SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of July,
1996 by and among Phase-Out of America, Inc., a Delaware corporation, with
headquarters located at 000 Xxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Company"),
and each of the purchasers set forth on the signature pages hereto (the
"Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by ss. 4(2) of the Securities Act of 1933, as amended and Rule 506 under
Regulation D ("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"); and
B. The Buyers desire to purchase and the Company desires to issue and
sell, upon the terms and conditions stated in this Agreement, an aggregate of
19,557,951 shares of Common Stock, par value $.00003 per share, of the Company
(the "Common Stock") for an aggregate purchase price of $500,000;
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
a. Purchase of Common Stock. On the closing date (as defined herein),
subject to the satisfaction (or waiver) of the conditions thereto set forth in
Section 5 and Section 6 below, the Company shall issue and sell to each Buyer
and each Buyer shall purchase from the Company the number of shares of Common
Stock set forth immediately below such Buyer's name on the signature page hereto
(such shares being hereinafter collectively referred to as the "Shares") for an
aggregate price of $500,000.
The Shares shall constitute 18% of the number of shares of common stock
of the Company that would be outstanding if all of the outstanding securities of
the Company convertible into common stock of the Company were so converted. In
addition, if and when any warrants to purchase common stock of the Company that
are outstanding on the date hereof are exercised the Buyers will be issued,
without any additional payment, additional shares of common stock of the Company
pro rata so that the Buyers will own in the aggregate 18% of the then
outstanding shares of common stock of the Company.
In the event that during the period of five years after the date hereof
the Company raises additional funds through the issuance of equity (other than
through an offering registered under
the Securities Act of 1933, as amended) the Buyers will be issued, without any
additional payment, additional shares of common stock of the Company pro rata so
that Buyers will own in the aggregate 18% of the then outstanding shares of
common stock of the Company.
b. Form of Payment. On the Closing Date, (i) each Buyer shall pay the
purchase price for the Shares to be issued and sold to such Buyer (the "Purchase
Price") by wire transfer to the Company, in accordance with the Company's
written wiring instruction or by check against delivery of a duly executed
certificate(s) representing such number of Shares and (ii) the Company shall
deliver such certificate(s) against delivery of such Purchase Price. The
Purchase Price payable by each Buyer is set forth immediately below such Buyer's
name of the signature page hereto.
c. Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 5 and Section 6 below, the date and time
of the issuance and sale of the Shares pursuant to this Agreement (the "Closing
Date") shall be 10:00 a.m. Eastern Standard Time not later than July 12, 1996,
or, such other mutually agreed time. The closing shall occur on the Closing Date
at the offices of the Company, 000 Xxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000.
2. BUYERS' REPRESENTATIONS AND WARRANTIES
Each Buyer, severally and not jointly, represents and warrants to the
Company solely with respect to such Buyer that:
a. Investment Purpose. The Buyer is purchasing the Shares for its
own account, not as nominee or agent, for investment only and not with
a present view towards the public sale or distribution thereof, except
pursuant to sales registered under the 0000 Xxx.
b. Accredited Investor Status. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. The Buyer understands that the Shares are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Shares.
d. Information. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Buyer or its advisors. The Buyer and its advisors, if
any, have
been afforded the opportunity to ask questions of the Company and have received
what the Buyer believes to be satisfactory answers to any such inquiries.
Neither such inquiries nor any other due diligence investigation conducted by
Buyer or any of its advisors or representatives shall modify, amend or affect
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. The Buyer understands that its investment in the Shares
involves a high degree of risk.
e. Governmental Review. The Buyer understands that no United
States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or
endorsement of the Shares.
f. Transfer or Resale. The Buyer understands that (i) the Shares have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be transferred unless (a) subsequently registered thereunder,
or (b) the Buyer shall have delivered to the Company an opinion of counsel, in
form, substance and scope reasonably acceptable to the Company, to the effect
that the Shares to be sold or transferred pursuant to an exemption from such
registration or (c) sold pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule); (ii) any sale of such Shares made in reliance on Rule 144 may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such Shares under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such Shares under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.
The Company agrees on request at its expense to register the Shares in
a registration statement filed under the Securities Act of 1933, as amended (the
"Act"). The Company shall also offer the Buyers the opportunity to include the
Shares in a registration statement filed by the Company under the Act on a form
which permits inclusion of such Shares.
g. Legends. The Buyer understands that the Shares, may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Shares):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be
sold,transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or
an opinion of counsel, in form, substance and scope reasonably
acceptable to the Company, that registration is not required under
said Act or unless sold pursuant to Rule 144 under said Act."
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Shares upon which
it is stamped, if, unless otherwise required by state securities laws, (a) the
sale of such Shares is registered under the 1933 Act, or (b) such holder
provides the Company with an opinion of counsel, in form, substance and scope
reasonably acceptable to the Company, to the effect that a public sale or
transfer of such Shares may be made without registration under the 1933 Act or
(c) such holder provides the Company with reasonable assurances that such Shares
can be sold pursuant to Rule 144 under the 1933 Act (or a successor rule
thereto) without any restrictions as to the number of shares acquired as of a
particular date that can then be immediately sold. The Buyer agrees to sell all
Shares, including those represented by a certificate(s) from which the legend
has been removed, in compliance with applicable securities law.
h. Authorization: Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Buyer and is a valid
and binding agreement of the Buyer enforceable in accordance with their terms.
i. Residency. The Buyer is a resident of the jurisdiction set forth
immediately below such Buyer's name on the signature page hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Buyer that:
a. Organization and Qualification: Subsidiaries. The Company is a
corporation duly organized and existing in good standing under the laws of the
State of Delaware, and has the requisite corporate power to own its properties
and to carry on its business as now being conducted. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary and where the failure so to qualify would have a
Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on the operations, properties, financial condition or prospects of the
Company or on the transactions contemplated hereby. None of the Company's
subsidiaries are engaged in any activities which are material to the operations
of the Company and its subsidiaries taken as a whole.
b. Authorization: Enforcement. (i) The Company has the
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requisite corporate power and authority to enter into and perform this Agreement
and to issue the Shares in accordance with the terms hereof, (ii) the execution
and delivery of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby (including without limitation the issuance of
the Shares) have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board or Directors, or its
stockholders is required, (iii) this Agreement has been duly executed and
delivered by the Company, and (iv) this Agreement constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
c. Capitalization. The Shares constitute not less than 18% of the
fully diluted common stock of the Company after giving effect to the conversion
of all outstanding convertible securities of the Company and the Buyers shall
retain such percentage ownership as stated in section 1.
d. Issuance of Shares. The Shares are duly authorized and, upon
issuance in accordance with the terms of this Agreement shall be validly issued,
fully paid and non-assessable, and free from all taxes, liens and charges with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of stockholders of the Company.
e. No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby (including without limitation, the issuance of the Shares),
will not (i) result in a violation of the Certificate of Incorporation or
By-laws or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries is bound or
affect (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). The Company is not in violation of
its Certificate of Incorporation or By-laws and is not in default (and no event
has occurred which with notice or lapse of time of both would put the Company in
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for possible defaults
as would not, individually or in the aggregate, have a Material Adverse Effect.
The business of the Company is not being conducted, and shall not be conducted
so long as a Buyer owns any of the Shares,
in violation of any law, ordinance or regulation of any governmental entity,
except for possible violations which either singly or in the aggregate do not
have a Material Adverse Effect. Except as specifically contemplated by this
Agreement and as required under the 1933 Act any applicable state securities
laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency or
any regulatory or self regulatory agency in order for it to execute, deliver or
perform any of its obligations under this Agreement in accordance with the terms
hereof.
f. SEC Documents. Financial Statements. Since December 31, 1994, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act of 1934, as amended (the "1934 Act")(all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to herein as the
"SEC Documents"). The Company has delivered to each Buyer true and complete
copies of the SEC Documents, except for such exhibits, schedules and
incorporated documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respect with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the financial statements of the Company included in the SEC
documents, the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to
December 31, 1995 and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in such financial statements,
which, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. The Company has not provided to
any Buyer or its representatives any information which, according to applicable
law, rule or regulation, should have been disclosed publicly by the Company but
which has not been so disclosed.
g. Absence of Certain Chances. Since December 31, 1995 there has been
no material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or prospects
of the Company.
h. Absence of Litigation. Except as disclosed in the SEC documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company, the Common Stock or any of the
Company's subsidiaries.
i. Disclosure. All information relating to or concerning the Company
set forth in this Agreement and provided to the Buyers pursuant to Section 2(d)
hereof and otherwise in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or exists with respect to the
Company or its business, properties, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
j. Acknowledgment Regarding Buyers' Purchase of the Shares. The
Company acknowledges and agrees that Buyers are acting solely in the capacity of
arm's length purchasers with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that no Buyer is acting as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
advice given by any Buyer or any of their respective representatives or agents
in connections with this Agreement and the transactions contemplated hereby is
merely incidental to the Buyers' purchase of the Shares. The Company further
represents to each Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.
k. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has
7
directly or indirectly made any offers or sales in any security or solicited any
offers to buy any security under circumstances that would require registration
of the issuance of the Shares to the Buyers under the 1933 Act.
1. No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by any Buyer relating to this Agreement or the transactions
contemplated hereby except for 2,000,000 warrants being issued by the Company to
Xxxxxx Xxxxxxx.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts to satisfy
each of the conditions described in Section 5 and 6 of this Agreement.
b. Reporting Status. So long as any Buyer beneficially owns any of the
Shares, the Company shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination.
c. Use of Proceeds. The Company shall use the proceeds from the sale
of the Shares substantially as set forth in Exhibit A. The Company shall not,
directly or indirectly, use such proceeds for any loan or investment in any
other corporation, partnership, enterprise or other person.
d. Expenses. Each party hereto shall be responsible for the payment of
its own expenses incurred in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other agreements
to be executed in connection herewith.
e. Financial Information. The Company agrees to send the following
reports to each Buyer until such Buyer transfers, assigns, or sells all of the
Shares: (i) within ten (10) days after the filing with the SEC, a copy of its
Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current
Reports on Form 8-K; and (ii) within one (1) day after release, copies of all
press releases by the Company or any of its subsidiaries.
f. Officers and Directors. The Company shall cause Xxxxxxx X. Xxxxxxxx
("Xxxxxxxx") and Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") to be elected to its Board of
Directors and to its Executive Committee effective upon the closing. Xxxxxxxx
shall also be elected a member of the Company's Audit Committee and a member of
its Compensation Committee. Xxxxxxxx will also be elected Secretary Treasurer
effective upon the closing.
g. Executive Compensation. The cash salaries of Xxxxxxx
8
Xxxxxx, Xxxxx Pearl and Xxxx Xxxxxx shall be maintained at the rate of $50,000
per annum subject to change by action of the Board of Directors after the
Company has become profitable. Each of these three persons shall receive a car
allowance of $500 per month and no additional allowances shall be made for auto
insurance, maintenance or other upkeep.
h. Employment Agreement and Consulting Agreement. The Company shall
honor the existing employment agreements with Xxxxxxx Xxxxxx, Xxxxx Xxxxx and
Xxxx Xxxxxx, which have a remaining term of approximately 18 months. At the
expiration of Xxxxxxx Xxxxxx'x employment agreement, the Company will enter into
a three-year consulting agreement with him on terms and conditions to be agreed
upon at the time.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Shares
to each of the Buyers at the closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions thereto, provided
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion:
(i) The Buyers shall have executed this Agreement and
delivered the same to the Company.
(ii) The Buyers shall have delivered the Purchase Price in
accordance with Section l(b) above.
(iii) The representations and warranties of the Buyers shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyers shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyers at or prior to the Closing Date.
(iv) No injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction or any self regulatory organization having authority over the
matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Shares at the
closing is subject to the satisfaction, at or before the
9
Closing Date, of each of the following conditions, provided that these
conditions are for such Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion:
(i) The Company shall have executed this Agreement and
delivered the same to the Buyers.
(ii) The Company shall have entered into Warrant Agreements
substantially in the form of Exhibit "B" hereto.
(iii) The Company shall have delivered duly executed
certificates (in such denominations as such Buyer shall request) representing
the Shares being so purchased to such Buyer in accordance with Section l(b)
above.
(iv) The representations and warranties of the Company shall
be true and correct in all material respects as of the date when made and as of
the date of the closing as though made at that time (except for representations
and warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the date of the closing. The
Buyers shall have received a certificate, executed by the chief executive
officer of the Company, dated as of the date of the closing, to the foregoing
effect and as to such other matters as may be reasonably requested by the
Buyers.
(v) The Buyers shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyers and in substantially the same form as
Exhibit "C" attached hereto.
(vi) The Buyers shall have received the officer's certificate
described in Section 3(c) above, dated as of the Closing Date.
7. GOVERNING LAW: MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the Delaware without regard to the principles of
conflict of laws. The parties hereto hereby submit to the exclusive jurisdiction
of the New York Supreme Court located in New York County in the State of New
York with respect to any dispute arising under this Agreement, the agreements
entered into in connection herewith or the transactions contemplated hereby or
thereby.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the
10
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or uneforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreements: Authority to Act for Buyers. This Agreement and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyers
make any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier and shall be effective
five days after being placed in the mail, if mailed, or upon receipt or refusal
of receipt, if delivered personally or by courier, in each case addressed to a
party. The addresses for such communications shall be:
If to the Company:
Phase-Out of America, Inc.
000 Xxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
With copy to:
Xxxx X. Xxxxxxxx, Esq.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
If to Buyers to:
Xxxxxxx Xxxxxxxx, CPA
0000 Xxxxxxx Xxxxxxxx-Xxxxx 000X
Xxxxxxx, XX 00000
Each party shall provide notice to the other party of any change in
address.
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g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, any Buyer may assign its rights hereunder to any
of its "affiliates", as that term is defined under the 1934 Act, without the
consent of the Company. The Company shall be sent written notice of any such
assignment prior to the closing.
h. Third Part Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. The representations and warranties of the Company and the
agreements and covenants set forth in Section 3, 4, 5 and 7 shall survive the
closing notwithstanding any due diligence investigation conducted by or on
behalf of the Buyers. The Company agrees to indemnify and hold harmless each of
the Buyers for loss or damage arising as a result of or related to any breach or
alleged breach by the Company of any of its representations set forth in Section
3 hereof.
j. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments an documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused
this Agreement to be duly executed as of the date first above written.
Phase-Out of America, Inc.
By:-----------------------
Name:---------------------
Its:----------------------
"BUYERS"
RESIDENCE: New York --------------------------
Subscription Amount: --------------------------
Number of Shares:
12
[LOGO]
PHASEOUT. EXHIBIT A
OF AMERICA, INC
--------------------------------------------------------------------------------
000 Xxxxxxxx (800) PHASEOUT
Lynbrook, New York (000) 000-0000
Fax (000) 000-0000
Use of Proceeds
Description of Use Amount to be Used
Inventory Purchase from South Korea $ 175,000
Marketing/Media/Advertising Budget $ 225,000
To Begin Clinical Study Preparation $ 25,000
On-Air Infonetwork Settlement $ 25,000
Working Capital $ 50,000
Total Use of Proceeds $ 500,000
=========
EXHIBIT C
XXXX X. XXXXXXXX, ESQ.
------------
000 XXXXX XXXXXX
XXXXX 0000
XXX XXXX. XXX XXXX 00000
TELEPHONE (000) 000-0000
TELEFAX (000) 000-0000
July , 1996
Purchasers under that
Certain Securities Purchase Agreements
Dated as of July ,1996 with
Phase-Out of America, Inc.
Re: Phase-Out of America, Inc.
Gentlemen:
I am counsel to Phase-Out of America, Inc. (the "Company") and am
rendering this opinion pursuant to those certain Securities Purchase Agreements
(the "Agreements") dated as of July , 1996 between the purchasers and the
Company. Certain capitalized terms used herein and not otherwise defined herein
shall have the respective meanings given in the Agreements.
In rendering the following opinions, I have examined the Agreements
and related agreements and documents, and I have examined and considered such
corporate records, certificates and matters of law as I have deemed appropriate
as a basis for the opinions set forth below. As to various matters of fact
material to the opinions set forth below, I have relied on the representations
and warranties contained in the Agreements and on certificates of officers of
the Company. I have also assumed the receipt by the Company of $500,000 as the
purchase price for the Shares.
Based upon the foregoing and subject to the assumptions, limitations,
qualifications and exceptions stated herein, I am of the opinion that as of the
date hereof:
(1) The Company is a corporation duly organized, validly existing and
in good standing under the laws of Delaware.
(2) (i) The Company has the requisite corporate power and authority to
enter into and perform the Agreements, and to issue the Shares in accordance
with the terms of the Agreements, (ii) the execution and delivery of the
Agreements by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board or
Directors, or its stockholders is required, (iii) the Agreements
have been duly executed and delivered by the Company, and (iv) the Agreements
constitutes valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.
(3) The Shares are duly authorized, validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof.
(4) Based in part upon your representations, warranties and covenants
set forth in the Agreements, the Shares may be issued to you without
registration under the Securities Act of 1933, as amended.
(5) Other than necessary approvals that have been obtained, no
authorization approval or consent of any court, governmental body, regulatory
agency, self-regulatory organization or stock exchange or market, or the
stockholders of the Company, or, to my knowledge, any third party is required to
be obtained by the Company for the issuance and sale of the Shares as
contemplated by the Agreements.
These opinions are limited to the matters expressly stated herein and
are rendered solely for your benefit and may not be quoted or relied upon for
any other purpose or by another person, except that the opinions expressed in
paragraphs (3) and (4) may be relied upon by North American Transfer Company, as
Transfer Agent.
The opinions expressed herein are subject to the following
assumptions, limitations, qualifications and exceptions:
(a) I have assumed the genuineness of all signatures, the authenticity
of all Agreements submitted to me as copies, the authenticity of certificates of
public officials and the due authorization, execution and delivery of all
Agreements (except the due authorization, execution and delivery by the Company
of the Agreements).
(b) I have assumed that each of the parties to the Agreements other
than the Company (the "Other Parties") has the legal right, capacity, and power
to enter into, enforce and perform all of its obligations under the Agreements.
Furthermore, I have assumed the due authorization by each of the Other Parties
of all requisite action and the due execution and delivery of the Agreements.
My examination of law relevant to the matters covered by this opinion
is limited to the laws of New York and the federal law of the United States, and
I express no opinion as to the
effect on the matters covered by this opinion of the laws of any other
jurisdiction. To the extent that the governing law with respect to any matters
covered by this opinion is the law of a jurisdiction other than the State of New
York, or federal law, I have assumed the law of such other jurisdiction is
identical to New York law.
The undersigned is a stockholder of the Company.
This opinion is given as of the date hereof and I assume no obligation
to update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to my attention or any changes in laws which may hereafter
occur.
Very truly yours,
Xxxx X. Xxxxxxxx
