SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
January __, 2006, among All American Plazas, Inc., a Pennsylvania corporation
(the "COMPANY"), and each purchaser identified on the signature pages hereto
(each, including its successors and assigns, a "PURCHASER" and collectively the
"PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT") and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debentures (as defined herein), and (b) the
following terms have the meanings indicated in this Section 1.1:
"ABLE ENERGY" shall mean Able Energy Inc., a Delaware
corporation.
"ABLE ENERGY TRANSACTION" shall mean the business combination of
the Company by Able Energy such that, upon completion of the business
combination, Able Energy owns all of the assets of All American.
"ABLE ENERGY TRANSACTION DOCUMENTS" means the securities
assumption, amendment and issuance agreement, the convertible
debentures, the security agreement, the warrants and any other documents
or agreements executed in connection with the transactions contemplated
under such securities assumption, amendment and issuance agreement which
shall be substantially in the form of ANNEX X attached to the Prior
Security Agreement, except that the additional investment right in
Section 4.18 of the Securities, Assumption, Amendment and Issuance
Agreement to be entered into to facilitate the exchange of Debentures
issued hereunder shall be for up to $6.16 million rather than $14
million, and any provisions relating thereto shall be applied ratably
(for example, the conversion prices shall be based on increments of $2.8
million rather than $7 million). Additionally, the Subsidiary Borrowers,
as defined in the form of debenture included in Annex X, shall be the
Xxxxxx Subsidiary. This Able Energy Transaction
Documents shall be in addition to, and not supersede or amend, the
execution and completion of transactions contemplated under the Prior
Security Agreement.
"ACTION" shall have the meaning ascribed to such term in Section
3.1(j).
"ADDITIONAL INVESTMENT RIGHT" means the Additional Investment
Rights as described in Section 2.2(a)(vi), in the form of EXHIBIT D
attached hereto.
"ADDITIONAL INVESTMENT RIGHT SECURITIES" means the Debentures
issuable upon exercise of the Additional Investment Right.
"AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is
under common control with a Person, as such terms are used in and
construed under Rule 144 under the Securities Act. With respect to a
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser
will be deemed to be an Affiliate of such Purchaser.
"BUSINESS DAY" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday in the United States or a day on
which banking institutions in the State of New York are authorized or
required by law or other government action to close.
"CLOSING" means the closing of the purchase and sale of the
Debentures and Additional Investment Rights pursuant to SECTION 2.1.
"CLOSING DATE" means the Business Day when all of the
Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers'
obligations to pay the Subscription Amount and (ii) the Company's
obligations to deliver the Debentures and Additional Investment Rights
have been satisfied or waived.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, par value
$0.001 per share, and any other class of securities into which such
securities may hereafter have been reclassified or changed into.
"COMMON STOCK EQUIVALENTS" means any securities of the Company
or the Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
"COMPANY COUNSEL" means Austern & Austern, P.C.
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"DEBENTURES" means, the Secured Debentures, in the form of
EXHIBIT A, due 24 months from their date of issuance, issued, jointly
and severally by the Company and Xxxxxx Subsidiary to the Purchasers
hereunder and subject to the terms therein.
"DISCLOSURE SCHEDULES" shall have the meaning ascribed to such
term in Section 3.1 hereof.
"EXEMPT ISSUANCE" means the issuance of (a) shares of Common
Stock or options to employees, officers or directors of the Company
pursuant to any stock or option plan duly adopted by a majority of the
non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors
established for such purpose, (b) convertible securities, options or
warrants issued and outstanding on the date of this Agreement, provided
that such securities have not been amended since the date of this
Agreement to increase the number of such securities or to decrease the
exercise or conversion price of any such securities and (c) securities
issued pursuant to acquisitions or strategic transactions, provided any
such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the
business of the Company and in which the Company receives benefits in
addition to the investment of funds, but shall not include a transaction
in which the Company is issuing securities primarily for the purpose of
raising capital or to an entity whose primary business is investing in
securities.
"FW" means Xxxxxxx Xxxxxxxxx LLP with offices at 000 Xxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000-0000.
"GAAP" shall have the meaning ascribed to such term in Section
3.1(h) hereof.
"INTELLECTUAL PROPERTY RIGHTS" shall have the meaning ascribed
to such term in Section 3.1(o).
"LIENS" means a lien, charge, security interest, encumbrance,
right of first refusal, preemptive right or other restriction.
"LOAN DOCUMENTS" shall mean that certain Loan Agreement, dated
the date hereof, by and among the Company, the Purchasers and Xxxxxx
Subsidiary, and all documents required thereunder granting a security
interest and lien on the real and personal property of the Company and
Xxxxxx Subsidiary, which agreement and which documents shall be in form
and substance reasonably satisfactory to the Purchasers.
"MATERIAL ADVERSE EFFECT" shall have the meaning assigned to
such term in Section 3.1(b) hereof.
"MATERIAL PERMITS" shall have the meaning ascribed to such term
in Section 3.1(m).
"MAXIMUM RATE" shall have the meaning ascribed to such term in
Section 5.17.
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"PARTICIPATION MAXIMUM" shall have the meaning ascribed to such
term in Section 4.7.
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
"PLEDGE DOCUMENTS" shall mean that certain Pledge Agreement,
dated as of the date hereof, by and among the Company and the Purchasers
and all documents required thereunder whereby the Company pledges to the
Purchasers all of the equity of Xxxxxx Subsidiary to secure the
obligations under the Transaction Documents, which documents shall be in
form and substance reasonably satisfactory to the Purchasers.
"PRIOR SECURITY AGREEMENT" means the Securities Purchase
Agreement, dated May 26, 2005, by and among the Company and the
purchasers signatory thereto and the agreements entered into in
connection therewith and the transactions contemplated thereunder.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PURCHASER PARTY" shall have the meaning ascribed to such term
in Section 4.6.
"RULE 144" means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSCRIPTION AMOUNT" means, as to each Purchaser, the aggregate
amount to be paid for the Debenture and Additional Investment Right
purchased hereunder as specified below such Purchaser's name on the
signature page of this Agreement and next to the heading "SUBSCRIPTION
AMOUNT", in United States Dollars and in immediately available funds.
"SUBSEQUENT FINANCING" shall have the meaning ascribed to such
term in Section 4.7.
"SUBSEQUENT FINANCING NOTICE" shall have the meaning ascribed to
such term in Section 4.7.
"SUBSIDIARY" means any subsidiary of the Company as set forth on
SCHEDULE 3.1(A).
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"XXXXXX SUBSIDIARY" shall mean St. John's Realty Corporation, a
___________ corporation, residing at _____________________.
"TRANSACTION DOCUMENTS" means this Agreement, the Debentures,
the Loan Documents, the Pledge Documents, the Additional Investment
Right and any other documents or agreements executed in connection with
the transactions contemplated hereunder.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSING. On the Closing Date, upon the terms and subject to the
conditions set forth herein, concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and each Purchaser
agrees to purchase in the aggregate, severally and not jointly, up to $2,500,000
principal amount of the Debentures. Each Purchaser shall deliver to the Company
via wire transfer or a certified check immediately available funds equal to
their Subscription Amount and the Company shall deliver to each Purchaser their
respective Debenture and Additional Investment Right as determined pursuant to
Section 2.2(a) and the other items set forth in Section 2.2 issuable at the
Closing. Upon satisfaction of the conditions set forth in Section 2.2, the
Closing shall occur at the offices of FW, or such other location as the parties
shall mutually agree.
2.2 DELIVERIES.
a) On the Closing Date, the Company shall deliver
or cause to be delivered to each Purchaser the following:
(i) this Agreement duly executed by the
Company;
(ii) a Debenture with a principal amount
equal to such Purchaser's Subscription Amount,
registered in the name of such Purchaser;
(iii) all Loan Documents, duly executed by the
Company where required;
(iv) all Pledge Documents, duly executed by
the Company where required;
(v) written agreements in the form of
EXHIBIT B attached hereto from the shareholders of Able
Energy holding a controlling interest in Able Energy;
(vi) for each $1 principal amount of
Debentures purchased by such Purchaser hereunder, an
Additional Investment Right to purchase an additional $1
principal amount of Debenture on the same terms and
conditions as the Debentures issued hereunder; and
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(vii) a legal opinion of Company Counsel, in
the form of EXHIBIT C attached hereto.
b) On the Closing Date, each Purchaser shall
deliver or cause to be delivered to the Company the following:
(i) this Agreement duly executed by such
Purchaser;
(ii) such Purchaser's Subscription Amount by
wire transfer to the account as specified in writing by
the Company;
(iii) the Loan Documents, duly executed by
such Purchaser; and
(iv) the Pledge Documents.
2.3 CLOSING CONDITIONS.
a) The obligations of the Company hereunder in
connection with the Closing are subject to the following
conditions being met:
(i) the accuracy in all material respects
when made and on the Closing Date of the representations
and warranties of the Purchasers contained herein;
(ii) all obligations, covenants and
agreements of the Purchasers required to be performed at
or prior to the Closing Date shall have been performed;
and
(iii) the delivery by the Purchasers of the
items set forth in Section 2.2(b) of this Agreement.
b) The respective obligations of the Purchasers
hereunder in connection with the Closing are subject to the
following conditions being met:
(i) the accuracy in all material respects on
the Closing Date of the representations and warranties
of the Company contained herein;
(ii) all obligations, covenants and
agreements of the Company required to be performed at or
prior to the Closing Date shall have been performed;
(iii) the delivery by the Company of the items
set forth in Section 2.2(a) of this Agreement;
(iv) there shall have been no Material
Adverse Effect with respect to the Company since the
date hereof; and
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(v) From the date hereof to the Closing
Date, a banking moratorium have been declared either by
the United States or New York State authorities nor
shall there have occurred any material outbreak or
escalation of hostilities or other national or
international calamity of such magnitude in its effect
on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment
of each Purchaser, makes it impracticable or inadvisable
to purchase the Debentures at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth under the corresponding section of the disclosure schedules delivered to
the Purchasers concurrently herewith (the "DISCLOSURE SCHEDULES") which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.
(a) SUBSIDIARIES. All of the direct and indirect
subsidiaries of the Company are set forth on SCHEDULE 3.1(A). The
Company owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary free and clear of any Liens, and all
the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities.
If the Company has no subsidiaries, then references in the Transaction
Documents to the Subsidiaries will be disregarded.
(b) ORGANIZATION AND QUALIFICATION. The Company and each of
the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation or organization (as applicable), with the requisite
power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Neither the Company nor
any Subsidiary is in violation or default of any of the provisions of
its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it
makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not have or
reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Documents, (ii)
a material adverse effect on the results of operations, assets,
business, prospects or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on
the Company's ability to perform in any material respect on a timely
basis its obligations under any Transaction Documents (any of (i), (ii)
or (iii), a "MATERIAL ADVERSE EFFECT") and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or
qualification.
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(c) AUTHORIZATION; ENFORCEMENT. The Company has the
requisite corporate power and authority to enter into and to consummate
the transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary action on the part of the Company. Each
Transaction Document has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement
of creditors' rights generally and (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other
equitable remedies.
(d) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the other transactions contemplated thereby do not and will
not: (i) conflict with or violate any provision of the Company's or any
Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a
Company or Subsidiary debt or otherwise) or other understanding to which
the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (iii)
conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or
affected; except in the case of each of clauses (ii) and (iii), such as
could not have or reasonably be expected to result in a Material Adverse
Effect.
(e) FILINGS, CONSENTS AND APPROVALS. The Company is not
required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the
Company of the Transaction Documents.
(f) ISSUANCE OF THE DEBENTURES AND ADDITIONAL INVESTMENT
RIGHTS. The Debentures and Additional Investment Rights are duly
authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the
Transaction Documents.
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(g) CAPITALIZATION. The capitalization of the Company is as
described in SCHEDULE 3.1(G). The Company has not issued any capital
stock other than as set forth on SCHEDULE 3.1(G). No Person has any
right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale of
the Debentures and Additional Investment Rights or as set forth on
SCHEDULE 3.1(G), there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or
acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is
or may become bound to issue additional shares of Common Stock or Common
Stock Equivalents. The issuance and sale of the Debentures and
Additional Investment Rights will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price
under such securities. All of the outstanding shares of capital stock of
the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance
and sale of the Debentures and Additional Investment Rights. Except as
disclosed in SCHEDULE 3.1(G), there are no stockholders agreements,
voting agreements or other similar agreements with respect to the
Company's capital stock to which the Company is a party or, to the
knowledge of the Company, between or among any of the Company's
stockholders. A complete list of stockholders of record, with their
shareholdings as of the date hereof, is included in SCHEDULE 3.1(G).
(h) FINANCIAL STATEMENTS. The audited financial statements
of the Company for its last three fiscal years and unaudited statements
for the most recent fiscal quarter, are attached hereto as SCHEDULE
3.1(H). Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a
consistent basis during the periods involved ("GAAP"), except as may be
otherwise specified in such financial statements or the notes thereto
and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects
the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
(i) MATERIAL CHANGES. Since the date of the Company's most
recent financial statements, attached hereto as SCHEDULE 3.1(H), (i)
there has been no event, occurrence or development that has had or that
could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred
in the ordinary course of business consistent with past practice and (B)
liabilities not required to be
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reflected in the Company's financial statements pursuant to GAAP, (iii)
the Company has not altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (v)
the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option
plans.
(j) LITIGATION. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company, any Subsidiary
or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an
"ACTION") which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the
Debentures and Additional Investment Rights or (ii) could, if there were
an unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company.
(k) LABOR RELATIONS. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the
employees of the Company which could reasonably be expected to result in
a Material Adverse Effect.
(l) COMPLIANCE. Neither the Company nor any Subsidiary (i)
is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not
such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is or has
been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and
local laws applicable to its business except in each case as could not
have a Material Adverse Effect.
(m) REGULATORY PERMITS. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in
SCHEDULE 3.1(M), except where the failure to possess such permits could
not have or reasonably be expected to result in a Material Adverse
Effect ("MATERIAL PERMITS"), and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
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(n) TITLE TO ASSETS. The Company and the Subsidiaries have
good and marketable title to all mineral rights, interests that,
individually or in the aggregate, are material to the business of the
Company and the Subsidiaries and good and marketable title in fee simple
to all real property owned by them that is material to the business of
the Company and the Subsidiaries and good and marketable title in all
personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all Liens,
except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries and Liens for
the payment of federal, state or other taxes, the payment of which is
neither delinquent nor subject to penalties. Any real property and
facilities held under lease by the Company and the Subsidiaries are held
by them under valid, subsisting and enforceable leases of which the
Company and the Subsidiaries are in compliance.
(o) PATENTS AND TRADEMARKS. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights necessary or material for
use in connection with their respective businesses as described in
SCHEDULE 3.1(O) and which the failure to so have could have a Material
Adverse Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS").
Neither the Company nor any Subsidiary has received a written notice
that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of
any of the Intellectual Property Rights of others.
(p) INSURANCE. The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged,
including, but not limited to, directors and officers insurance coverage
at least equal to the aggregate principal amount of the Debentures. To
the best of Company's knowledge, such insurance contracts and policies
are accurate and complete. Neither the Company nor any Subsidiary has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
(q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as
set forth in SCHEDULE 3.1(Q), none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of
the Company are presently a party to any transaction with the Company or
any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee
or partner, in each case in excess of $60,000 other than (i) for payment
of salary or
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consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the
Company.
(r) INTERNAL ACCOUNTING CONTROLS. The Company and the
Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only
in accordance with management's general or specific authorization, and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(s) CERTAIN FEES. No brokerage or finder's fees or
commissions are or will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by this
Agreement.
(t) PRIVATE PLACEMENT. Assuming the accuracy of the
Purchasers representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale
of the Debentures and Additional Investment Rights by the Company to the
Purchasers as contemplated hereby.
(u) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate of, and immediately after receipt of payment for the
Debentures and Additional Investment Rights, will not be or be an
Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. The Company shall conduct
its business in a manner so that it will not become subject to the
Investment Company Act.
(v) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
Board of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or
other similar anti-takeover provision under the Company's Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including
without limitation as a result of the Company's issuance of the
Debentures and Additional Investment Rights and the Purchasers'
ownership of the Debentures and Additional Investment Rights.
(w) DISCLOSURE. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated
hereby, including the
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Disclosure Schedules to this Agreement, furnished by or on behalf of the
Company with respect to the representations and warranties made herein
are true and correct with respect to such representations and warranties
and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that no Purchaser makes
or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth
in Section 3.2 hereof.
(x) NO INTEGRATED OFFERING. Assuming the accuracy of the
Purchasers' representations and warranties set forth in Section 3.2,
neither the Company, nor any of its affiliates, nor any Person acting on
its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Debentures and
Additional Investment Rights to be integrated with prior offerings by
the Company for purposes of the Securities Act or any applicable
shareholder approval provisions.
(y) SOLVENCY. Based on the financial condition of the
Company as of the Closing Date after giving effect to the receipt by the
Company of the proceeds from the sale of the Debentures hereunder, (i)
the Company's fair saleable value of its assets exceeds the amount that
will be required to be paid on or in respect of the Company's existing
debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably
small capital to carry on its business for the current fiscal year as
now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements
and capital availability thereof; and (iii) the current cash flow of the
Company, together with the proceeds the Company would receive, were it
to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on
or in respect of its debt when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash
to be payable on or in respect of its debt).
(z) TAX STATUS. Except for matters that would not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect, the Company and each Subsidiary has
filed all necessary federal, state and foreign income and franchise tax
returns and has paid or accrued all taxes shown as due thereon, and the
Company has no knowledge of a tax deficiency which has been asserted or
threatened against the Company or any Subsidiary.
(aa) NO GENERAL SOLICITATION. Neither the Company nor any
person acting on behalf of the Company has offered or sold any of the
Debentures and Additional Investment Rights by any form of general
solicitation or general advertising. The Company has offered the
Debentures and Additional Investment Rights for sale only to the
Purchasers and certain other "accredited investors" within the meaning
of Rule 501 under the Securities Act.
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(bb) FOREIGN CORRUPT PRACTICES. Neither the Company, nor to
the knowledge of the Company, any agent or other person acting on behalf
of the Company, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution
made by the Company (or made by any person acting on its behalf of which
the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act
of 1977, as amended
(cc) ACCOUNTANTS. The Company's accountants are set forth on
SCHEDULE 3.1(CC) of the Disclosure Schedule. To the Company's knowledge,
such accountants, who the Company expects will express their opinion
with respect to the financial statements to be included in the Company's
upcoming financial statements, are a registered public accounting firm
as required by the Securities Act.
(dd) SENIORITY. As of the Closing Date, no indebtedness or
other equity of the Company is senior to the Debentures in right of
payment, whether with respect to interest or upon liquidation or
dissolution, or otherwise, other than indebtedness secured by purchase
money security interests (which is senior only as to underlying assets
covered thereby) and capital lease obligations (which is senior only as
to the property covered thereby).
(ee) NO DISAGREEMENTS WITH ACCOUNTANTS AND LAWYERS. There are
no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the accountants and lawyers
formerly or presently employed by the Company and the Company is current
with respect to any fees owed to its accountants and lawyers.
(ff) ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF
DEBENTURES AND ADDITIONAL INVESTMENT RIGHTS. The Company acknowledges
and agrees that each of the Purchasers is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any advice
given by any Purchaser or any of their respective representatives or
agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Purchasers' purchase of
the Debentures and Additional Investment Rights. The Company further
represents to each Purchaser that the Company's decision to enter into
this Agreement has been based solely on the independent evaluation of
the transactions contemplated hereby by the Company and its
representatives.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
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(a) ORGANIZATION; AUTHORITY. Such Purchaser is an entity
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with full right, corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or
similar action on the part of such Purchaser. Each Transaction Document
to which it is a party has been duly executed by such Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except
(i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) OWN ACCOUNT. Such Purchaser understands that the
Debentures and Additional Investment Rights are "restricted securities"
and have not been registered under the Securities Act or any applicable
state securities law and is acquiring the Debentures and Additional
Investment Rights as principal for its own account and not with a view
to or for distributing or reselling such Debentures and Additional
Investment Rights or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of
distributing any of such Debentures and Additional Investment Rights in
violation of the Securities Act or any applicable state securities law
and has no arrangement or understanding with any other persons regarding
the distribution of such Debentures and Additional Investment Rights
(this representation and warranty not limiting such Purchaser's right to
sell the Debentures and Additional Investment Rights pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws) in violation of the Securities Act or
any applicable state securities law. Such Purchaser is acquiring the
Debentures and Additional Investment Rights hereunder in the ordinary
course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any
of the Debentures and Additional Investment Rights.
(c) PURCHASER STATUS. At the time such Purchaser was offered
the Debentures and Additional Investment Rights, it was an "accredited
investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)
under the Securities Act.
(d) EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either
alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to
be capable of evaluating the merits and risks of the prospective
investment in the Debentures and Additional Investment Rights, and has
so evaluated the merits and risks of such investment. Such Purchaser is
able to bear the economic risk of an investment in the Debentures and
Additional Investment Rights and, at the present time, is able to afford
a complete loss of such investment.
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(e) GENERAL SOLICITATION. Such Purchaser is not purchasing
the Debentures and Additional Investment Rights as a result of any
advertisement, article, notice or other communication regarding the
Debentures and Additional Investment Rights published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.
The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
(a) The Debentures and Additional Investment Rights may only
be disposed of in compliance with state and federal securities laws. In
connection with any transfer of Debentures and Additional Investment
Rights other than pursuant to an effective registration statement or
Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company
may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Debentures and Additional
Investment Rights under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms of
this Agreement and shall have the rights of a Purchaser under this
Agreement.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Debentures
and Additional Investment Rights in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
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4.2 INTEGRATION. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Debentures and Additional Investment Rights in a manner
that would require the registration under the Securities Act of the sale of the
Debentures and Additional Investment Rights to the Purchasers.
4.3 SHAREHOLDERS RIGHTS PLAN. No claim will be made or enforced by
the Company or, to the knowledge of the Company, any other Person that any
Purchaser is an "Acquiring Person" under any shareholders rights plan or similar
plan or arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Debentures and Additional Investment Rights
under the Transaction Documents or under any other agreement between the Company
and the Purchasers. The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.
4.4 NON-PUBLIC INFORMATION. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
4.5 USE OF PROCEEDS. The Company shall first use the net proceeds
from the sale of the Debentures hereunder for the repayment in full of all
outstanding indebtedness of the Xxxxxx Subsidiary and then, except as set forth
on SCHEDULE 4.5 attached hereto, the Company shall use the net proceeds from the
sale of the Debentures hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Common Stock or Common Stock Equivalents or to settle any
outstanding litigation.
4.6 INDEMNIFICATION OF PURCHASERS. Subject to the provisions of this
Section 4.6, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, partners, employees and agents (each, a
"PURCHASER PARTY") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a
Purchaser, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser, with respect to any of
the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser's representation, warranties or
covenants under the Transaction Documents or any agreements or understandings
such Purchaser may have with any such stockholder or any violations by the
Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this
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Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Purchaser Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Purchaser Party. The Company will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected without the Company's prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations, warranties, covenants or agreements made
by the Purchasers in this Agreement or in the other Transaction Documents.
4.7 PARTICIPATION IN FUTURE FINANCING.
(a) From the date hereof until the date that is the one year
anniversary of the effective date of the registration statement filed
with the Commission and required pursuant to the Able Energy Transaction
Documents, upon any financing by the Company or any of its Subsidiaries
of Common Stock, Common Stock Equivalents or debt securities (a
"SUBSEQUENT FINANCING"), each Purchaser shall have the right to
participate in up to an amount of the Subsequent Financing equal to 100%
of the Subsequent Financing (the "PARTICIPATION MAXIMUM").
(b) The Company shall promptly, but no later than 5 Business
Day prior to the closing of a Subsequent Financing, deliver a notice
("SUBSEQUENT FINANCING NOTICE") to such Purchaser. The Subsequent
Financing Notice shall describe in reasonable detail the proposed terms
of such Subsequent Financing, the amount of proceeds intended to be
raised thereunder, the Person with whom such Subsequent Financing is
proposed to be effected, and attached to which shall be a term sheet or
similar document relating thereto.
(c) Any Purchaser desiring to participate in such Subsequent
Financing must provide written notice to the Company by not later than
5:30 p.m. (New York City time) on the 5th Business Day after all of the
Purchasers have received the Subsequent Financing Notice that the
Purchaser is willing to participate in the Subsequent Financing, the
amount of the Purchaser's participation, and that the Purchaser has such
funds ready, willing, and available for investment on the terms set
forth in the Subsequent Financing Notice. If the Company receives no
notice from a Purchaser as of such 5th Business Day, such Purchaser
shall be deemed to have notified the Company that it does not elect to
participate.
(d) If by 5:30 p.m. (New York City time) on the fifth
Business Day after all of the Purchasers have received the Subsequent
Financing Notice, notifications by the Purchasers of their willingness
to participate in the Subsequent Financing (or to cause
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their designees to participate) is, in the aggregate, less than the
total amount of the Subsequent Financing, then the Company may effect
the remaining portion of such Subsequent Financing on the terms and to
the Persons set forth in the Subsequent Financing Notice.
(e) If by 5:30 p.m. (New York City time) on the fifth
Business Day after all of the Purchasers have received the Subsequent
Financing Notice, the Company receives responses to a Subsequent
Financing Notice from Purchasers seeking to purchase more than the
aggregate amount of the Participation Maximum, each such Purchaser shall
have the right to purchase the greater of (a) their Pro Rata Portion (as
defined below) of the Participation Maximum and (b) the difference
between the Participation Maximum and the aggregate amount of
participation by all other Purchasers. "PRO RATA PORTION" is the ratio
of (x) the Subscription Amount of Debentures purchased on the Closing
Date by a Purchaser participating under this Section 4.7 and (y) the sum
of the aggregate Subscription Amounts of Debentures purchased on the
Closing Date by all Purchasers participating under this Section 4.7.
(f) The Company must provide the Purchasers with a second
Subsequent Financing Notice, and the Purchasers will again have the
right of participation set forth above in this Section 4.7, if the
Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such
Subsequent Financing Notice within 60 Business Days after the date of
the initial Subsequent Financing Notice.
(g) In connection with a Purchaser's right to participate in
a Subsequent Financing hereunder, such Purchaser may elect, in its sole
discretion, to exchange all or some of its Debentures then held by it
for the securities issued in such based on the then outstanding
principal amount of the Debenture plus accrued but unpaid interest and
any other fees then owed by the Company to the Purchaser, and the
effective price at which such securities are sold in such Subsequent
Financing.
(h) Notwithstanding the foregoing, this Section 4.7 shall
not apply in respect of an Exempt Issuance.
4.8 EQUAL TREATMENT OF PURCHASERS. No consideration shall be offered
or paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. Further, the
Company shall not make any payment of principal or interest on the Debentures in
amounts which are disproportionate to the respective principal amounts
outstanding on the Debentures at any applicable time. For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended to
treat for the Company the Debenture holders as a class and shall not in any way
be construed as the Purchasers acting in concert or as a group with respect to
the purchase, disposition or voting of Debentures or otherwise.
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4.9 ABLE ENERGY TRANSACTION. Upon the occurrence of the Able Energy
Transaction, as a condition to such transaction, (a) the Company shall cause
Able Energy to duly execute the Able Energy Transaction Documents concurrently
with the consummation Able Energy Transaction wherefore the Debentures shall be
assumed and amended as set forth in and the securities of Able Energy as
provided for under the Able Energy Transaction Documents shall be issued, (b)
Able Energy shall have obtained such approval as may be required by the
applicable rules and regulations of the Trading Market (or any successor entity)
from the shareholders of the Company with respect to the transactions
contemplated by the Able Energy Transaction Documents, including the issuance of
all of the shares of Common Stock issuable thereunder, ignoring for such
purposes any conversion or exercise limitations therein, in excess of 19.99% of
the issued and outstanding Common Stock on the Closing Date and (c) the Company
shall take any and all actions and execute any and all documents reasonably
required by the Purchasers to insure that the liens on the real and personal
property of the Company and Xxxxxx Subsidiary (the "BORROWERS") granted pursuant
to the Loan Documents and the pledge granted pursuant to the Pledge Documents
are extended and modified to secure the obligations of the Borrowers and Able
Energy under the Able Energy Transaction Documents. The terms of any agreement
pursuant to which the Able Energy Transaction is effected shall include terms
requiring Able Energy to comply with the provisions of this Section 4.9 and
insuring that the securities required to be issued hereunder (or any such
replacement security) will be similarly issued upon any subsequent transaction
analogous to the Able Energy Transaction.
ARTICLE V.
MISCELLANEOUS
5.1 TERMINATION. This Agreement may be terminated by any Purchaser,
as to such Purchaser's obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by
written notice to the other parties, if the Closing has not been consummated on
or before January 15, 2006; provided that no such termination will affect the
right of any party to xxx for any breach by the other party (or parties).
5.2 FEES AND EXPENSES. At the Closing, the Company has agreed to
reimburse Lilac Ventures Master Fund Ltd. ("LILAC") for $40,000, for its actual,
reasonable, out-of-pocket legal fees and expenses. Accordingly, in lieu of the
foregoing payments, the aggregate amount that Lilac is to pay for the Debentures
and Additional Investment Rights at the Closing shall be reduced by $40,000 in
lieu thereof. The Company shall deliver, prior to the Closing, a completed and
executed copy of the Closing Statement, attached hereto as ANNEX A. Except as
expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Debentures and Additional
Investment Rights.
5.3 ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
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5.4 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a Business Day, (b) the next Business Day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number set forth on the signature pages attached hereto on a
day that is not a Business Day or later than 5:30 p.m. (New York City time) on
any Business Day, (c) the second Business Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the signature pages
attached hereto.
5.5 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.
5.6 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Debentures and Additional Investment Rights,
provided such transferee agrees in writing to be bound, with respect to the
transferred Debentures and Additional Investment Rights, by the provisions
hereof that apply to the "Purchasers".
5.8 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.6.
5.9 GOVERNING LAW. Except as specifically set forth in a Transaction
Documents, all questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the
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internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.10 SURVIVAL. The representations and warranties contained herein
shall survive the Closing and the delivery and/or exercise of the Debentures and
Additional Investment Rights, as applicable for the applicable statue of
limitations.
5.11 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.12 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.13 RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Documents and the Company does not timely
perform its related obligations within the periods
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therein provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
5.14 REPLACEMENT OF DEBENTURES AND ADDITIONAL INVESTMENT RIGHTS. If
any certificate or instrument evidencing any Debentures or Additional Investment
Rights is mutilated, lost, stolen or destroyed, the Company shall issue or cause
to be issued in exchange and substitution for and upon cancellation thereof, or
in lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested. The
applicants for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the issuance of such
replacement Debentures or Additional Investment Rights.
5.15 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.16 PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to any Purchaser pursuant to any Transaction Documents or a
Purchaser enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
5.17 USURY. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction
Documents. Notwithstanding any provision to the contrary contained in any
Transaction Documents, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the "MAXIMUM RATE"), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or
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decreased by statute or any official governmental action subsequent to the date
hereof, the new maximum contract rate of interest allowed by law will be the
Maximum Rate applicable to the Transaction Documents from the effective date
forward, unless such application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is paid by the
Company to any Purchaser with respect to indebtedness evidenced by the
Transaction Documents, such excess shall be applied by such Purchaser to the
unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser's election.
5.18 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Documents are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Documents. Nothing contained herein or in any
Transaction Documents, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent all of
the Purchasers but only Lilac. The Company has elected to provide all Purchasers
with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by the Purchasers.
5.19 LIQUIDATED DAMAGES. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
5.20 CONSTRUCTION. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
(SIGNATURE PAGES FOLLOW)
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
ALL AMERICAN PLAZAS, INC. Address for Notice:
-------------------
By:____________________________________
Name:
Title:
With a copy to (which shall not constitute notice):
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER SIGNATURE PAGES TO ALL AMERICAN INDUSTRIES
SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Name of Investing Entity: ______________________________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Email Address of Authorized Entity: ____________________________________________
Address for Notice of Investing Entity:
Address for Delivery of Debentures and Additional Investment Rights for
Investing Entity (if not same as above):
Subscription Amount:
EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]
[SIGNATURE PAGES CONTINUE]
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ANNEX A
CLOSING STATEMENT
Pursuant to the attached Debentures Purchase Agreement, dated as of the date
hereto, the purchasers shall purchase up to $2,200,000 of Debentures from All
American Plazas, Inc., (the "COMPANY"). All funds will be wired into a trust
account maintained by [S Manchester's office?], counsel to the Company. All
funds will be disbursed in accordance with this Closing Statement.
DISBURSEMENT DATE: January ____, 2006
________________________________________________________________________________
I. PURCHASE PRICE
--------------
GROSS PROCEEDS TO BE RECEIVED IN TRUST $
II. DISBURSEMENTS
-------------
$
$
$
$
$
TOTAL AMOUNT DISBURSED: $
WIRE INSTRUCTIONS:
------------------
To: _____________________________________
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