COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT
(this "Agreement") is dated as of July 14, 2000 by and between
Cambex Corporation, a Massachusetts corporation (the
"Company"), and Thumberland Limited, a British Virgin Islands
Corporation (the "Purchaser").
NOW, THEREFORE, in consideration of the covenants
and mutual promises contained herein and other good and
valuable consideration, the receipt and legal sufficiency of which
are hereby acknowledged and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I
Definitions
Section 1.1 Certain Definitions.
(a) "Average Daily Price" shall be the price based on
the VWAP of the Company on the OTC Bulletin Board or, if the
OTC Bulletin Board is not the Principal Market, on the Principal
Market.
(b) "Draw Down" shall have the meaning assigned to
such term in Section 6.1(a) hereof.
(c) "Draw Down Exercise Date" shall have the
meaning assigned to such term in Section 6.1(b) hereof.
(d) "Draw Down Pricing Period" shall mean a period
of twenty-two (22) consecutive Trading Days beginning on the
date specified in the Draw Down Notice.
(e) "Effective Date" shall mean the date the
Registration Statement of the Company covering the Shares
being subscribed for hereby is declared effective.
(f) "Investment Amount" shall have the meaning
assigned to such term in Section 6.1(e) hereof.
(g) "Material Adverse Effect" shall mean any adverse
effect on the business, operations, properties or financial
condition of the Company that is material and adverse to the
Company and its subsidiaries and affiliates, taken as a whole
and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the
Company to perform any of its material obligations under this
Agreement or the Registration Rights Agreement or to perform
its obligations under any other material agreement.
(h) "Principal Market" shall mean initially the OTC
Bulletin Board, and shall include the American Stock Exchange,
the Nasdaq National Market, the Nasdaq SmallCap Market or the
New York Stock Exchange if the Company's shares of Common
Stock hereafter are listed and trades on such market or exchange.
(i) "Registration Statement" shall mean the
registration statement under the Securities Act of 1933, as
amended, to be filed with the Securities and Exchange
Commission for the registration of the Shares pursuant to the
Registration Rights Agreement attached hereto as Exhibit A.
(j) "SEC Documents" shall mean the Company's latest
Form 10-K as of the time in question, all Forms 10-Q and 8-K filed
thereafter, and the Proxy Statement for its latest fiscal year as of the
time in question until such time as the Company no longer has an
obligation to maintain the effectiveness of a Registration Statement as
set forth in the Registration Rights Agreement.
(k) "Shares" shall mean, collectively, the shares of
Common Stock of the Company being subscribed for hereunder
and those shares of Common Stock issuable to the Purchaser
upon exercise of the Warrants.
(l) "Threshold Price" is the lowest Average Daily
Price at which the Company will sell its Common Stock with
respect to this Agreement.
(m) "Trading Day" shall mean any day on which the
Principal Market is open for business.
(n) "VWAP" shall mean the daily volume weighted
average price of the Company's Common Stock on the OTC
Bulletin Board or on any Principal Market as reported by
Bloomberg Financial using the AQR function.
ARTICLE II
Purchase and Sale of Common Stock
Section 2.1 Purchase and Sale of Stock.
Subject to the terms and conditions of this Agreement, the Company, at its
sole and exclusive option, may issue and sell to the Purchaser and the
Purchaser shall purchase from the Company up to Ten Million Dollars
($10,000,000) (the "Commitment Amount") of the Company's Common
Stock, $0.10 par value per share (the "Common Stock"), based on up to
eighteen (18) Draw Downs of (i) as to the first Draw Down only, up to Two
Million Dollars ($2,000,000) and (ii) as to any subsequent Draw Downs, up
to One Million Dollars ($1,000,000) per Draw Down.
Section 2.2 The Shares. The Company has
authorized and has reserved and covenants to continue to reserve, free of
preemptive rights and other similar contractual rights of stockholders, a
sufficient number of its authorized but unissued shares of its Common Stock
to cover the Shares to be issued in connection with all Draw Downs requested
under this Agreement. Anything in this Agreement to the contrary
notwithstanding, the Company may not make a Draw Down to the extent
that, after such purchase by the Purchaser, the sum of the number of shares of
Common Stock beneficially owned by the Purchaser and its affiliates would
result in beneficial ownership by the Purchaser and its affiliates of more than
9.9%. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Securities and Exchange Act of 1934, as amended, and the Regulations
promulgated thereunder.
Section 2.3 Purchase Price and Closing. The
Company agrees to issue and sell to the Purchaser and, in consideration
of and in express reliance upon the representation, warranties, covenants,
terms and conditions of this Agreement, the Purchaser agrees to purchase
that number of the Shares to be issued in connection with each Draw
Down. The delivery of executed documents under this Agreement and
the other agreements referred to herein and the payment of fees set forth
in Articles II of the Escrow Agreement (the "Closing") shall take place at
the offices of Xxxxxxx Xxxxxx & Green, P.C., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 within fifteen (15) days of the date hereof, or (ii)
such other time and place or on such date as the Purchaser and the
Company may agree upon (the "Closing Date"). Each party shall deliver
all documents, instruments and writings required to be delivered by such
party pursuant to this Agreement at or prior to the Closing.
ARTICLE III
Representations and Warranties
Section 3.1 Representation and Warranties of the
Company. The Company hereby makes the following representations
and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The
Company is a corporation duly incorporated validly existing and in
good standing under the laws of the Commonwealth of Massachusetts
and has all requisite corporate authority to own, lease and operate its
properties and assets and to carry on its business as now being
conducted. Except as set forth in the SEC Documents or on Schedule
3.1(a), the Company does not have any subsidiaries and does not own
more that fifty percent (50%) of or control any other business entity.
Except as set forth in the SEC Documents or on Schedule 3.1(a), the
Company is duly qualified and is in good standing as a foreign
corporation to do business in every jurisdiction in which the nature of
the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to
qualify would not have a Material Adverse Effect.
(b) Authorization, Enforcement. (i) The Company
has the requisite corporate power and corporate authority to enter
into and perform its obligations under this Agreement, the
Registration Rights Agreement, the Escrow Agreement and to
issue the Shares pursuant to the respective terms of such
agreements, (ii) the execution and delivery of this Agreement, the
Registration Rights Agreement and the Escrow Agreement by the
Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required,
and (iii) this Agreement, the Registration Rights Agreement and
the Escrow Agreement have been duly executed and delivered by
the Company and at the initial Closing shall constitute valid and
binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
The Company has duly and validly authorized and reserved for
issuance shares of Common Stock sufficient in number for the
issuance of the Shares.
(c) Capitalization. As of March 28, 2000, the
authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, of which 9,635,259 shares are issued
and outstanding and 3,000,000 shares of preferred stock, $1.00
par value per share, none of which have been issued. All of the
outstanding shares of the Company's Common Stock have been
duly and validly authorized and are fully-paid and non-
assessable. Except as set forth in this Agreement and the
Registration Rights Agreement and as set forth in the SEC
Documents or on Schedule 3.1(c) hereto, no shares of Common
Stock are entitled to preemptive rights or registration rights and
there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of
capital stock of the Company. Furthermore, except as set forth in
this Agreement and as set forth in the SEC Documents or on
Schedule 3.1(c) hereto, there are no contracts, commitments,
understandings, or arrangements by which the Company is or
may become bound to issue additional shares of the capital stock
of the Company or options, securities or rights convertible into
shares of capital stock of the Company. Except as set forth in the
SEC Documents or on Schedule 3.1(c) hereto, the Company is
not a party to any agreement granting registration rights to any
person with respect to any of its equity or debt securities. The
Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the
capital stock of the Company. Except as set forth in the SEC
Documents or on Schedule 3.1(c) hereto, the offer and sale of all
capital stock, convertible securities, rights, warrants, or options of
the Company issued prior to the Closing complied with all
applicable federal and state securities laws, and no stockholder
has a right of rescission or damages with respect thereto which
would have a Material Adverse Effect on the Company's
financial condition or operating results. The Company has made
available to the Purchaser true and correct copies of the
Company's Articles of Organization as in effect on the date
hereof (the "Articles"), and the Company's Bylaws as in effect
on the date hereof (the "Bylaws"). The Principal Market for the
Common Stock in the United States is the OTC Bulletin Board,
and the Company has not received any notice from such market
questioning or threatening the continued inclusion of the
Common Stock on such market.
(d) Issuance of Shares. The Shares to be issued under
this Agreement have been duly authorized by all necessary
corporate action and, when paid for or issued in accordance with
the terms hereof, the Shares shall be validly issued and
outstanding, fully paid and non-assessable, and the Purchaser
shall be entitled to all rights accorded to a holder of Common
Stock.
(e) No Conflicts. The execution, delivery and
performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated
herein do not and will not (i) violate any provision of the
Company's Articles or Bylaws, (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, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the
Company is a party, (iii) create or impose a lien, charge or
encumbrance on any property of the Company under any
agreement or any commitment to which the Company is a party
or by which the Company is bound or by which any of its
respective properties or assets are bound, or (iv) result in a
violation of any federal, state, local or other foreign statute, rule,
regulation, order, judgment or decree (including any federal or
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 are bound or affected, except,
in all cases, for such conflicts, defaults, termination,
amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect. The Company is not required under any federal, state or
local law, rule or regulation to obtain any consent, authorization
or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement, or issue and sell the
Shares in accordance with the terms hereof (other than any filings
which may be required to be made by the Company with the
Securities and Exchange Commission (the "Commission") or
state securities administrators subsequent to the Closing and any
registration statement which may be filed pursuant hereto);
provided that, for purpose of the representation made in this
sentence, the Company is assuming and relying upon the
accuracy of the relevant representations and agreements of the
Purchaser herein.
(f) SEC Documents, Financial Statements. The
Common Stock of the Company is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, except as disclosed in the SEC Documents
or on Schedule 3.1(f) hereto, since December 31, 1998, the
Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a)
or 15(d) of the Exchange Act. The Company has delivered or
made available to the Purchaser true and complete copies of the
SEC Documents filed with the Commission since December 31,
1998. The Company has not provided to the Purchaser 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, other than with respect to
the transactions contemplated by this Agreement. As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder
applicable to such documents, and, as of their respective dates,
none of the SEC Documents 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. The financial statements of the Company
included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the
published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a
consistent basis 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 financial position of the Company and its subsidiaries as of
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 year-end audit adjustments).
(g) Subsidiaries. The SEC Documents or Schedule
3.1(g) hereto sets forth each subsidiary of the Company, showing
the jurisdiction of its incorporation or organization and showing
the percentage of each person's ownership of the outstanding
stock or other interests of such subsidiary. For the purposes of
this Agreement, "subsidiary" shall mean any corporation or other
entity of which at least a majority of the securities or other
ownership interests having ordinary voting power (absolutely or
contingently) for the election of directors or other persons
performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries.
All of the outstanding shares of capital stock of each subsidiary
have been duly authorized and validly issued, and are fully paid
and non-assessable. There are no outstanding preemptive,
conversion or other rights, options, warrants or agreements
granted or issued by or binding upon any subsidiary for the
purchase or acquisition of any shares of capital stock of any
subsidiary or any other securities convertible into, exchangeable
for or evidencing the rights to subscribe for any shares of such
capital stock. Neither the Company nor any subsidiary is subject
to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of the capital stock of any
subsidiary or any convertible securities, rights, warrants or
options of the type described in the preceding sentence. Neither
the Company nor any subsidiary is a party to, nor has any
knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of any subsidiary.
(h) No Material Adverse Effect. Since April 1, 2000,
no Material Adverse Effect has occurred or exists with respect to
the Company, except as disclosed in the SEC Documents or on
Schedule 3.1(h) hereof.
(i) No Undisclosed Liabilities. Except as disclosed in
the SEC Documents or on Schedule 3.1(i) hereto, neither the
Company nor any of its subsidiaries has any liabilities,
obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise)
that would be required to be disclosed on a balance sheet of the
Company or any subsidiary (including the notes thereto) in
conformity with GAAP which are not disclosed in the SEC
Documents, other than those incurred in the ordinary course of
the Company's or its subsidiaries respective businesses since
such date and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect on the Company or its
subsidiaries.
(j) No Undisclosed Events or Circumstances. Since
April 1, 2000, no event or circumstance has occurred or exists
with respect to the Company or its businesses, properties,
prospects, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which
has not been so publicly announced or disclosed in the SEC
Documents.
(k) Indebtedness. The SEC Documents or Schedule
3.1(k) hereto sets forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company or any
subsidiary, or for which the Company or any subsidiary has
commitments. For the purposes of this Agreement,
"Indebtedness" shall mean (a) any liabilities for borrowed money
or amounts owed in excess of $250,000 (other than trade
accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements and contingent obligations in respect
of Indebtedness of others, whether or not the same are or should
be reflected in the Company's balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business; and (c) the present value of any lease
payments in excess of $250,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor
any subsidiary is in default with respect to any Indebtedness.
(l) Title to Assets. Each of the Company and the
subsidiaries has good and marketable title to all of its real and
personal property reflected in the SEC Documents, free of any
mortgages, pledges, charges, liens, security interests or other
encumbrances, except for those indicated in the SEC Documents
or on Schedule 3.1(1) hereto or such that do not cause a Material
Adverse Effect on the Company's financial condition or
operating results. All said leases of the Company and each of its
subsidiaries are valid and subsisting and in full force and effect.
(m) Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any subsidiary
which questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. Except as set forth in the SEC Documents or
on Schedule 3.1(m) hereto, there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the
Company, threatened, against or involving the Company, any
subsidiary or any of their respective properties or assets. There
are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory
body against the Company or any subsidiary.
(n) Compliance with Law. The business of the
Company and its subsidiaries has been and is presently being
conducted in accordance with all applicable federal, state and
local governmental laws, rules, regulations and ordinances,
except as set forth in the SEC Documents or on Schedule 3.1(n)
hereto, except for possible violation which singularly or in the
aggregate do not and will not cause a Material Adverse Effect.
The Company and each of its subsidiaries have all franchises,
permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of their
respective businesses as now being conducted by them unless the
failure to possess such franchises, permits, licenses, consents and
other governmental or regulatory authorizations and approvals,
individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
(o) Taxes. Since December 31, 1998, the Company
and each subsidiary has filed all Tax Returns which it is required to
file under applicable laws; all such Tax Returns are true and accurate
in all material respects and have been prepared in compliance with all
applicable laws; the Company has paid all Taxes due and owing by it
or any subsidiary (whether or not such Taxes are required to be shown
on a Tax Return) and have withheld and paid over to the appropriate
taxing authorities all Taxes which it is required to withhold from
amounts paid or owing to any employee, stockholder, creditor or
other third parties, and since December 31, 1998, the charges,
accruals and reserves for Taxes with respect to the Company
(including any provisions for deferred income taxes) reflected on the
books of the Company are adequate to cover any Tax liabilities of the
Company if its current tax year were treated as ending on the date
hereof.
To the Company's knowledge, no claim has
been made by a taxing authority in a jurisdiction where the Company
does not file tax returns that the Company or any subsidiary is or may
be subject to taxation by that jurisdiction. There are no foreign,
federal, state or local tax audits or administrative or judicial
proceedings pending or being conducted with respect to the Company
or any subsidiary; no information related to Tax matters has been
requested by any foreign, federal, state or local taxing authority; and,
except as disclosed above, no written notice indicating an intent to
open an audit or other review has been received by the Company or
any subsidiary from any foreign, federal, state or local taxing
authority. There are no material unresolved questions or claims
concerning the Company's Tax liability. The Company (A) has not
executed or entered into a closing agreement pursuant to 7121 of the
Internal Revenue Code or any predecessor provision thereof or any
similar provision of state, local or foreign law; and (B) has not agreed
to or is required to make any adjustments pursuant to 481 (a) of the
Internal Revenue Code or any similar provision of state, local or
foreign law by reason of a change in accounting method initiated by
the Company or any of its subsidiaries or has any knowledge that the
IRS has proposed any such adjustment or change in accounting
method, or has any application pending with any taxing authority
requesting permission for any changes in accounting methods that
relate to the business or operations of the Company. The Company
has not been a United States real property holding corporation within
the meaning of 897(c)(2) of the Internal Revenue Code during the
applicable period specified in 897(c)(1)(A)(ii) of the Internal
Revenue Code.
The Company has not made an election under
341(f) of the Internal Revenue Code. The Company is not liable for
the Taxes of another person that is not a subsidiary of the Company
under (A) Treas. Reg. 1.1502-6 (or comparable provisions of state,
local or foreign law), (B) as a transferee or successor, (C) by contract
or indemnity or (D) otherwise. The Company is not a party to any tax
sharing agreement. The Company has not made any payments, is not
obligated to make payments or is not a party to an agreement that
could obligate it to make any payments that would not be deductible
under 280G of the Internal Revenue Code.
For purposes of this Section 3.1(o):
"IRS" means the United States Internal Revenue
Service.
"Tax" or "Taxes" means federal, state, county, local,
foreign, or other income, gross receipts, ad valorem, franchise, profits,
sales or use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license,
payroll, wage or other withholding, employment, social security,
severance, stamp, occupation, alternative or add-on minimum,
estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest
attributable thereto) whether disputed or not.
"Tax Return" means any return, information report or
filing with respect to Taxes, including any schedules attached thereto
and including any amendment thereof.
(p) Certain Fees. Except as set forth on Schedule
3.1(p) hereto, no brokers, finders or financial advisory fees or
commissions will be payable by the Company or any subsidiary
with respect to the transactions contemplated by this Agreement.
(q) Disclosure. To the best of the Company's
knowledge, neither this Agreement or the Schedules hereto nor
any other documents, certificates or instruments furnished to the
Purchaser by or on behalf of the Company or any subsidiary in
connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which
they were made herein or therein, not misleading.
(r) Operation of Business. The Company and each of
the subsidiaries owns or possesses all patents, trademarks, service
marks, trade names, copyrights, licenses and authorizations as set
forth in the SEC Documents or on Schedule 3.1(r) hereto, and all
rights with respect to the foregoing, which are necessary for the
conduct of its business as now conducted without any conflict
with the rights of others.
(s) Regulatory Compliance. The Company has all
necessary licenses, registrations and permits to conduct its business as
now being conducted in all states where the Company conducts its
business.
(t) Books and Records. The records and documents
of the Company and its subsidiaries accurately reflect in all
material respects the information relating to the business of the
Company and the subsidiaries, the location and collection of their
assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company or any
subsidiary.
(u) Material Agreements. Except as set forth in the
SEC Documents, or on Schedule 3.1(u) hereto, neither the
Company nor any subsidiary is a party to any written or oral
contract, instrument, agreement, commitment, obligation, plan, or
arrangement, a copy of which would be required to be filed with
the Commission as an exhibit to a registration statement on Form
10-K or other applicable form (collectively, "Material
Agreements") if the Company or any subsidiary were registering
securities under the Securities Act of 1933, as amended ( the
"Securities Act"). The Company and each of its subsidiaries has
in all material respects performed all the obligations required to
be performed by them to date under the foregoing agreements,
have received no notice of default and, to the best of the
Company's knowledge are not in default under any Material
Agreement now in effect, the result of which could cause a
Material Adverse Effect. Except as set forth in the SEC
Documents or on Schedule 3.1(u) hereto, no written or oral
contract, instruments, agreement, commitment, obligation, plan
or arrangement of the Company or of any subsidiary limits or
shall limit the payment of dividends on the Company's Common
Stock.
(v) Transactions with Affiliates. Except as set forth in
the SEC Documents or on Schedule 3.1(v) hereto, there are no
loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing
transactions exceeding $100,000 between (a) the Company, any
subsidiary or any of their respective customers or suppliers on the
one hand, and (b) on the other hand, any officer, employee,
consultant or director of the Company, or any of its subsidiaries,
or any person owning any capital stock of the Company or any
subsidiary or any member of the immediately family of such
officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee,
consultant, director or stockholder, or a member of the immediate
family of such officer, employee, consultant, director or
stockholder.
(w) Securities Act of 1933. The Company has
complied with all applicable federal and state securities laws in
connection with the offer, issuance and sale of the Shares
hereunder. Neither the Company nor anyone acting on its behalf,
directly or indirectly, has or will sell, offer to sell or solicit offers
to buy the Shares or similar securities to, or solicit offers with
respect thereto from, or enter into any preliminary conversations
or negotiations relating thereto with, any person (other than the
Purchaser), so as to bring the issuance and sale of the Shares
and/or Warrants under the registration provisions of the
Securities Act and applicable state securities laws. Neither the
Company nor any of its affiliates, nor any person acting on its or
their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the
Shares.
(x) [INTENTIONALLY DELETED]
(y) Employees. Neither the Company nor any
subsidiary has any collective bargaining arrangements or
agreements covering any of its employees, except as set forth in
the SEC Documents or on Schedule 3(y) hereto. Except as set
forth in the SEC Documents or on Schedule 3(y) hereto, neither
the Company nor any subsidiary is in material breach of any
employment contract, agreement regarding proprietary
information, noncompetition agreement, nonsolicitation
agreement, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any
officer, employee or consultant to be employed or engaged by the
Company or such subsidiary. Since the date of the December 31,
1999, Form 10-K, no officer, consultant or key employee of the
Company or any subsidiary whose termination, either
individually or in the aggregate, could have a Material Adverse
Effect, has terminated or, to the knowledge of the Company, has
any present intention of terminating his or her employment or
engagement with the Company or any subsidiary.
(z) Absence of Certain Developments. Except as
provided in SEC Documents or in Schedule 3.1(z) hereto, since
April 1, 2000 neither the Company nor any subsidiary has:
(i) issued any stock, bonds or other corporate
securities or any rights, options or warrants with respect thereto;
(ii) borrowed any amount or incurred or
become subject to any liabilities (absolute or contingent) except
current liabilities incurred in the ordinary course of business
which are comparable in nature and amount to the current
liabilities incurred in the ordinary course of business during the
comparable portion of its prior fiscal year, as adjusted to reflect
the current nature and volume of the Company's or such
subsidiary's business;
(iii) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or
contingent), other than current liabilities paid in the ordinary
course of business;
(iv) declared or made any payment or
distribution of cash or other property to stockholders with respect
to its stock, or purchased or redeemed, or made any agreements
so to purchase or redeem, any shares of its capital stock;
(v) sold, assigned or transferred any other
tangible assets, or canceled any debts or claims, except in the
ordinary course of business;
(vi) sold, assigned or transferred any patent
rights, trademarks, trade names, copyrights, trade secrets or other
intangible assets or intellectual property rights, or disclosed any
proprietary confidential information to any person except to
customers in the ordinary course of business or to the Purchaser
or its representatives;
(vii) suffered any substantial losses or waived
any rights of material value, whether or not in the ordinary course
of business, or suffered the loss of any material amount of
prospective business;
(viii) made any changes in employee
compensation except in the ordinary course of business and
consistent with past practices;
(ix) made capital expenditures or commitments
therefor in excess of $500,000;
(x) entered into any other material transaction
not in the ordinary course of business;
(xi) suffered any material damage, destruction
or casualty loss, whether or not covered by insurance;
(xii) experienced any material problems with
labor or management in connection with the terms and conditions
of their employment; or
(xiii) effected any two or more events of the
foregoing kind which in the aggregate would be material to the
Company or its subsidiaries.
(aa) Use of Proceeds. The proceeds from the sale of
the Shares will be used by the Company and its subsidiaries for
general corporate purposes, including for working capital and the
prepayment and repayment of debt.
(bb) Acknowledgment Regarding Purchaser's Purchase
of Shares. Company acknowledges and agrees that Purchaser is
acting solely in the capacity of arm's length purchaser with
respect to this Agreement and the transactions contemplated
hereunder. The Company further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereunder and any
advice given by the Purchaser or any of its representatives or
agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Purchaser's
purchase of the Shares. The Company further represents to the
Purchaser that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation
by the Company and its own representatives and counsel.
Section 3.2 Representations and Warranties of
the Purchaser. The Purchaser hereby makes the following
representations and warranties to the Company:
(a) Organization and Standing of the Purchaser. The
Purchaser is a corporation duly incorporated, validly existing and
in good standing under the laws of British Virgin Islands.
(b) Authorization and Power. The Purchaser has the
requisite power and authority to enter into and perform this
Agreement and to purchase the Shares being sold to it hereunder.
The execution, delivery and performance of this Agreement by
Purchaser and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action.
(c) No Conflicts. The execution, delivery and
performance of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby or relating
hereto do not and will not (i) result in a violation of such
Purchaser's charter documents or bylaws 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 Purchaser is
a party, or result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental
agency applicable to the Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually
or in the aggregate, have a Material Adverse Effect on
Purchaser). The Purchaser is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or
to purchase the Shares in accordance with the terms hereof,
provided that for purposes of the representation made in this
sentence, the Purchaser is assuming and relying upon the
accuracy of the relevant representations and agreements of the
Company herein.
(d) Financial Risks. The Purchaser acknowledges that
it is able to bear the financial risks associated with an investment
in the Shares and that it has been given full access to such records
of the Company and the subsidiaries and to the officers of the
Company and the subsidiaries as it has deemed necessary or
appropriate to conduct its due diligence investigation. The
Purchaser is capable of evaluating the risks and merits of an
investment in the Shares by virtue of its experience as an investor
and its knowledge, experience, and sophistication in financial and
business matters and the Purchaser is capable of bearing the
entire loss of its investment in the Shares.
(e) Accredited Investor. The Purchaser is an
"accredited investor" as defined in Regulation D promulgated
under the Securities Act.
(f) Compliance With Law. The Purchaser's trading
and distribution activities with respect to the Shares will be in
compliance with all applicable state and federal securities laws,
rules and regulations and the rules and regulations of the
Principal Market.
(g) General. The Purchaser understands that the
Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to
determine the suitability of the Purchaser to acquire the Shares.
ARTICLE IV
Covenants
The Company covenants with the Purchaser as follows:
Section 4.1 Securities Compliance.
If applicable, the Company shall notify the NASD, in
accordance with their rules and regulations, of the transactions
contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Shares and the Warrants to the Purchaser or
subsequent holders.
Section 4.2 Registration and Listing. The
Company will use reasonable efforts to cause its Common Stock
to continue to be registered under Sections 12(b) or 12(g) of the
Exchange Act, will comply in all respects with its reporting and
filing obligations under the Exchange Act, will comply with all
requirements related to any registration statement filed pursuant
to this Agreement, and will not take any action or file any
document (whether or not permitted by the Securities Act or the
rules promulgated thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act, except as
permitted herein. The Company will take all commercially
reasonable action to continue the listing or trading of its Common
Stock on the OTC Bulletin Board or another Principal Market
and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the
NASD and the OTC Bulletin Board.
Section 4.3 Registration Statement. The
Company shall use its reasonable best efforts to cause to be filed
the Registration Statement, which Registration Statement shall
provide for the resale of the Shares by the Purchaser to the public
in accordance with this Agreement. The Company shall cause
such Registration Statement to be declared effective by the
Commission as expeditiously as practicable. Before the
Purchaser shall be obligated to accept a Draw Down request from
the Company, the Company shall have caused a sufficient
number of shares of Common Stock to be registered to cover the
Shares to be issued in connection with such Draw Down.
Section 4.4 Escrow Arrangement. The
Company shall enter into an escrow arrangement with the
Purchaser and Xxxxxxx Xxxxxx & Green, P.C. (the "Escrow
Agent") in the Form of Exhibit B hereto respecting payment
against delivery of the Shares.
Section 4.5 Compliance with Laws. The
Company shall comply, and cause each subsidiary to comply,
with all applicable laws, rules, regulations and orders,
noncompliance with which could have a Material Adverse Effect.
Section 4.6 Keeping of Records and Books of
Account. The Company shall keep and cause each subsidiary to
keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Company and
its subsidiaries, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its
business shall be made.
Section 4.7 Amendments. The Company shall
not amend or waive any provision of its Articles of Organization
or Bylaws of the Company in any way that would adversely
affect the dividend rights or voting rights of the holders of the
Shares.
Section 4.8 Other Agreements. The Company
shall not enter into any agreement the terms of which such
agreement would restrict or impair the right to perform of the
Company or any subsidiary under this Agreement.
Section 4.9 Notice of Certain Events Affecting
Registration; Suspension of Right to Request a Draw Down. The
Company will immediately notify the Purchaser upon the
occurrence of any of the following events in respect of the
Registration Statement or related prospectus in respect of the
Shares: (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 Shares 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 or deemed to be
incorporated therein 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 Registration Statement would be appropriate;
and the Company will promptly make available to the Purchaser
any such supplement or amendment to the related prospectus.
The Company shall not deliver to the Purchaser any Draw Down
Notice during the continuation of any of the foregoing events.
Section 4.10 Consolidation; Merger. The
Company shall not, at any time after the date hereof, effect any
merger or consolidation of the Company with or into, or a
transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting
successor or acquiring entity (if not the Company) assumes by
written instrument or by operation of law the obligation to deliver
to the Purchaser such shares of stock and/or securities as the
Purchaser may be entitled to receive pursuant to this Agreement.
Section 4.11 Limitation on Future Financing.
The Company agrees that, except as set forth below, it will not
enter into any sale of its securities for cash at a discount to the
current market price until the earlier of (i) eighteen (18) months
from the effective date of the Registration (ii) thirty (30) days
after the entire $10,000,000 of Shares (excluding the Shares
underlying the Warrants) has been purchased by Purchaser or (iii)
thirty (30) days after termination of this Agreement pursuant to
the provisions of Sections 7.1, 7.2(a) or 7.2(b) hereof. The
foregoing shall not prevent or limit the Company from engaging
in any sale of securities (i) in a registered public offering by the
Company which is underwritten by one or more established
investment banks, (ii) in one or more private placements where
the purchasers do not have registration rights, (iii) pursuant to
any presently existing or future employee benefit plan which plan
has been or is approved by the Company's stockholders, (iv)
pursuant to any compensatory plan for a full-time employee or
key consultant, (v) in connection with a strategic partnership or
other business transaction, the principal purpose of which is not
simply to raise money or (vi) to which Purchaser gives its written
approval.
The Purchaser covenants with the Company as follows:
4.12 No Short Sales. The Purchaser and its
affiliates shall not engage in short sales of the Company's
Common Stock (as defined in applicable SEC and NASD rules)
during the term of this Agreement.
4.13 Notice of Beneficial Ownership. At the
request of the Company, upon delivering a Draw Down Notice to
the Purchaser, the Purchaser shall inform the Company of the
current number of shares of Common Stock and Warrants
beneficially owned by the Purchaser and its affiliates.
ARTICLE V
Conditions to Closing and Draw Downs
Section 5.1 Conditions Precedent to the
Obligation of the Company to Sell the Shares. The obligation
hereunder of the Company to issue and sell the Shares to the
Purchaser is subject to the satisfaction or waiver, at or before the
Closing and as of each Draw Down Exercise Date, of each of the
conditions set forth below. These conditions are for the
Company's sole benefit and may be waived by the Company at
any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser
shall be true and correct in all material respects as of the date
when made and as of the Closing and as of each Draw Down
Exercise Date as though made at that time, except for
representations and warranties that speak as of a particular date.
(b) Performance by the Purchaser. The Purchaser
shall have performed, satisfied and complied in all material
respects with all material covenants, agreements and conditions
required by this Agreement to be performed, satisfied or
complied with by the Purchaser at or prior to the Closing and as
of each Draw Down Exercise Date.
(c) 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 which prohibits
the consummation of any of the transactions contemplated by this
Agreement.
Section 5.2 Conditions Precedent to the
Obligation of the Purchaser to Close at the Closing. The
obligation hereunder of the Purchaser to perform its obligations
under this Agreement and to purchase the Shares is subject to the
satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below. These conditions are for the
Purchaser's sole benefit and may be waived by the Purchaser at
any time in its sole discretion.
(a) Accuracy of the Company's Representations and
Warranties. Each of the representations and warranties of the
Company shall be true and correct in all material respects as of
the date when made and as of the Closing as though made at that
time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Company. The Company
shall have performed, satisfied and complied in all respects with
all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing.
(c) 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 which prohibits
the consummation of any of the transactions contemplated by this
Agreement.
(d) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority
shall have been commenced, and no investigation by any
governmental authority shall have been threatened, against the
Purchaser or the Company or any subsidiary, or any of the
officers, directors or affiliates of the Company or any subsidiary
seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in
connection with such transactions.
(e) Opinion of Counsel, Etc. At the Closing, the
Purchaser shall have received an opinion of counsel to the
Company, dated the date of Closing, in the form of Exhibit C
hereto, and such other customary closing certificates and
documents as the Purchaser or its counsel shall reasonably
require incident to the Closing.
(f) Warrants. In lieu of a minimum Draw Down
commitment by the Company, the Purchaser shall receive a
warrant certificate to purchase up to a number of shares
determined by dividing $500,000 by the average VWAP on the
five (5) Trading Days immediately prior to the Closing Date (the
"Warrants"). The Warrants shall have an exercise price equal to
115% of the average VWAP on the five (5) Trading Days
immediately preceding the Closing Date and a term of three (3)
years. The Common Stock underlying the Warrant will be
registered in the Registration Statement referred to in Section 4.3
hereof. The Warrant shall be in the form of Exhibit E hereof.
Section 5.3 Conditions Precedent to the
Obligation of the Purchaser to Accept a Draw Down and
Purchase the Shares. The obligation hereunder of the Purchaser
to accept a Draw Down request and to acquire and pay for the
Shares is subject to the satisfaction, at or before each Draw Down
Exercise Date, of each of the conditions set forth below.
(a) Satisfaction of Conditions to Closing. The
Company shall have
satisfied, or the Purchaser
shall have waived at the
Closing, the conditions set
forth in Section 5.2 hereof
(b) Effective Registration Statement. The
Registration Statement registering the Shares shall have been
declared effective by the Commission and shall remain effective
on each Draw Down Exercise Date.
(c) No Suspension. Trading in the Company's
Common Stock shall not have been suspended by the
Commission or the Principal Market (except for any suspension
of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the delivery of each Draw
Down Notice), and, at any time prior to such Draw Down Notice,
trading in securities generally as reported on the Principal Market
shall not have been suspended or limited, or minimum prices
shall not have been established on securities whose trades are
reported on the Principal Market (unless the general suspension
or limitation shall have been terminated prior to the delivery of
such Draw Down Notice).
(d) Material Adverse Effect. No Material Adverse
Effect and no Consolidation Event where the successor entity has
not agreed to perform the Company's obligations shall have
occurred.
(e) Opinion of Counsel The Purchaser shall have
received a "down-to-date" letter from the Company's counsel,
confirming that there is no change from the counsel's previously
delivered opinion, or else specifying with particularity the reason for any
change.
(f) Future Financing. The Company shall have not
completed any financing prohibited by Section 4.11 unless, prior to the
Company delivering a Draw Down Notice after any such financing, the
Company pays the Purchaser the sum of $100,000 as liquidated damages.
ARTICLE VI
Draw Down Terms
Section 6.1 Draw Down Terms. Subject to the
satisfaction of the conditions set forth in this Agreement, the
parties agree as follows:
(a) The Company, may, in its sole
discretion, issue a notice to the Purchaser of the Company's
intent to sell Shares to the Purchaser (a "Draw Down") during
each Draw Down Pricing Period, which Draw Down the
Purchaser is obligated to accept.
(b) Only one Draw Down shall be allowed
in each Draw Down Pricing Period. The price per share paid by
the Purchaser shall be the Average Daily Price on each separate
Trading Day during the Draw Down Pricing Period. The number
of shares of Common Stock purchased by the Purchaser with
respect to each Draw Down shall be determined on a daily basis
during each Draw Down Pricing Period and settled on, (i) as to
the 1st through the 11th Trading Days after a Draw Down Pricing
Period commences, on the 13th Trading Day after a Draw Down
Pricing Period commences, and (ii) as to the 12th through the 22nd
Trading Days after a Draw Down Pricing Period commences, the
24th Trading Day after a Draw Down Pricing Period (each, a
"Draw Down Exercise Date"). In connection with each Draw
Down Pricing Period, the Company may set an Average Daily
Price below which the Company will not sell any Shares (the
"Threshold Price"). If the Average Daily Price on any day within
the Draw Down Pricing Period is less than the Threshold Price,
the Company shall not sell and the Purchaser shall not be
obligated to purchase the Shares otherwise to be purchased for
such day. The Company shall have the right to issue and exercise
a Draw Down of up to (i) as to the first Draw Down only,
$2,000,000 (ii) as to all subsequent Draw Downs, $1,0000,000
per Draw Down of the Company's Common. Each Draw Down
is subject to the limitations set forth immediately below, until the
aggregate amount purchased under this Agreement equals Ten
Million Dollars ($10,000,000).
(c) The minimum Draw Down shall be
$250,000, except that if the remaining Commitment Amount is
less than $250,000, the Investment Amount (as defined below)
shall be equal to such remaining Commitment Amount.
(d) The maximum dollar amount of each
Draw Down during any Draw Down Pricing Period shall be
limited pursuant to the following formula: Average Stock Price:
Average of the Average Daily Prices for the 22 Trading Days
prior to the Draw Down Notice date. Average Trading Volume:
Average daily trading volume for the 45 Trading Days prior to
the Draw Down Notice date. Maximum dollar amount of each
Draw Down: 20% of (Average Stock Price x (Average Trading
Volume x 22)) the number of Shares of Common Stock to be
issued in connection with each Draw Down shall be equal to the
sum of the quotients (for each trading day within the Draw Down
Pricing Period) of (x) 1/22nd of the Draw Down amount and (y)
93% of the Average Daily Price of the Common Stock on each
Trading Day within the Draw Down Pricing Period. If the
Average Daily Price on a given Trading Day is less than the
Threshold Price, then the Purchaser's Draw Down will be
reduced by 1/22nd and that day shall be withdrawn from the Draw
Down Pricing Period, except that the Purchaser in its sole
discretion may purchase such shares at the Threshold Price.
(e) The Company must inform the
Purchaser of the amount of the Draw Down (the "Investment
Amount") by delivering a Draw Down Notice, in the form of
Exhibit D hereto, via facsimile transmission as to the amount of
the Draw Down the Company wishes to exercise before the first
day of the Draw Down Pricing Period (the "Draw Down
Notice"). The Company may set the Threshold Price, if any,
prior to the commencement of each Draw Down Pricing Period.
At no time shall the Purchaser be required to purchase more than
the maximum Draw Down amount for a given Draw Down
Pricing Period so that if the Company chooses not to exercise the
maximum permitted Draw Down in a given Draw Down Pricing
Period the Purchaser is not obligated to and shall not purchase
more than the scheduled maximum amount in a subsequent Draw
Down Pricing Period.
(f) On or before each Draw Down
Exercise Date, the Shares purchased by the Purchaser shall be
delivered to The Depository Trust Company ("DTC") on the
Purchaser's behalf. The Shares shall be credited by the Company
to the DTC account designated by the Purchaser upon receipt by
the Escrow Agent of payment for the Draw Down into the
Escrow Agent's trust account as provided in the Escrow
Agreement. The Escrow Agent shall be directed to pay 95% of
the purchase price to the Company, net of One Thousand Five
Hundred Dollars ($1,500) per Draw Down as escrow expenses to
the Escrow Agent, and 5% of the Purchase Price to the placement
agent as set forth in the Escrow Agreement. The delivery of the
Shares into the Purchaser's DTC account in exchange for
payment therefor shall be referred to herein as "Settlement".
ARTICLE VII
Termination
Section 7.1 Termination by Mutual Consent.
The term of this Agreement shall be eighteen (18) months from
the Effective Date.
Section 7.2 Other Termination.
(a) The Purchaser may terminate this Agreement
upon one (1) Trading Day's notice if (i) an event resulting in a
Material Adverse Effect has occurred, (ii) the Common Stock is
de-listed from the OTC Bulletin Board unless such de-listing is in
connection with the listing of the Common Stock on the
American Stock Exchange, the Nasdaq National Market, Nasdaq
SmallCap Market, or the New York Stock Exchange, or (iii) the
Company files for protection from creditors under any applicable
law.
(b) The Company may terminate this Agreement upon one (1)
Trading Day's notice if the Purchaser shall fail to fund more than
one properly noticed Draw Down within three (3) Trading Days
of the date payment for such Draw Down is due. Except as to (i)
10% of the Warrants issued to the Purchaser and (ii) any
Warrants already exercised by the Purchaser, in the event that the
Purchaser fails to honor more than one properly noticed Draw
Down as set forth above, the Purchaser shall return to the
Company for cancellation a pro-rata portion of the remaining
Warrants, based upon the portion of the Commitment Amount
that has not been previously honored.
Section 7.3 Effect of Termination. In the event
of termination by the company or the Purchaser, written notice
thereof shall forthwith be given to the other party and the
transactions contemplated by this Agreement shall be terminated
without further action by either party. If this Agreement is
terminated as provided in Section 7.1 or 7.2 herein, this
Agreement shall become void and of no further force and effect,
except for Sections 7.2(b), 9.1 and 9.2, and Article VIII herein.
Nothing in this Section 7.3 shall be deemed to release the
Company or the Purchaser from any liability for any breach
under this Agreement, or to impair the rights to the Company and
the Purchaser to compel specific performance by the other party
of its obligations under this Agreement.
ARTICLE VIII
Indemnification
Section 8.1 General Indemnity. The Company
agrees to indemnify and hold harmless the Purchaser (and its
directors, officers, affiliates, agents, successors and assigns) from
and against any and all losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, reasonable
attorney's fees, charges and disbursements) incurred by the
Purchaser as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company
herein; provided, however, this Section 8.1 shall not inure to the
benefit of the Purchaser with respect to any person asserting such
loss, claim, damage or liability who purchased the Registrable
Securities (as defined in Section 1 of the Registration Rights
Agreement) which are the subject thereof if the Purchaser failed
to send or give (in violation of the Securities Act or the rules and
regulations promulgated thereunder) a copy of the prospectus
contained in the Registration Statement to such person at or prior
to the written confirmation to such person of the sale of such
Registrable Securities, where the Purchaser or other underwriter
distributing the Registrable Securities was obligated to do so
under the Securities Act or the rules and regulations promulgated
thereunder. The Purchaser agrees to indemnify and hold harmless
the Company and its directors, officers, affiliates, agents,
successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys fees, charges and
disbursements) incurred by the Company as result of any
inaccuracy in or breach of the representations, warranties or
covenants made by the Purchaser herein. Notwithstanding
anything to the contrary herein, the Purchaser shall be liable
under this Section 8.1 for only that amount as does not exceed the
net proceeds to such Purchaser as a result of the sale of Shares
pursuant to the Registration Statement.
8.2 Contribution. In order to provide for just
and equitable contribution under the Securities Act in any case in
which (i) the indemnified party (as defined below) makes a claim
for indemnification pursuant to Article VIII hereof but is
judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Article
VIII hereof provide for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part
of any indemnified party, then the Company and the Purchaser
shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable
attorneys' fees), in either such case (after contribution from
others) on the basis of relative fault as well as any other relevant
equitable considerations. The relative fault shall be determined
by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Purchaser on
the other hand, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission. The Company and the Purchaser agree
that it would not be just and equitable if contribution pursuant to
this Section 8.2 were determined by pro rata allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to in this Section 8.2. The
amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section 8.2 shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
Notwithstanding any other provision of this
Section 8.2, in no event shall any (i) Purchaser be required to
undertake liability to any person under this Section 8.2 for any
amounts in excess of the dollar amount of the net proceeds to be
received by such Purchaser from the sale of such Purchaser's
Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any Registration
Statement under which such Registrable Securities are to be
registered under the Securities Act and (ii) underwriter be
required to undertake liability to any person hereunder for any
amounts in excess of the aggregate discount, commission or
other compensation payable to such underwriter with respect to
the Registrable Securities underwritten by it and distributed
pursuant to the Registration Statement.
Section 8.3 Indemnification Procedure. Any
party entitled to indemnification under this Article VIII (an
"indemnified party") will give written notice to the indemnifying
party of any matters giving rise to a claim for indemnification;
provided, that the failure of any party entitled to indemnification
hereunder to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Article VIII
except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified party in
respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless
in the reasonable judgment of counsel to the indemnified party a
conflict of interest between it and the indemnifying party may
exist with respect of such action, proceeding or claim, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party
advises an indemnified party that it will contest such a claim for
indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such
person of its election to defend, settle or compromise, at its sole
cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such
defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In
any event, unless and until the indemnifying party elects in
writing to assume and does so assume the defense of any such
claim, proceeding or action, the indemnified party's costs and
expenses arising out of the defense, settlement or compromise of
any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall
cooperate fully with the indemnifying party in connection with
any settlement negotiations or defense of any such action or
claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the
indemnified party, which relates to such action or claim. The
indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. If the indemnifying
party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense
with counsel of its choice at its sole cost and expense. The
indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written
consent. Notwithstanding anything in this Article VIII to the
contrary, the indemnifying party shall not, without the
indemnified party's prior written consent, settle or compromise
any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or
which does not include, as an unconditional term thereof, the
giving by the claimant or the plaintiff to the indemnified party of
a release from all liability in respect of such claim. The
indemnification required by this Article VIII shall be made by
periodic payments of the amount thereof during the course of
investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred, within ten (10)
Trading Days of written notice thereof to the indemnifying party
so long as the indemnified party irrevocably agrees to refund
such moneys if it is ultimately determined by a court of
competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein
shall be in addition to (a) any cause of action or similar rights of
the indemnified party against the indemnifying party or others,
and (b) any liabilities the indemnifying party may be subject to.
ARTICLE IX
Miscellaneous
Section 9.1 Fees and Expenses. The
Company and the Purchaser shall pay all of their own fees and
expenses related to the transactions contemplated by this
Agreement; provided, however, that the Company shall pay, at
the Closing, attorneys and escrow fees and expenses (exclusive of
disbursements and out-of-pocket expenses) incurred by the
Purchaser of $10,000 in connection with the preparation,
negotiation, execution and delivery of this Agreement and the
transactions contemplated hereunder. In addition, the Company
shall pay all reasonable fees and expenses incurred by the
Purchaser in connection with any subsequent amendments,
modifications or waivers of this Agreement, the Escrow
Agreement or the Registration Rights Agreement by the
Company or incurred in connection with the enforcement of this
Agreement, the Escrow Agreement and the Registration Rights
Agreement, including, without limitation, all reasonable attorneys
fees and expenses. The Company shall pay all stamp or other
similar taxes and duties levied in connection with issuance of the
Shares pursuant hereto.
Section 9.2 Specific Enforcement. The
Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to
any other remedy to which any of them may be entitled by law or
equity.
Section 9.3 Entire Agreement; Amendment.
This Agreement, together with the Registration Rights
Agreement and the Escrow Agreement contains the entire
understanding of the parties with respect to the matters covered
hereby and, except as specifically set forth herein, neither the
Company nor the Purchaser makes any representations, warranty,
covenant or undertaking with respect to such matters. No
provision of this Agreement may be waived or amended other
than by a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought and no
condition to closing any Draw Down in favor of the Purchaser
may be waived by the Purchaser.
Section 9.4 Notices. Any notice, demand,
request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or facsimile at the address or number
designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is
to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such
communications shall be:
If to the Company: Cambex Corporation
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
With copies to: Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
If to Purchaser: c/o Dr. Xx. Xxxxxxxx & Partner
Xxxxxxxxxxxx 00
XX-0000 Xxxxx, Xxxxxxxxxxxxx
Fax: 000-000-000-0000
Attn: Xxxx Xxxxxxx, Authorized
Signatory
with copies to: Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (212) 351-
4924
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
Any party hereto may from time to time change its
address for notices by giving written notice of such changed
address to the other party hereto in accordance herewith.
Section 9.5 Waivers. No waiver by either party
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
provisions, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.
Section 9.6 Headings. The article, section and
subsection headings in this Agreement are for convenience only
and shall not constitute a part of this Agreement for any other
purpose and shall not be deemed to limit or affect any of the
provisions hereof.
Section 9.7 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. After the Closing, the
assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this
Agreement.
Section 9.8 No Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any
other person.
Section 9.9 Governing Law/Arbitration. This
Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to the
choice of law provisions. Any dispute under this Agreement or any
Exhibit attached hereto shall be submitted to arbitration under the
American Arbitration Association (the "AAA") in New York City, New
York, and shall be finally and conclusively determined by the decision
of a board of arbitration consisting of three (3) members (hereinafter
referred to as the "Board of Arbitration") selected as according to the
rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall
reach and render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to the amount, if any,
which the losing party is required to pay to the other party in respect of a
claim filed. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow the laws of the State of New York.
To the extent practical, decisions of the Board of Arbitration shall be
rendered no more than thirty (30) calendar days following
commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. The Board of Arbitration shall be authorized
and is directed to enter a default judgment against any party refusing to
participate in the arbitration proceeding within thirty days of any
deadline for such participation. Any decision made by the Board of
Arbitration (either prior to or after the expiration of such thirty (30)
calendar day period) shall be final, binding and conclusive on the parties
to the dispute, and entitled to be enforced to the fullest extent permitted
by law and entered in any court of competent jurisdiction. The
prevailing party shall be awarded its costs, including attorneys' fees,
from the non-prevailing party as part of the arbitration award. Any
party shall have the right to seek injunctive relief from any court of
competent jurisdiction in any case where such relief is available. The
prevailing party in such injunctive action shall be awarded its costs,
including attorney's fees, from the non-prevailing party.
Section 9.10 Counterparts. This Agreement may
be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall
become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being
understood that all parties need not sign the same counterpart.
Execution may be made by delivery by facsimile.
Section 9.11 Publicity. Prior to the Closing,
neither the Company nor the Purchaser shall issue any press
release or otherwise make any public statement or announcement
with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement. After the Closing, the
Company may issue a press release or otherwise make a public
statement or announcement with respect to this Agreement or the
transactions contemplated hereby or the existence of this
Agreement; provided, that prior to issuing any such press release,
making any such public statement or announcement, the
Company obtains the prior consent of the Purchaser, which
consent shall not be withheld or delayed for more than three (3)
Trading Days.
Section 9.12 Severability. The provisions of this
Agreement are severable and, in the event that any court or
affiliates of any regulatory agency of competent jurisdiction shall
determine that any one or more of the provisions or part of the
provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement and this
Agreement shall be reformed and construed as if such invalid or
illegal or unenforceable provision, or part of such provision, had
never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible, so
long as such construction does not materially adversely effect the
economic rights of either parties hereto.
Section 9.13 Further Assurances. From and
after the date of this Agreement, upon the request of the
Purchaser or the Company, each of the Company and the
Purchaser shall execute and deliver such instruments, documents
and other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
Section 9.14 Controlling Document. In the event of any
conflict between the terms of the exhibits attached hereto and this
Purchase Agreement, this Purchase Agreement shall control.
Section 9.15 Effectiveness of Agreement. This
Agreement shall become effective only upon satisfaction of the
conditions precedent to the Closing in Article I of the Escrow
Agreement.
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed by their
respective authorize officer as of this 14th day of July, 2000.
CAMBEX CORPORATION
By: /s/ Xxxxxx Xxxx
Xxxxxx Xxxx, Chairman,
President and CEO
Thumberland Limited
By: /s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx, Authorized
Signatory
