliate, partner,
director, agent, representative, employee or controlling person shall have any
liability to the Company or any other Person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation
of any Transaction Document, except as provided in or contemplated by the
Transaction Documents. If, in connection with a Proceeding in which it is
alleged that a Purchaser or others on behalf of or in concert with such
Purchaser improperly traded any of the Company's securities or manipulated the
price of any of the Company's securities, a court of competent jurisdiction
determines in a final judgment, not subject to appeal or review, that a
Purchaser who has been, or is seeking to be, indemnified or reimbursed under
this Section is liable for any manipulation, then the indemnity and
reimbursement obligations of the Company under this Section 5.9(b) will not be
available to the Purchaser and the other indemnitees hereunder with respect to
such Proceeding.
Section 5.10 Expectations Regarding Put Notices. Within ten days
after the commencement of each calendar quarter following the Effective Date,
the Company must notify the Investor, in writing, as to its reasonable
expectations as to the dollar amount it intends to raise during such calendar
quarter, if any, through the issuance of Put Notices. Such notification shall
constitute only the Company's good faith estimate and shall in no way obligate
the Company to raise such amount, or any amount, or otherwise limit its
ability to deliver Put Notices. The failure by the Company to comply with this
provision can be cured by the Company's notifying the Investor, in writing, at
any time as to its reasonable expectations with respect to the current
calendar quarter.
Section 5.11 Purchase Price Adjustment If at any time during
the Commitment Period the Company or any Subsidiary (with respect to Capital
Shares Equivalents) shall offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition) any of shares of Common Stock or Capital Shares
Equivalents at a price that is, at the issuance thereof, or at any later time
due to adjustment, reset, additional issuances or otherwise, less than the
Purchase Price for any Put Shares (assuming for the purposes hereof that a Put
Notice is delivered on the date of the issuance at issue), then, at the option
of the Investor for such subsequent Closings as the Investor shall indicate,
the Purchase Price shall be adjusted to mirror the conversion, exchange or
purchase price for such Common Stock or Capital Shares Equivalents (including
any reset provisions thereof) at issue. Such adjustment shall be made
whenever such Common Stock or Capital Shares Equivalents are issued. If the
holder of the Common Stock or Common Stock Equivalent so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights issued in connection with such issuance, be
entitled to receive shares of Common Stock at a price less than the Purchase
Price (assuming for the purposes hereof that a Put Notice is delivered on the
date of the issuance at issue), such issuance shall be deemed to have occurred
for less than the Purchase Price. The Company shall notify the Investor in
writing, no later than the Trading Day following the issuance of any Common
Stock or Common Stock Equivalent subject to this section, indicating therein
the applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms. The purchase price adjustment
discussed in this Section 5.11 shall not apply to any issuances of Common
Stock or Capital Shares Equivalents as discussed in Section 5.5(e).
Section 5.12 Transfer Agent. By December 7, 2001 the Company shall
have retained American Stock Transfer or another mutually acceptable
nationally recognized transfer agent, as the transfer agent for the Common
Stock.
ARTICLE VI
Conditions Precedent to the Right of the Company to Deliver a Put Notice and
the Obligation of the Investor to Close
Section 6.1 Conditions Precedent to the Right of the Company to
Deliver a Put Notice and the Obligation of the Investor to Close. In addition
to the conditions contained in Section2.1(b), the right of the Company to
deliver a Put Notice and the obligation of Investor hereunder to perform its
obligations at any Closing hereunder is subject to the satisfaction, on both:
(i) the applicable Put Date and (ii) the applicable Closing Date (each a
"Condition Satisfaction Date"), of each of the following conditions, or the
waiver by the Investor of such conditions (other than the condition contained
in Section 6.1(c), which only need be satisfied on the applicable Closing
Date):
(a) Representations and Warranties. The
representations and warranties of the Company in the Transaction Documents
shall be true and correct as of the date when made and as of the applicable
Condition Satisfaction Date as though first made at that time (except for
representations and warranties that speak of a specific date, which need only
be true and correct as of such date).
(b) Performance by the Company. The Company shall
have performed, satisfied and complied in all material respects with all
covenants and agreements required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.
(c) Compliance Certificate. The Company shall
have delivered to or as directed by the Investor an Officer's Certificate
signed by its Chief Executive Officer, dated as of the applicable Condition
Satisfaction Date, certifying that the Company has satisfied the conditions
set forth in paragraphs (a), (g)(ii) - (iv), and (i) of this Section.
(d) Delivery of Closing Items. The Company shall
have transmitted the Put Shares and the Company Required Items required to be
delivered pursuant to Section 2.2.
(e) Opinion of Counsel. The Investor shall have
received (or receipt shall have been confirmed by its agent on its behalf) an
opinion of counsel to the Company, in the form of Exhibit D hereto.
(f) Transfer Agent. The Investor shall have
received satisfactory evidence of the Company's delivery to its transfer agent
for the Common Stock of instructions and legal opinion meeting the
requirements of this Agreement and acceptable to such transfer agent.
(g) Registration Statement.
(i) The Registration Statement shall have
been declared effective by the Commission and the prospectus thereunder shall
be available to the Investor to resell all of the Registrable Securities
thereunder.
(ii) Neither the Company nor the Investor
shall have received notice that the Commission has issued or intends to issue
a stop order with respect to the Registration Statement or that the Commission
otherwise has suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently.
(iii) The Registration Statement (including
the information or documents incorporated by reference therein) and any
amendments or supplements thereto shall not contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(h) Adverse Changes. Since the earlier to occur
of: (i) with respect to the first Put Date, since the date of this Agreement
and (ii) with respect to subsequent Put Dates, the last Closing hereunder, no
occurrence or event shall have occurred that has had or would result in a
material adverse effect on the results of operations, assets or financial
condition of the Company and the Subsidiaries, taken as a whole.
(i) No Suspension of Trading In or Delisting of
Common Stock. The Common Stock and the Put Shares issuable at the Closing at
issue shall be authorized for trading or quotation on the Principal Market and
trading in the Common Stock shall not have been suspended by the Commission or
the Principal Market at any time from the Put Date through the Closing Date.
The Company shall not have received any notice from the Principal Market
threatening to delist the Common Stock from the Principal Market.
(j) Illegality. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction, by the Commission or by the Principal Market that
prohibits or materially impairs the transactions contemplated by this
Agreement.
ARTICLE VII
Due Diligence Review; Non-Disclosure of Non-Public Information.
Section 7.1 Due Diligence Review. The Company shall make
available for inspection and review by the Investor, and its advisors and
representatives of the Investor, any underwriter participating in any
disposition of the Registrable Securities on behalf of the Investor all SEC
Documents and other filings with the Commission, and all other publicly
available corporate documents and properties of the Company as may be
reasonably necessary for the purpose of such review. In connection therewith,
the Company shall cause its officers, directors and employees to supply all
such publicly available information reasonably requested by the Investor or
any such Person (including, without limitation, in response to all questions
and other inquiries reasonably made or submitted by any of them), prior to and
from time to time after the filing and effectiveness of the Registration
Statement.
Section 7.2 Non-Disclosure of Non-Public Information. The Company
shall not disclose non-public information to the Investor or its advisors or
representatives unless prior to disclosure of such information the Company
identifies such information as being non-public information and the Investor
enter into a non-disclosure agreement in form mutually acceptable to the
Company and the Investor.
ARTICLE VIII
Miscellaneous
Section 8.1 Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
any of the Transaction Documents (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders, employees or
agents) shall be commenced in the state and federal courts sitting in the City
of New York, Borough of Manhattan (the "New York Courts"). Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), 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, or such New York Courts are improper or inconvenient venue for
such proceeding. 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 via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for 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 hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby. If either party
shall commence an action or proceeding to enforce any provisions of this
Agreement, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.
Section 8.2 Notices. Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:30 p.m. (New York City time) on a Business Day, (ii) the Business Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Agreement later
than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m.
(New York City time) on such date, (iii) the Business Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as follows:
If to the Company: Composite Industries of America, Inc.
0000 X. Xxxxxxxx Xxx, Xxxx X-0
Xxx Xxxxx, Xxxxxx 00000
Facsimile No.: (702) 579- 4833
Attn: Xxxxx Xxxxxxxx
With copies to: Xxxxx X. Xxxxx, Esq.
000 Xxxxxxx Xxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
If to the Investor: To the address set forth under the Investor's
name on the signature page hereto or such other address as may be designated
in writing hereafter, in the same manner, by such Person.
Section 8.3 Reporting Entity for the Common Stock. The reporting
entity relied upon for the determination of the trading price or trading
volume of the Common Stock on any given Trading Day for the purposes of this
Agreement shall be Bloomberg, L.P. or any successor to its function of
reporting share prices. The written mutual consent of the Investor and the
Company shall be required to employ any other reporting entity.
Section 8.4 Replacement of Certificates. Upon (i) receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of a certificate representing any Securities and
(ii) in the case of any such loss, theft or destruction of such certificate,
upon delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company (which shall not exceed that required by the
Company's transfer agent in the ordinary course) or (iii) in the case of any
such mutilation, on surrender and cancellation of such certificate, the
Company at its expense will execute and deliver, in lieu thereof, a new
certificate.
Section 8.5 Execution. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create
a valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
Section 8.6 Entire Agreement. The Transaction Documents, together
with the exhibits and schedules thereto contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits
and schedules.
Section 8.7 Amendments; Waivers. No provision of this Agreement
may be waived or amended except in a written instrument signed, in the case of
an amendment, by both the Company and the Investor or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it
thereafter.
Section 8.8 Survival. The representations, warranties, agreements
and covenants contained herein shall survive the Closing and the delivery and
exercise of all Securities issuable hereunder.
Section 8.9 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor. The
Investor may not assign this Agreement or any of the rights or obligations
hereunder without the consent of the Company; however, this provision shall
not limit the Investor's right to transfer Securities acquired hereunder or
transfer or assign rights under the Registration Rights Agreement.
Section 8.10 Remedies. In addition to being entitled to exercise
all rights provided herein or granted by law, including recovery of damages,
the Investor will be entitled to specific performance of the obligations of
the Company under the Transaction Documents. The parties hereto agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence
and hereby agree to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
Section 8.11 Severability. In case any one or more of the
provisions of this Agreement shall be invalid or unenforceable in any respect,
the validity and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affected or impaired thereby and the parties
will attempt to agree upon a valid and enforceable provision which shall be a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
Section 8.12 Headings. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
Section 8.13 Fees and Expenses. Other than the amounts to be
delivered to or as directed by the Investor under Section 2.6 and except as
otherwise set forth in the Registration Rights Agreement, each party shall pay
the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all stamp and other taxes and duties levied
in connection with the issuance of the Securities issuable hereunder.
Section 8.14 No Third-Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.
[REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Equity Line
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first set forth above.
COMPOSITE INDUSTRIES OF AMERICA, INC.
By:_____________________________________
Name: Xxxxx Xxxxxxxx
Title: President
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR INVESTOR FOLLOWS]
BURLINGTON STREET LLC
By:_____________________________________
Name:
Title:
Address for Notice: Burlington Street LLC
Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxxx Xxxxx
P.O. Box 972
Road Town, Tortola
British Virgin Islands
Facsimile No.: (000) 000-0000
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
EXHIBIT A
PUT NOTICE
Composite Industries of America, Inc. (formerly known as World Homes,
Inc.), a Nevada corporation (the "Company"), hereby irrevocably elects to
exercise its right pursuant to the Equity Line Purchase Agreement dated as of
October 22, 2001 (the "Agreement") to require the Investor thereunder to
purchase Put Shares pursuant to terms of the Agreement. Terms used and not
defined herein shall have the meaning ascribed to them in the Agreement
The Company hereby certifies that:
1. The Investment Amount is: $_______________ ("IA")
2. The Valuation Period runs from _________ to __________.
By its delivery of this Put Notice, the Company hereby certifies that
as of the date of this Put Notice, it has satisfied all of the conditions set
forth in paragraphs 6.1(a), (b), (g), (h), (i) and (j) of the Agreement and
that, to the best of its knowledge, no statute, rule, regulation, executive
order, decree, ruling or injunction has been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction or
by the Principal Market that prohibits or materially impairs the transactions
contemplated hereby.
The undersigned has executed this Put Notice as of this _____ day of
______, _______.
COMPOSITE INDUSTRIES OF AMERICA, INC.
By: __________________________________
Name:
Title:
EXHIBIT E
CALCULATION NOTICE
In connection with the Put Notice delivered on ___________ by
Composite Industries of America, Inc. (formerly known as World Homes, Inc.), a
Nevada corporation (the "Company") pursuant to the Equity Line Purchase
Agreement dated as of October 22, 2001 (the "Agreement"), the Company hereby
certifies that:
1. The Investment Amount is: $_______________ ("IA")
2. The Valuation Period runs from _________ to __________.
3. 92.5% of the average of the three lowest Bid Prices (subject to
adjustment) during the Valuation Period is: $________ ("PP")
4. The number of Put Shares (IA/PP) issuable hereunder is:_______________
The undersigned has executed this Calculation Notice as of this _____
day of ______, _______.
COMPOSITE INDUSTRIES OF AMERICA, INC.
By: __________________________________
Name:
Title:
Agreed and accepted:
[ ]
By: __________________________________
Name:
Title:
