STOCK PURCHASE AGREEMENT
BETWEEN
ENUCLEUS, INC.
AND
XXXXXX PARTNERS LP
DATED
May 6, 2005
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of the 6th day of May, 2005 between eNucleus, Inc., a corporation organized
and existing under the laws of the State of Delaware ("eNucleus" or the
"Company"), and XXXXXX PARTNERS LP, a Delaware limited partnership ("Investor").
PRELIMINARY STATEMENT:
WHEREAS, the Investor wishes to purchase from the Company, upon the terms
and subject to the conditions of this Agreement, at the purchase price of Two
Million Eighty Thousand Dollars ($2,080,000), 8,000,000 shares of Common Stock
of the Company. In addition, the Company (x) will issue to the Investor a
Common Stock Purchase Warrant (the "Warrant") to purchase up to an additional
2,000,000 shares of Common Stock of the Company at an exercise price of $.35 per
share and (y) will reprice the two common stock purchase warrants dated August
13, 2004 issued to the Investor ("Previously Issued Warrants") to $.35 per share
and delete any "callability" provisions therein; and
WHEREAS, the parties intend to memorialize the purchase and sale of the
Common Stock and the Warrants.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby conclusively acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
INCORPORATION BY REFERENCE, SUPERSEDER AND DEFINITIONS
1.1 Incorporation by Reference. The foregoing recitals, and the Exhibits
and Schedules attached hereto and referred to herein, are hereby acknowledged
to be true and accurate, and are incorporated herein by this reference.
1.2 Superseder. This Agreement, to the extent that it is inconsistent with
any other instrument or understanding among the parties governing the affairs of
the Company, shall supersede such instrument or understanding to the fullest
extent permitted by law. A copy of this Agreement shall be filed at the
Company's principal office.
1.3 Certain Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings (all capitalized terms used
in this Agreement that are not defined in this Article 1 shall have the meanings
set forth elsewhere in this Agreement):
1.3.1 "1933 Act" means the Securities Act of 1933, as amended.
1.3.2 "1934 Act" means the Securities Exchange Act of 1934, as
amended.
1.3.3 "Affiliate" means a Person or Persons directly or indirectly,
through one or more intermediaries, controlling, controlled by or under common
control with the Person(s) in question. The term "control," as used in the
immediately preceding sentence, means, with respect to a Person that is a
corporation, the right to the exercise, directly or indirectly, of more than 50
percent of the voting rights attributable to the shares of such controlled
corporation and, with respect to a Person that is not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such controlled Person.
13.4 "Certificate" means the Certificate of Incorporation of the
Company, as the same may be amended from time to time.
13.5 "Closing" shall mean the Closing of the transactions
contemplated by this Agreement on the Closing Date.
13.6 "Closing Date" means the date on which the payment of the
Purchase Price (as defined herein) by the Investor to the Company is completed
pursuant to this Agreement to purchase the Common Stock and Warrant, which shall
occur on May 6, 2005.
13.7 "Common Stock" means shares of common stock of the Company, par
value $0.001 per share.
13.8 "Delaware Act" means the Delaware General Corporation Law, as
amended.
13.9 "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.
13.10 "Person" means an individual, partnership, firm, limited
liability company, trust, joint venture, association, corporation, or any other
legal entity.
13.11 "Purchase Price" means the $2,080,000 paid by the Investor to
the Company for the Common Stock and the Warrant.
13.12 Registration Rights Agreement" shall mean the registration
rights agreement between the Investor and the Company attached hereto as Exhibit
A.
13.13 "Registration Statement" shall mean the registration statement
under the 1933 Act to be filed with the Securities and Exchange Commission for
the registration of the Shares pursuant to the Registration Rights Agreement.
13.14 "SEC" means the Securities and Exchange Commission.
13.15 "SEC Documents" shall mean the Company's latest Form 10-K or
10-KSB as of the time in question, all Forms 10-Q or 10-QSB 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.
13.16 "Shares" shall mean, collectively, the shares of Common Stock of
the Company purchased hereunder and the shares of Common Stock issuable to the
Investor upon exercise of the Warrant.
1.3.17 "Subsequent Financing" shall mean any offer and sale of shares
of Common Stock or debt that is convertible into shares of Common Stock.
1.3.18 "Transaction Documents" shall mean this Agreement, all Schedules
and Exhibits attached hereto and all other documents and instruments to be
executed and delivered by the parties in order to consummate the transactions
contemplated hereby, including, but not limited to the documents listed in
Sections 3.2 and 3.3 hereof.
1.3.19 "Warrant" shall mean the Common Stock Purchase Warrant in the
form attached hereto Exhibit B.
ARTICLE II
SALE AND PURCHASE OF ENUCLEUS STOCK AND WARRANT PURCHASE PRICE
2.1 Sale of Common Stock and Issuance of Warrant.
(a) Upon the terms and subject to the conditions set forth herein,
and in accordance with applicable law, the Company agrees to sell to the
Investor, and the Investor agrees to purchase from the Company, on the Closing
Date, 8,000,000 shares of Common Stock and the Warrant for the Purchase Price.
The Purchase Price shall be paid by the Investor to the Company on the Closing
Date by a wire transfer or check of the Purchase Price into an account
designated by the Company. The Company shall register the shares of Common Stock
pursuant to the terms and conditions of the Registration Rights Agreement.
(b) Upon the execution and delivery of this Agreement and the
Company's receipt of the Purchase Price, the Company shall (x) issue to the
Investor 8,000,000 shares of Common Stock, (y) issue to the Investor the Warrant
to purchase an additional 2,000,000 shares of Common Stock and (z) reprice the
3,500,000 Previously Issued Warrants to $.35 per share and delete any
"callability" provisions therein.
2.2 Purchase Price. The Purchase Price shall be paid by the Investor in the
form of a check or wire transfer of immediately available funds to the Company
in United States Dollars from the Investor to the escrow agent pursuant to the
Escrow agreement on the Closing Date.
ARTICLE III
CLOSING DATE AND DELIVERIES AT CLOSING
3.1 Closing Date The closing of the transactions contemplated by this
Agreement (the "Closing"), unless expressly determined herein, shall be held at
the offices of the Company, at 5:00 P.M. local time, on the Closing Date or on
such other date and at such other place as may be mutually agreed by the parties
including closing by facsimile with originals to follow.
3.2 Deliveries by the Company. In addition to and without limiting any
other provision of this Agreement, the Company agrees to deliver, or cause to be
delivered, to the Investor, the following:
(a) On the Closing Date, certificates representing the Shares of Common Stock,
which certificates shall be issued in the name of the Investor.
(b) At or prior to the Closing, an executed Agreement;
(c) At or prior to the Closing, the executed Registration Rights Agreement;
(d) At or prior to the Closing, an executed Common Stock Purchase Warrant;
(e) Certifications in form and substance acceptable to the Company and the
Investor from any and all brokers or agents involved in the transactions
contemplated hereby as to the amount of commission or compensation payable to
such broker or agent as a result of the consummation of the transactions
contemplated hereby and from the Company or the Investor, as appropriate, to the
effect that reasonable reserves for any other commissions or compensation that
may be claimed by any broker or agent have been set aside;
(f) Evidence of approval of the Board of Directors of the Company of the
Transaction Documents and the transactions contemplated hereby;
(g) Certificates of Existence or Authority to Transact Business of the Company
issued by each of the Secretaries of State for Delaware and Illinois;
(h) Documentation regarding the repricing of the Previously Issued Warrants held
by Xxxxxx to $.35 per share;
(i) Documentation regarding the elimination of all callability by the Company
in the Previously Issued Warrants; and
(j) Such other documents or certificates as shall be reasonably requested by
the Investor or its counsel.
3.3 Deliveries by Investor. In addition to and without limiting any other
provision of this Agreement, the Investor agrees to deliver, or cause to be
delivered, to the Company, the following:
(a) At or prior to the Closing, the Purchase Price;
(b) At or prior to the Closing, an executed Agreement;
(c) At or prior to the Closing, the executed Registration Rights Agreement; and
(d) Such other documents or certificates as shall be reasonably requested by the
Company or its counsel.
In the event any document provided to the other party in Paragraphs 3.2 and 3.3
herein are provided by facsimile, the party shall forward an original document
to the other party within seven (7) business days.
3.4 Further Assurances. The Company and the Investor shall, upon request, on or
after the Closing Date, cooperate with each other (specifically, the Company
shall cooperate with the Investor, and the Investor shall cooperate with the
Company) by furnishing any additional information, executing and delivering any
additional documents and/or other instruments and doing any and all such things
as may be reasonably required by the parties or their counsel to consummate or
otherwise implement the transactions contemplated by this Agreement.
3.5 Waiver. The Investor may waive any of the requirements of Section 3.2 of
this Agreement, and the Company at its discretion may waive any of the
provisions of Section 3.3 of this Agreement.
3.6 Terms of Previous Transactions. All terms and conditions of this
agreement, except for price paid per share, updates and supersedes all previous
transactions between the Company and the Investor.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ENUCLEUS
The Company represents and warrants to the Investor as as of Closing
(which warranties and representations shall survive the Closing for a period of
one year regardless of what examinations, inspections, audits and other
investigations the Investor has heretofore made or may hereinafter make with
respect to such warranties and representations) as follows:
4.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and is duly qualified to do business in any other jurisdiction by virtue of the
nature of the businesses conducted by it or the ownership or leasing of its
properties, except where the failure to be so qualified will not, when taken
together with all other such failures, have a Material Adverse Effect on the
business, operations, properties, assets, financial condition or results of
operation of the Company and its subsidiaries taken as a whole.
4.2 Articles of Incorporation and By-Laws. The complete and correct copies
of the Company's Certificate and By-Laws, as amended or restated to date which
have been filed with the SEC are a complete and correct copy of such document
as in effect as of the Closing Date.
4.3 Capitalization.
4.3.1 The authorized and outstanding capital stock of the Company is set
forth in the Company's Annual Report on Form 10-KSB, filed on April 22, 2005
with the SEC and updated on all subsequent SEC Documents. All shares of capital
stock have been duly authorized and are validly issued, and are fully paid and
no assessable, and free of preemptive rights.
4.3.2 Except pursuant to this Agreement and as set forth in in the
Company's Form 10-KSB filed on April 22, 2005 with the SEC, there are not now
outstanding options, warrants, rights to subscribe for, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of any class of capital stock of the Company, or
agreements, understandings or arrangements to which the Company is a party, or
by which the Company is or may be bound, to issue additional shares of its
capital stock or options, warrants, scrip or rights to subscribe for, calls or
commitment of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of any class of its capital
stock. The Company agrees to inform the Investor in writing of any additional
warrants granted prior to the Closing Date.
4.3.3 The Company on the Closing Date (i) will have full right, power,
and authority to sell, assign, transfer, and deliver, by reason of record and
beneficial ownership, to the Investor, the Shares hereunder, free and clear of
all liens, charges, claims, options, pledges, restrictions, and encumbrances
whatsoever; and (ii) upon delivery and payment by the Investor of the Purchase
Price to the Company, exercise of the Warrant, the Investor will acquire good
and marketable title to the Shares, free and clear of all liens, charges,
claims, options, pledges, restrictions, and encumbrances whatsoever.
4.4 Authority. The Company has all requisite corporate power and authority
to execute and deliver this Agreement and the Common Stock, and the Warrant, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company is necessary to authorize this Agreement
or to consummate the transactions contemplated hereby except as disclosed in
this Agreement. This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
4.5 No Conflict; Required Filings and Consents. The execution and
delivery of this Agreement by the Company does not, and the performance by the
Company of its obligations hereunder will not: (i) conflict with or violate the
Certificate or By-Laws of the Company; (ii) conflict with, breach or violate any
federal, state, foreign or local law, statute, ordinance, rule, regulation,
order, judgment or decree (collectively, "Laws") in effect as of the date of
this Agreement and applicable to the Company; or (iii) result in any breach of,
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, give to any other entity any right of
termination, amendment, acceleration or cancellation of, require payment under,
or result in the creation of a lien or encumbrance on any of the properties or
assets of the Company pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by the Company or any of its
properties or assets is bound. Excluding from the foregoing are such
violations, conflicts, breaches, defaults, terminations, accelerations,
creations of liens, or incumbency that would not, in the aggregate, have a
Material Adverse Effect.
4.6 Report and Financial Statements. The Company's Annual Report on Form
10-KSB, filed on April 22, 2005 with the SEC, contains the audited financial
statements of the Company as of December 31, 2004 (the "Financial Statements").
Each of the balance sheets contained in or incorporated by reference into any
such Financial Statements (including the related notes and schedules thereto)
fairly presented the financial position of the Company, as of its date, and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such Financial Statements (including any related
notes and schedules thereto) fairly presents, changes in stockholders' equity
and changes in cash flows, as the case may be, of the Company, for the periods
to which they relate, in each case in accordance with United States generally
accepted accounting principles ("U.S. GAAP") consistently applied during the
periods involved, except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements. The books and
records of the Company have been, and are being, maintained in all material
respects in accordance with U.S. GAAP and any other applicable legal and
accounting requirements and reflect only actual transaction.
4.7 Compliance with Applicable Laws. The Company is not in violation of,
or, to the knowledge of the Company, is under investigation with respect to or
has been given notice or has been charged with the violation of any Law of a
governmental agency, except for violations which individually or in the
aggregate do not have a Material Adverse Effect.
4.8 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or Commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company
4.9 SEC Documents. The Company acknowledges that the Company is a publicly
held company and has made available to the Investor after demand true and
complete copies of any requested SEC Documents. The Company has registered its
Common Stock pursuant to Section 12(d) of the 1934 Act, and the Common Stock is
quoted and traded on the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. The Company has received no notice, either oral or
written, with respect to the continued quotation or trading of the Common Stock
on the OTC Bulletin Board. The Company has not provided to the Investor any
information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company, but which has
not been so disclosed. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act, and rules and
regulations of the SEC promulgated thereunder and the SEC Documents did not
contain any untrue statement of a material fact or omit 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.
4.10 Litigation. To the knowledge of the Company, no litigation, claim, or
other proceeding before any court or governmental agency is pending or, to the
knowledge of the Company, threatened against the Company, the prosecution or
outcome of which may have a Material Adverse Effect.
4.11 Exemption from Registration. Subject to the accuracy of the Investor's
representations in Article V, except as required pursuant to the Registration
Rights Agreement, the sale of the Common Stock and the Warrant by the Company to
the Investor will not require registration under the 1933 Act, but may require
registration under New York state securities law if applicable to the Investor.
Upon exercise of the Warrant in accordance with their terms, the Shares of
Common Stock and the underlying Shares of the Warrant will be duly and validly
issued, fully paid, and non-assessable. The Company is issuing the Common Stock
and the Warrants in accordance with and in reliance upon the exemption from
securities registration afforded, inter alia, by Rule 505 under Regulation D as
promulgated by the SEC under the 1933 Act, and/or Section 4(2) of the 1933 Act;
provided, however, that certain filings and registrations may be required under
state securities "blue sky" laws depending upon the residency of the Investor.
4.12 No General Solicitation or Advertising in Regard to this Transaction.
Neither the Company nor any of its Affiliates nor, to the knowledge of the
Company, any Person acting on its or their behalf (i) has conducted or will
conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D as promulgated by the SEC under the 0000 Xxx) or general
advertising with respect to the sale of the Common Stock or the Warrant, or (ii)
made any offers or sales of any security or solicited any offers to buy any
security under any circumstances that would require registration of the Common
Stock or the Warrant, under the 1933 Act, except as required herein.
4.13 No Material Adverse Effect. Since December 31, 2004, no event or
circumstance resulting in a Material Adverse Effect has occurred or exists with
respect to the Company. No material supplier has given notice, oral or written,
that it intends to cease or reduce the volume of its business with the Company
from historical levels. Since December 31, 2004, no event or circumstance has
occurred or exists with respect to the Company or its businesses, properties,
prospects, operations or financial condition, that, under any 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 writing to the Investor.
4.14 Material Non-Public Information. The Company has not disclosed to the
nvestor any material non-public information that (i) if disclosed, would
reasonably be expected to have a material effect on the price of the Common
Stock or (ii) according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but which has not
been so disclosed.
4.15 Internal Controls And Procedures. The Company maintains books and
records and internal accounting controls which provide reasonable assurance
that (i) all transactions to which the Company or any subsidiary is a party or
by which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to the Company's
consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. GAAP.
4.16 Full Disclosure. No representation or warranty made by the Company in this
Agreement and no certificate or document furnished or to be furnished to the
Investor pursuant to this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company that:
5.1 Organization and Standing of the Investor. The Investor is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of Delaware. The state in which any offer to purchase Shares hereunder
was made or accepted by the Investor is the state shown as the Investor's
address. The Investor was not formed for the purpose of investing solely in the
Common Stock, the Warrant or shares of Common Stock which are the subject of
this Agreement.
5.2 Authorization and Power. The Investor has the requisite power and
authority to enter into and perform this Agreement and to purchase the
securities being sold to it hereunder. The execution, delivery and performance
of this Agreement by the Investor and the consummation by the Investor of the
transactions contemplated hereby have been duly authorized by all necessary
partnership action where appropriate. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by the Investor and at the
Closing shall constitute valid and binding obligations of the Investor
enforceable against the Investor in accordance with their 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.
5.3 No Conflicts. The execution, delivery and performance of this Agreement
and the consummation by the Investor of the transactions contemplated hereby or
relating hereto do not and will not (i) result in a violation of the Investor's
charter documents or bylaws where appropriate 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 Investor 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 Investor or its properties (except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, have a Material Adverse Effect on such Investor). The Investor 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 the Investor's obligations under this
Agreement or to purchase the securities from the Company in accordance with the
terms hereof, provided that for purposes of the representation made in this
sentence, the Investor is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.
5.4 Financial Risks. The Investor acknowledges that the Investor is able to
bear the financial risks associated with an investment in the securities being
purchased by the Investor from the Company 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 Investor is capable of evaluating
the risks and merits of an investment in the securities being purchased by the
Investor from the Company by virtue of its experience as an investor and its
knowledge, experience, and sophistication in financial and business matters and
the Investor is capable of bearing the entire loss of its investment in the
securities being purchased by the Investor from the Company.
5.5 Accredited Investor. The Investor is (i) an "accredited investor" as
that term is defined in Rule 501 of Regulation D promulgated under the 1933 Act
by reason of Rule 501(a)(3) and (6), (ii) experienced in making investments of
the kind described in this Agreement and the related documents, (iii) able, by
reason of the business and financial experience of its officers (if an entity)
and professional advisors (who are not affiliated with or compensated in any way
by the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its investment
in the securities being purchased by the Investor from the Company.
5.6 Brokers. Wood Capital Associates is entitled to a finder's fee in
connection with the transaction contemplated by this Agreement.
5.7 Knowledge of Company. The Investor and the Investor's advisors, if any,
have been, upon request, furnished with all materials relating to the business,
finances and operations of the Company and materials relating to the offer and
sale of the securities being purchased by the Investor from the Company . The
Investor and the Investor's advisors, if any, have been afforded the opportunity
to ask questions of the Company and have received complete and satisfactory
answers to any such inquiries.
5.8 Risk Factors The Investor understands that the Investor's investment
in the securities being purchased by the Investor from the Company involves a
high degree of risk. The Investor understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the securities being purchased by the
Investor from the Company. The Investor warrants that the Investor is able to
bear the complete loss of the Investor's investment in the securities being
purchased by the Investor from the Company.
5.9 Full Disclosure. No representation or warranty made by the Investor in this
Agreement and no certificate or document furnished or to be furnished to the
Company pursuant to this Agreement contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading. Except as set
forth or referred to in this Agreement, the Investor does not have any agreement
or understanding with any person relating to acquiring, holding, voting or
disposing of any equity securities of the Company.
5.10 Reimbursement of Due Diligence Expenses. Upon closing, the Company shall
reimburse the investor for expenses incurred in conducting due diligence up to
an aggregate maximum of $25,000. If the transaction is not closed, there shall
be no reimbursement of any due diligence expenses.
ARTICLE VI
COVENANTS OF THE COMPANY
6.1. Registration Rights. The Company shall cause the Registration Rights
Agreement to remain in full force and effect according to the provisions of the
Registration Rights Agreement and the Company shall comply in all material
respects with the terms thereof.
6.2. Reservation Of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the shares of Common Stock underlying the Warrant.
6.3. Compliance with Laws. The Company hereby agrees to comply in all
respects with the Company's reporting, filing and other obligations under the
Laws.
6.4. Exchange Act Registration. The Company (a) will continue its obligation
to report to the SEC under Section Section 12(b) or (g) under the 1934 Act and
will use its best efforts to comply in all respects with its reporting and
filing obligations under the 1934 Act, and will not take any action or file any
document (whether or not permitted by the 1934 Act or the rules thereunder) to
terminate or suspend any such registration or to terminate or suspend its
reporting and filing obligations under the 1934 until the Investor has disposed
of all of its Shares.
6.5 Corporate Existence; Conflicting Agreements. The Company will take all
steps necessary to preserve and continue the corporate existence of the Company.
The Company shall not enter into any agreement, the terms of which agreement
would restrict or impair the right or ability of the Company to perform any of
its obligations under this Agreement or any of the other agreements attached as
exhibits hereto.
6.6 Preferred Stock. For a period of two (2) years from the Closing Date, the
Company will not issue any Preferred Stock of the Company.
6.7 Convertible Debt. On or prior to the Closing Date, the Company will
cause to be cancelled all convertible debt in the Company. For a period of two
(2) years from the Closing Date, the Company will not issue any convertible
debt.
6.8 Acquisition Payments. Shares to be issued as a form of payment in any
acquisition, previous, present or future must not be issued below a floor stock
price of $0.40 / share.
6.9 Reset Equity Deals. On or prior to the Closing Date, the Company will
cause to be cancelled any and all reset features related to any shares
outstanding that could result in additional shares being issued. For a period of
two (2) years from the Closing Date, the Company will not enter into any
transactions that have any reset features that could result in additional shares
being issued.
6.10 Independent Directors. The Company will cause the appointment of the
majority of the board of directors to be qualified independent directors within
thirty (30) days of the Closing Date. If within such time following the Closing
Date the board shall not be composed in the majority of qualified independent
directors, the Company shall pay to the Investor, as liquidated damages and not
as a penalty, an amount equal to sixty percent (60%) of the Purchase Price per
annum, payable in cash monthly. The parties agree that the only damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude the Investor from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement. The parties hereto agree that
the liquidated damages provided for in this Section 6.8 constitute a reasonable
estimate of the damages that may be incurred by the Investor by reason of the
failure of the Company to appoint a majority of the board of directors in
accordance with the provision hereof.
6.11 Independent Directors Become Majority of Audit and Compensation
Committees. The Company will cause the appointment of a majority of outside
directors to the audit and compensation committees of the board of directors
within thirty (30) days of the Closing Date. If within such time following the
Closing Date such independent directors do not compose the majority of the audit
and compensation committees, the Company shall pay to the Investor, as
liquidated damages and not as a penalty, an amount equal to sixty percent (60%)
of the Purchase Price per annum, payable in cash monthly. The parties agree
that the only damages payable for a violation of the terms of this Agreement
with respect to which liquidated damages are expressly provided shall be such
liquidated damages. Nothing shall preclude the Investor from pursuing other
remedies or obtaining specific performance or other equitable relief with
respect to this Agreement. The parties hereto agree that the liquidated damages
provided for in this Section 6.9 constitute a reasonable estimate of the damages
that may be incurred by the Investor by reason of the failure of the Company to
appoint a majority of outside directors to the audit and compensation
committees, in accordance with the provision hereof.
6.12 Price Adjustment. If, within the 24 months following the Closing Date,
the Company closes on the sale of a note or notes, shares of Common Stock, or
shares of any class of Preferred Stock at a price per share of Common Stock, or
with a conversion right to acquire Common Stock at a price per share of Common
Stock, that is less than the Purchase Price (as adjusted to the capitalization
per share as of the Closing Date, following any stock splits, stock dividends,
or the like) (collectively, the "Subsequent Purchase Price"), the Company shall
make a post-Closing adjustment in the Purchase Price so that the effective
price per share paid by the Investors at Closing is reduced on a weighted
average basis between the Purchase Price and the Subsequent Purchase Price as
applied to the Investors' then current holdings. Within five business days
following the closing of the subsequent sale, the Company shall pay to the
Investors the product of the number of Shares owned by Investors on the date of
the subsequent sale times the weighted average price between the Purchase Price
and the Subsequent Purchase Price. Payment shall be made in cash or issuance of
the notes, Preferred Stock, Common Stock, unit offering or whichever financing
is causing the triggering of this provision, at the option of each individual
Investor.
6.13 Use of Proceeds. The Company will use the proceeds from the sale of the
Common Stock and the Warrant (excluding amounts paid by the Company for legal
and administrative fees in connection with the sale of such securities) for
working capital and acquisitions.
6.14 Right of First Refusal. The Investor shall have the right to
participate in any funding by the Company following the Closing Date on a pro
rata basis at ninety percent (90%) of the applicable offering price; provided
that such right shall terminate on the earlier of (x) the three (3) year
anniversary of the date of this Agreement and (y) such time as the Investor no
longer holds more than twenty percent (20%) of the shares of Common Stock
acquired herein.
6.15 Insider Selling. The earliest any "Insiders" can start selling their
shares shall be one year from the Closing Date. Insiders shall include all
officers and directors of the Company. Xxxxxx Xxxxxx Xxxxxx and the Investor
shall not be considered "Insiders".
6.16 Employment and Consulting Contracts. Employment and consulting
contracts with officers and directors shall at time of Closing and for two
years thereafter not contain: any bonuses not related directly to increases in
earnings; any car allowances not approved by the unanimous vote of the board of
directors; any anti-dilution or reverse split protection provisions for shares,
options or warrants; any deferred compensation; any unreasonable compensation or
benefit clauses; or any termination clauses of over one year of salary.
Notwithstanding the foregoing, the annual salaries for each of Xxxx Xxxxxxx and
Xxxx Xxxxx shall be $175,000 for a period of two years with a bonus plan that is
tied to earnings per share growth and the issuance of 700,000 options to each
payable in two installments of 350,000 each per year over a two year period.
6.17 Debt Limitation. The Company agrees for three years after Closing not to
enter into any new borrowings of more than twice as much as the sum of the
EBITDA from recurring operations over the past four quarters.
6.18 Subsequent Equity Sales. From the date hereof until such time as the
Investor no longer holds any of the Securities, the Company shall be prohibited
from effecting or entering into an agreement to effect any Subsequent Financing
involving a "Variable Rate Transaction" (as defined below). The term "Variable
Rate Transaction" shall mean a transaction in which the Company issues or sells
(i) any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
shares of Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock. For a period of five years from the date hereof,
the Company shall be prohibited from effecting or entering into an agreement to
effect a Subsequent Financing including an "MFN Transaction" (as defined below).
The term "MFN Transaction" shall mean a transaction in which the Company issues
or sells any securities in a capital raising transaction or series of related
transactions which grants to an investor the right to receive additional shares
based upon future transactions of the Company on terms more favorable than those
granted to such investor in such offering. The Investor shall be entitled to
obtain injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.
Notwithstanding the foregoing, this Section 6.15 shall not apply in respect of
an Exempt Issuance, except that no Variable Rate Transaction or MFN Transaction
shall be an Exempt Issuance.
6.19 Penalties. All penalties, resets, interest, or any additional
compensation of any kind to investor is either paid in cash or other at choice
of investor.
ARTICLE VII
COVENANTS OF THE INVESTOR
7.1 Compliance with Law. The Investor's trading activities with respect to
shares of the Company's Common Stock will be in compliance with all applicable
state and federal securities laws, rules and regulations and rules and
regulations of any public market on which the Company's Common Stock is listed.
7.2 Transfer Restrictions. The Investor acknowledges that (1) the Common
Stock, the Warrant and shares of Common Stock underlying the Warrant, have not
been registered under the provisions of the 1933 Act, and may not be transferred
unless (A) subsequently registered thereunder or (B) the Investor shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Common Stock, the
Warrant and shares of Common Stock underlying the Warrant, to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; and (2) any sale of the Common Stock, the Warrant and shares of
Common Stock underlying the Warrant, made in reliance on Rule 144 promulgated
under the 1933 Act may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller, or the person through whom the sale is made,
may be deemed to be an underwriter, as that term is used in the 1933 Act, may
require compliance with some other exemption under the 1933 Act or the rules
and regulations of the SEC thereunder.
7.3 Restrictive Legend. The Investor acknowledges and agrees that the Common
Stock, the Warrant and shares of Common Stock underlying the Warrant, and, until
such time as the Shares, and the shares of Common Stock underlying the Warrant,
have been registered under the 1933 Act and sold in accordance with an effective
Registration Statement, certificates and other instruments representing any of
the Shares, shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of any such
securities):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT."
ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to consummate the transactions
contemplated hereby shall be subject to the fulfillment, on or prior to Closing
Date, of the following conditions:
8.1 No Termination. This Agreement shall not have been terminated pursuant
to Article X hereof.
8.2 Representations True and Correct. The representations and warranties of
the Investor contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if made on as of the Closing Date.
8.3 Compliance with Covenants. The Investor shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied by it prior to or at the
Closing Date.
8.4 No Adverse Proceedings. On the Closing Date, no action or proceeding
shall be pending by any public authority or individual or entity before any
court or administrative body to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the transactions contemplated hereby or to
recover any damages or obtain other relief as a result of the transactions
proposed hereby.
ARTICLE IX
CONDITIONS PRECEDENT TO INVESTOR'S OBLIGATIONS
The obligation of the Investor to consummate the transactions
contemplated hereby shall be subject to the fulfillment, on or prior to Closing
Date unless specified otherwise, of the following conditions:
9.1 No Termination. This Agreement shall not have been terminated pursuant
to Article X hereof.
9.2 Representations True and Correct. The representations and warranties of
the Company contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if made on as of the Closing Date.
9.3 Compliance with Covenants . The Company shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied by it prior to or at the
Closing Date.
9.4 No Adverse Proceedings. On the Closing Date, no action or proceeding
shall be pending by any public authority or individual or entity before any
court or administrative body to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the transactions contemplated hereby or to
recover any damages or obtain other relief as a result of the transactions
proposed hereby.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time:
10.1.1 by mutual written consent of the Investor and the
Company;
10.1.2 by the Company upon a material breach of any
representation, warranty, covenant or agreement on the part of the Investor set
forth in this Agreement, or the Investor upon a material breach of any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of the Company or
the Investor, respectively, shall have become untrue, in either case such that
any of the conditions set forth in Article VIII or Article IX hereof would not
be satisfied (a "Terminating Breach"), and such breach shall, if capable of
cure, not have been cured within five (5) business days after receipt by the
party in breach of a notice from the non-breaching party setting forth in
detail the nature of such breach.
10.2 Effect of Termination. Except as otherwise provided herein, in the
event of the termination of this Agreement pursuant to Section 10.1 hereof,
there shall be no liability on the part of the Company or the Investor or any of
their respective officers, directors, agents or other representatives and all
rights and obligations of any party hereto shall cease; provided that in the
event of a Terminating Breach, the breaching party shall be liable to the
non-breaching party for all costs and expenses incurred by the non-breaching
party not to exceed $50,000.
10.3 Amendment. This Agreement may be amended by the parties hereto any
time prior to the Closing Date by an instrument in writing signed by the
parties hereto.
10.4 Waiver. At any time prior to the Closing Date, the Company or the
Investor, as appropriate, may: (a) extend the time for the performance of any
of the obligations or other acts of other party or; (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto which have been made to it or them; or (c) waive
compliance with any of the agreements or conditions contained herein for its or
their benefit. Any such extension or waiver shall be valid only if set forth in
an instrument in writing signed by the party or parties to be bound hereby.
ARTICLE XI
GENERAL PROVISIONS
11.1 Transaction Costs. Except as otherwise provided herein, each of the
parties shall pay all of its costs and expenses (including attorney fees and
other legal costs and expenses and accountants' fees and other accounting costs
and expenses) incurred by that party in connection with this Agreement.
11.2 Indemnification. The Investor agrees to indemnify, defend and hold the
Company (following the Closing Date) and its officers and directors harmless
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities or damages, including interest, penalties and
reasonable attorney's fees, that it shall incur or suffer, which arise out of or
result from any breach of this Agreement by the Investor or failure by the
Investor to perform with respect to any of its representations, warranties or
covenants contained in this Agreement or in any exhibit or other instrument
furnished or to be furnished under this Agreement. The Company agrees to
indemnify, defend and hold the Investor harmless against and in respect of any
and all claims, demands, losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties and reasonable attorney's fees, that it
shall incur or suffer, which arise out of, result from or relate to any breach
of this Agreement or failure by the Company to perform with respect to any of
its representations, warranties or covenants contained in this Agreement or in
any exhibit or other instrument furnished or to be furnished under this
Agreement. In no event shall the Company or the Investor be entitled to recover
consequential or punitive damages resulting from a breach or violation of this
Agreement nor shall any party have any liability hereunder in the event of gross
negligence or willful misconduct of the indemnified party. In the event of a
breach of this Agreement by the Company, the Investor shall be entitled to
pursue a remedy of specific performance upon tender into the Court an amount
equal to the Purchase Price hereunder. The indemnification shall be mutually
limited to the Purchase Price.
11.3 Headings. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.4 Entire Agreement. This Agreement (together with the Schedule, Exhibits,
Warrants and documents referred to herein) constitute the entire agreement of
the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof.
11.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified mail
confirmation; (iii) on the date delivered by an overnight courier service; or
(iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
If to the Company:
eNucleus, Inc.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
With a copy to:
Xxxxxxxx Xxxxxxx & XxXxxxxx LLC
Xxx Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx
If to the Investor:
Xxxxxx Partners L.P.
c/o Barron Capital Advisors, LLC
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx Xxxxxx
11.6 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any such term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
11.7 Binding Effect. All the terms and provisions of this Agreement whether
so expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors,
legal representatives, heirs, successors and assignees.
11.8 Preparation of Agreement. This Agreement shall not be construed more
strongly against any party regardless of who is responsible for its preparation.
The parties acknowledge each contributed and is equally responsible for its
preparation.
11.9 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to
applicable principles of conflicts of law.
11.10 Jurisdiction. This Agreement shall be exclusively governed by and
construed in accordance with the laws of the State of Illinois. If any action
is brought among the parties with respect to this Agreement or otherwise, by
way of a claim or counterclaim, the parties agree that in any such action, and
on all issues, the parties irrevocably waive their right to a trial by jury.
Exclusive jurisdiction and venue for any such action shall be the Federal
Courts serving the State of Illinois. In the event suit or action is brought
by any party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
11.11 Preparation and Filing of Securities and Exchange Commission filings.
The Investor shall reasonably assist and cooperate with the Company in the
preparation of all filings with the SEC after the Closing Date due after the
Closing Date.
11.12 Further Assurances, Cooperation. Each party shall, upon reasonable
request by the other party, execute and deliver any additional documents
necessary or desirable to complete the transactions herein pursuant to and in
the manner contemplated by this Agreement. The parties hereto agree to
cooperate and use their respective best efforts to consummate the transactions
contemplated by this Agreement.
11.13 Survival The representations, warranties, covenants and agreements
made herein shall survive the Closing of the transaction contemplated hereby
as provided herein.
11.14 Third Parties Except as disclosed in this Agreement, nothing in
this Agreement, whether express or implied, is intended to confer any rights
or remedies under or by reason of this Agreement on any persons other than the
parties hereto and their respective administrators, executors, legal
representatives, heirs, successors and assignees. Nothing in this Agreement
is intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over or against any party to this
Agreement.
11.15 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty, covenant or agreement herein, nor
shall nay single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
11.16 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement. A facsimile
transmission of this signed Agreement shall be legal and binding on all
parties hereto.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the Investor and the Company have as of the date
first written above executed this Agreement.
THE COMPANY:
ENUCLEUS, INC.
By:______ ________________
Xxxx Xxxxxxx, CEO
INVESTOR:
XXXXXX PARTNERS LP
________________________________
Xxxxxx Xxxxxx Xxxxxx
President, General Partner of
Xxxxxx Partners LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
Exhibit A
Registration Rights Agreement
Exhibit B
Warrants
NAME AND ADDRESS
Number of Warrants
Previous Terms
New Terms
Date
Exercise Price
Date
Exercise Price
Xxxxxx Partners LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx Xxxxxx
2,000,000
N/A
N/A
05/12/05
$0.35 Repricing of Previous Warrants Xxxxxx Partners LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx Xxxxxx
1,000,000
05/12/05
$0.35
Xxxxxx Partners LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx Xxxxxx
2,500,000
05/12/05
$0.35
I/eNucleus/Xxxxxx Partners/2005 Financing/Stock Purchase Agreement (execution)
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I/eNucleus/Xxxxxx Partners/2005 Financing/Stock Purchase Agreement (execution)
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I/eNucleus/Xxxxxx Partners/2005 Financing/Stock Purchase Agreement (execution)
