EXHIBIT 10.33
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT")
is made and entered into as of August 24, 2004, between VisiJet, Inc., a
corporation organized and existing under the laws of the State of Delaware
("VISIJET, INC."), and Xxxxxxx Park Investments PLC, a corporation organized
under the laws of England and Wales with its offices at 00 Xxxxxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX ("XXXXXXX").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, VisiJet, Inc. desires to issue and sell to Xxxxxxx and Xxxxxxx
desires to acquire from VisiJet, Inc. Four Hundred Fifty Thousand (450,000)
shares of VisiJet, Inc.'s Series A 0% Convertible Preferred Stock, $.001 par
value (the "SERIES A PREFERRED Stock"), with a Stated Value of ten dollars ($10)
per share, and an aggregate Stated Value of Four Million Five Hundred Thousand
Dollars ($4,500,000) for an aggregate purchase price of Three Million One
Hundred Fifty Thousand Dollars ($1,350,000).
IN CONSIDERATION of the mutual covenants contained in this Agreement,
VisiJet, Inc. and Xxxxxxx agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"AFFILIATE" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "CONTROL" (including,
with correlative meanings, the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"ATTORNEY-IN-FACT" means Gottbetter & Partners, LLP, 000 Xxxxxxx
Xxxxxx, 00 Xxxxx, Xxx Xxxx, XX 00000; Tel: 000-000-0000; Fax: 000-000-0000.
"BUSINESS DAY" means any day except Saturday, Sunday, any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York are authorized or required by law or other government actions to close.
"CERTIFICATE OF DESIGNATION" means the Certificate of Designation of
the Series A Preferred Stock annexed as EXHIBIT A hereto.
"CHANGE OF CONTROL" means the acquisition, directly or indirectly, by
any Person of ownership of, or the power to direct the exercise of voting power
with respect to, a majority of the issued and outstanding voting shares of
VisiJet, Inc.
"CLOSING" shall have the meaning set forth in SECTION 2.2(A) hereof.
"CLOSING DATE" shall have the meaning set forth in SECTION 2.2(A)
hereof.
"COMMON STOCK" means shares now or hereafter authorized of the class of
common stock $.001 par value of VisiJet, Inc.
"CONSIDERATION STOCK" shall have the meaning set forth in SECTION
2.1(A) hereof.
"CONTROL PERSON" shall have the meaning set forth in SECTION 4.8(A)
hereof.
"CONVERSION DATE" shall have the meaning set forth in the Certificate
of Designation.
"CONVERSION PRICE" shall have the meaning set forth in the Certificate
of Designation.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DISCLOSURE DOCUMENTS" means VisiJet, Inc.'s reports filed under the
Exchange Act with the SEC.
"ESCROW AGREEMENT" means the Escrow Agreement in the form of EXHIBIT D
attached hereto.
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION 5.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTION DATE" means the date of this Agreement first written above.
"INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 4.8(B)
hereof.
"INDEMNIFYING PARTY" shall have the meaning set forth in SECTION 4.8(B)
hereof.
"G&P" means Gottbetter & Partners, LLP.
"XXXXXXX" shall have the meaning in the introductory paragraph.
"XXXXXXX CONSIDERATION SHARES" shall have the meaning in SECTION 2.1(C)
hereof.
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"XXXXXXX SHARES" shall mean ordinary shares of 1.0p each in Xxxxxxx.
"LIMITATION ON CONVERSION" shall have the meaning set forth in SECTION
4.12 hereof.
"LOSSES" shall have the meaning set forth in SECTION 4.8(A) hereof.
"MATERIAL" shall mean having a financial consequence in excess of
$25,000.
"MATERIAL ADVERSE EFFECT" shall have the meaning set forth in SECTION
3.1(A).
"NASD" means the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the Nasdaq Stock Market, Inc.(R)
"ORIGINAL ISSUE DATE" shall have the meaning set forth in the
Certificate of Designation.
"OTCBB" shall mean the NASD over-the counter Bulletin Board(R).
"PER SHARE MARKET VALUE" of the Common Stock means on any particular
date (a) the last sale price of shares of Common Stock on such date or, if no
such sale takes place on such date, the last sale price on the most recent prior
date, in each case as officially reported on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading, or (b)
if the Common Stock is not then listed or admitted to trading on any national
securities exchange, the closing bid price per share as reported by Nasdaq, or
(c) if the Common Stock is not then listed or admitted to trading on the Nasdaq,
the closing bid price per share of the Common Stock on such date as reported on
the OTCBB or if there is no such price on such date, then the last bid price on
the date nearest preceding such date, or (d) if the Common Stock is not quoted
on the OTCBB, the closing bid price for a share of Common Stock on such date in
the over-the-counter market as reported by the Pinksheets LLC (or similar
organization or agency succeeding to its functions of reporting prices) or if
there is no such price on such date, then the last bid price on the date nearest
preceding such date, or (e) if the Common Stock is no longer publicly traded,
the fair market value of a share of the Common Stock as determined by an
Appraiser (as defined in the Certificate of Designation) selected in good faith
by the holders of a majority of the Series A Preferred Stock; PROVIDED, HOWEVER,
that VisiJet, Inc., after receipt of the determination by such Appraiser, shall
have the right to select an additional Appraiser, in which case, the fair market
value shall be equal to the average of the determinations by each such
Appraiser.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"POWER OF ATTORNEY" means the power of attorney in the form of EXHIBIT
B annexed hereto.
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"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.
"REDEMPTION PRICE" shall mean an amount equal to the Stated Value of
the shares of Consideration Stock outstanding that are subject to redemption.
"REPORTING ISSUER" means a company that is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act.
"REQUIRED APPROVALS" shall have the meaning set forth in SECTION
3.1(F).
"SECURITIES" means the Series A Preferred Stock, the Common Stock and
the Underlying Shares and stock of any other class into which such shares may
hereafter have been reclassified or changed.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STATED VALUE" means the sum of ten dollars ($10) per share of
Consideration Stock or Three Million One Hundred Fifty Thousand Dollars
($3,150,000) for all of the shares of Consideration Stock.
"SERIES A PREFERRED STOCK" shall have the meaning set forth in the
recital.
"SUBSIDIARIES" shall have the meaning set forth in SECTION 3.1(A).
"VISIJET, INC." shall have the meaning set forth in the introductory
paragraph.
"TOTAL PURCHASE PRICE" shall have the meaning set forth in SECTION
2.1(B) hereof.
"TRADING DAY" means (a) a day on which the Common Stock is quoted on
Nasdaq, the OTCBB or the principal stock exchange on which the Common Stock has
been listed, or (b) if the Common Stock is not quoted on Nasdaq, the OTCBB or
any stock exchange, a day on which the Common Stock is quoted in the
over-the-counter market, as reported by the Pinksheets LLC (or any similar
organization or agency succeeding its functions of reporting prices).
"TRANSACTION DOCUMENTS" means this Agreement and all exhibits and
schedules hereto and all other documents, instruments and writings required
pursuant to this Agreement.
"UNDERLYING SHARES" means the shares of VisiJet, Inc.'s Common Stock
into which the shares of Consideration Stock are convertible as provided in the
Certificate of Designation.
"U.S." means the United States.
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ARTICLE II
PURCHASE AND SALE OF CONVERTIBLE PREFERRED SHARES
2.1 PURCHASE AND SALE; PURCHASE PRICE.
(a) Subject to the terms and conditions set forth herein,
VisiJet, Inc. shall issue and sell and Xxxxxxx shall purchase Four Hundred Fifty
Thousand (450,000) shares of VisiJet, Inc.'s Series A 0% Convertible Preferred
Stock, $.001 par value per share (the "CONSIDERATION STOCK"). The Series A
Preferred Stock shall have the respective rights, preferences and privileges as
set forth in the Certificate of Designation to be filed by VisiJet, Inc. with
the Secretary of State of Delaware prior to the Closing Date.
(b) The purchase price for each share of Series A Preferred
Stock shall be Ten Dollars ($10) (the "PER SHARE CONSIDERATION"). The Per Share
Consideration multiplied by the number of shares of Series A Preferred Stock to
be purchased by Xxxxxxx is referred to as the "TOTAL PURCHASE PRICE."
(c) The Total Purchase Price shall be paid by delivery to
VisiJet, Inc. of the number of Xxxxxxx Shares (the "XXXXXXX CONSIDERATION
SHARES") equal to the Total Purchase Price divided by the conversion rate of the
British Pound Sterling to purchase US Dollars as determined below on July 30,
2004. The Xxxxxxx Shares shall have a value of (pound)1 per share. The number of
Xxxxxxx Shares to be issued will be based on the conversion rate of the British
Pound Sterling to the US Dollar in effect as of the close of business on the day
preceding the closing of the transaction, as quoted by Xxxxxx & Co. as the
commercial rate it gives to purchase US Dollars. For example, if the effective
conversion rate is $1.80/(pound) 1 and the Total Purchase Price is $5,000,000,
then the number of Xxxxxxx Shares VisiJet, Inc. will receive shall equal the
$5,000,000/$1.80, or 2,777,777 Xxxxxxx Shares.
2.2 EXECUTION AND DELIVERY OF DOCUMENTS; THE CLOSING.
(a) The Closing of the purchase and sale of the shares of
Consideration Stock (the "Closing") shall take place within sixty (60) days from
the date hereof (the "CLOSING DATE"). On the Closing Date,
(i) VisiJet, Inc. shall execute and deliver to Xxxxxxx the
certificates representing the shares of Consideration Stock, which shares of
Consideration Stock shall have the respective rights, preferences and privileges
as set forth in the Certificate of Designation annexed as EXHIBIT A hereto;
(ii) VisiJet, Inc. shall execute and deliver the Power of
Attorney annexed as EXHIBIT B hereto, provided that VisiJet, Inc. may execute
the Power of Attorney upon the execution of this Agreement, in which case it
will be held in escrow by G&P and delivered at Closing;
(iii) VisiJet, Inc. shall execute and deliver to Xxxxxxx a
certificate of its President, in the form of EXHIBIT C annexed hereto,
certifying that attached thereto is a copy of resolutions duly adopted by the
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Board of Directors of VisiJet, Inc. authorizing VisiJet, Inc. to execute and
deliver the Transaction Documents and to enter into the transactions
contemplated thereby, provided that VisiJet, Inc. may execute such certificate
upon the execution of this Agreement, in which case it will be held in escrow by
G&P and delivered at Closing;
(iv) Xxxxxxx shall execute and deliver a certificate in the
name of VisiJet, Inc. or a provisional letter of allotment for a trading account
in the name of VisiJet, Inc. representing the Xxxxxxx Consideration Shares;
(v) VisiJet, Inc., Xxxxxxx and the Escrow Agent shall execute
and deliver to each other an executed Escrow Agreement in the form annexed
hereto as EXHIBIT D, provided that VisiJet, Inc., Xxxxxxx and Escrow Agent may
execute the Escrow Agreement upon the execution of this Agreement, in which case
it will be held in escrow by the Escrow Agent and delivered at Closing
(vi) VisiJet, Inc. shall wire the monies owed to G&P pursuant
to SECTION 5.1 hereof for legal fees with the following wire instructions:
Citibank, N.A.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX
ABA Routing No.: 000000000
Account Name: Gottbetter & Partners, LLP
Account No. 00000000
Reference: [Target Company]
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF VISIJET, INC..
VisiJet, Inc. hereby makes the following representations and warranties to
Xxxxxxx, all of which shall survive the Closing:
(a) ORGANIZATION AND QUALIFICATION. VisiJet, Inc. is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its formation, with the requisite corporate power
and authority to own and use its properties and assets and to carry on its
business as currently conducted. VisiJet, Inc. has no subsidiaries other than as
set forth on SCHEDULE 3.1(A) attached hereto (collectively, the "SUBSIDIARIES").
Each of the Subsidiaries is a corporation, duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
with the full corporate power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Each of VisiJet,
Inc. and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation 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
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the case may be, would not, individually or in the aggregate, have a material
adverse effect on the results of operations, assets, prospects, or financial
condition of VisiJet, Inc. and the Subsidiaries, taken as a whole (a "MATERIAL
ADVERSE Effect").
(b) AUTHORIZATION, ENFORCEMENT. VisiJet, Inc. has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated hereby and by each other Transaction Document and to
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement and each of the other Transaction Documents by
VisiJet, Inc. and the consummation by it of the transactions contemplated hereby
and thereby has been duly authorized by all necessary action on the part of
VisiJet, Inc.. Each of this Agreement and each of the other Transaction
Documents has been or will be duly executed by VisiJet, Inc. and when delivered
in accordance with the terms hereof or thereof will constitute the valid and
binding obligation of VisiJet, Inc. enforceable against VisiJet, Inc. in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(c) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is set forth on SCHEDULE 3.1(C). No shares of the
Series A Preferred Stock have been issued as of the date hereof. No shares of
Common Stock are entitled to preemptive or similar rights, nor is any holder of
the Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with VisiJet, Inc. by virtue of this Agreement.
Except as disclosed in SCHEDULE 3.1(C), there are no outstanding options,
warrants, script, rights to subscribe to, registration rights, calls or
commitments of any character whatsoever relating to, or, except as a result of
the purchase and sale of the Series A Preferred Stock hereunder, 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 VisiJet, Inc. or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
Neither VisiJet, Inc. nor any Subsidiary is in violation of any of the
provisions of its Certificate of Incorporation, bylaws or other charter
documents.
(d) ISSUANCE OF SECURITIES. The shares of Consideration Stock
have been duly and validly authorized for issuance, offer and sale pursuant to
this Agreement and, when issued and delivered as provided hereunder against
payment in accordance with the terms hereof, shall be valid and binding
obligations of VisiJet, Inc. enforceable in accordance with their respective
terms. VisiJet, Inc. has and at all times while the shares of Consideration
Stock are outstanding will continue to maintain an adequate reserve of shares of
Common Stock to enable it to perform its obligations under this Agreement and
the Certificate of Designation. When issued in accordance with the terms hereof,
the Underlying Shares will be duly authorized, validly issued, fully paid and
non-assessable.
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(e) NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Transaction Documents by VisiJet, Inc. and the
consummation by VisiJet, Inc. of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of its
Certificate of Incorporation or bylaws (each as amended through the date hereof)
or (ii) be subject to obtaining any consents except those referred to in Section
3.1(f), 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 VisiJet, Inc. is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which
VisiJet, Inc. or its Subsidiaries is subject (including, but not limited to,
those of other countries and the federal and state securities laws and
regulations), or by which any property or asset of VisiJet, Inc. or its
Subsidiaries is bound or affected, except in the case of clause (ii), such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect. The business of VisiJet, Inc. and its Subsidiaries is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority.
(f) CONSENTS AND APPROVALS. Except as specifically set forth
in SCHEDULE 3.1(F), neither VisiJet, Inc. nor any Subsidiary is required to
obtain any consent, waiver, authorization or order of, 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 VisiJet, Inc. of this Agreement and each of the
other Transaction Documents except for the filing of the Certificate of
Designation with respect to the Series A Preferred Stock with the Secretary of
State of the State of Delaware, which filing shall be effected prior to the
Closing Date (together with the consents, waivers, authorizations, orders,
notices and filings referred to in SCHEDULE 3.1(F), the "REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed
in SCHEDULE 3.1(G), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the best knowledge of VisiJet, Inc., threatened
against or affecting VisiJet, Inc. or any of its Subsidiaries or any of their
respective properties before or by any court, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign) which
(i) relates to or challenges the legality, validity or enforceability of any of
the Transaction Documents, the Underlying Shares or the shares of Consideration
Stock, (ii) could, individually or in the aggregate, have a Material Adverse
Effect or (iii) could, individually or in the aggregate, materially impair the
ability of VisiJet, Inc. to perform fully on a timely basis its obligations
under the Transaction Documents.
(h) NO DEFAULT OR VIOLATION. Except as set forth in SCHEDULE
3.1(H) hereto, neither VisiJet, Inc. nor any Subsidiary (i) is in default under
or 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, except such conflicts or defaults as do not have a Material
Adverse Effect, (ii) is in violation of any order of any court, arbitrator or
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governmental body, except for such violations as do not have a Material Adverse
Effect, or (iii) is in violation of any statute, rule or regulation of any
governmental authority which could (individually or in the aggregate) (a)
adversely affect the legality, validity or enforceability of this Agreement, (b)
have a Material Adverse Effect or (c) adversely impair VisiJet, Inc.'s ability
or obligation to perform fully on a timely basis its obligations under this
Agreement.
(i) DISCLOSURE DOCUMENTS. The Disclosure Documents are
accurate in all material respects and do not contain any untrue statement of
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.
(j) NON-REGISTERED OFFERING. Neither VisiJet, Inc. nor any
Person acting on its behalf has taken or will take any action (including,
without limitation, any offering of any securities of VisiJet, Inc. under
circumstances which would require the integration of such offering with the
offering of the Securities under the Securities Act) which might subject the
offering, issuance or sale of the Securities to the registration requirements of
Section 5 of the Securities Act.
(k) PLACING AGENT. VisiJet, Inc. accepts and agrees that
Dungarvon Associates, Inc. ("DUNGARVON") is acting for Xxxxxxx and does not
regard any Person other than Xxxxxxx as its customer in relation to this
Agreement, and that it has not made any recommendation to VisiJet, Inc., in
relation to this Agreement and is not advising VisiJet, Inc., with regard to the
suitability or merits of the Xxxxxxx Shares and in particular Dungarvon has no
duties or responsibilities to VisiJet, Inc. for the best execution of the
transaction contemplated by this Agreement.
(l) PRIVATE PLACEMENT REPRESENTATIONS. VisiJet, Inc. (i) has
received and carefully reviewed such information and documentation relating to
Xxxxxxx that VisiJet, Inc. has requested, including, without limitation,
Xxxxxxx'x Confidential Private Offering Memorandum dated June 17, 2004; (ii) has
had a reasonable opportunity to ask questions of and receive answers from
Xxxxxxx concerning the Xxxxxxx Shares, and all such questions, if any, have been
answered to the full satisfaction of VisiJet, Inc.; (iii) has such knowledge and
expertise in financial and business matters that it is capable of evaluating the
merits and risks involved in an investment in the Xxxxxxx Shares; (iii)
understands that Xxxxxxx has determined that the exemption from the registration
provisions of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
provided by Section 4(2) of the Securities Act is applicable to the offer and
sale of the Xxxxxxx Shares, based, in part, upon the representations, warranties
and agreements made by VisiJet, Inc. herein; and (iv) except as provided herein
and in the Private Placement Memorandum, dated June 17, 2004, no representations
or warranties have been made to VisiJet, Inc. by Xxxxxxx or any agent, employee
or affiliate of Xxxxxxx and in entering into this transaction VisiJet, Inc. is
not relying upon any information, other than the results of independent
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investigation by VisiJet, Inc. Xxxxxxx acknowledges and agrees that VisiJet,
Inc. makes no representation or warranty with respect to the transactions
contemplated hereby other than those specifically set forth in SECTION 3.1
hereof.
3.2 REPRESENTATIONS AND WARRANTIES OF XXXXXXX. Xxxxxxx hereby
represents and warrants to VisiJet, Inc. as follows:
(a) ORGANIZATION; AUTHORITY. Xxxxxxx is a corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation with the requisite power and authority to
enter into and to consummate the transactions contemplated hereby and
by the other Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The acquisition of the shares of
Consideration Stock to be purchased by Xxxxxxx hereunder has been duly
authorized by all necessary action on the part of Xxxxxxx. This
Agreement has been duly executed and delivered by Xxxxxxx and
constitutes the valid and legally binding obligation of Xxxxxxx,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to, or affecting
generally the enforcement of, creditors rights and remedies or by other
general principles of equity.
(b) ISSUANCE OF XXXXXXX CONSIDERATION SHARES. The Xxxxxxx
Consideration Shares have been duly and validly authorized for
issuance, offer and sale pursuant to this Agreement and, when issued
and delivered as provided hereunder against payment in accordance with
the terms hereof, shall be valid and binding obligations of Xxxxxxx
enforceable in accordance with their terms.
(c) INVESTMENT INTENT. Xxxxxxx is acquiring the shares of
Consideration Stock to be purchased by it hereunder, and will acquire
the Underlying Shares relating to such shares of Consideration Stock
for its own account for investment purposes only and not with a view to
or for distributing or reselling such shares of Consideration Stock, or
Underlying Shares or any part thereof or interest therein, without
prejudice, however, to Xxxxxxx'x right, subject to the provisions of
this Agreement, at all times to sell or otherwise dispose of all or any
part of such shares of Consideration Stock in compliance with
applicable federal and state securities laws.
(d) EXPERIENCE OF XXXXXXX. Xxxxxxx, 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 an investment in the shares of
Consideration Stock to be acquired by it hereunder, and has so
evaluated the merits and risks of such investment.
(e) ABILITY OF XXXXXXX TO BEAR RISK OF INVESTMENT. Xxxxxxx is
able to bear the economic risk of an investment in the Securities to be
acquired by it hereunder and, at the present time, is able to afford a
complete loss of such investment.
(f) ACCESS TO INFORMATION. Xxxxxxx acknowledges that it has
been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of
VisiJet, Inc. concerning the terms and conditions of the Securities
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offered hereunder and the merits and risks of investing in such
securities; (ii) access to information about VisiJet, Inc. and VisiJet,
Inc.'s financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to
evaluate its investment in the Securities; and (iii) the opportunity to
obtain such additional information which VisiJet, Inc. possesses or can
acquire without unreasonable effort or expense that is necessary to
make an informed investment decision with respect to the investment and
to verify the accuracy and completeness of the information that it has
received about VisiJet, Inc..
(g) RELIANCE. Xxxxxxx understands and acknowledges that (i)
the shares of Consideration Stock and the Underlying Shares being
offered and sold to it hereunder are being offered and sold without
registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under
Section 4(2) of the Securities Act and (ii) the availability of such
exemption depends in part on, and that VisiJet, Inc. will rely upon the
accuracy and truthfulness of, the foregoing representations and Xxxxxxx
hereby consents to such reliance.
(h) REGULATION X. Xxxxxxx understand and acknowledge that (A)
the shares of Consideration Stock have not been registered under the
Securities Act, are being sold in reliance upon an exemption from
registration afforded by Regulation S; and that such shares of
Consideration Stock have not been registered with any state securities
commission or authority; (B) pursuant to the requirements of Regulation
S, the shares of Consideration Stock may not be transferred, sold or
otherwise exchanged unless in compliance with the provisions of
Regulation S and/or pursuant to registration under the Securities Act,
or pursuant to an available exemption hereunder; and (C) Xxxxxxx is
under no obligation to register the shares of Consideration Stock under
the Securities Act or any state securities law, or to take any action
to make any exemption from any such registration provisions available.
Xxxxxxx is not a U.S. person and is not acquiring the shares of
Consideration Stock for the account of any U.S. person; (B) no director or
executive officer of Xxxxxxx is a national or citizen of the United States; and
(C) it is not otherwise deemed to be a "U.S. Person" within the meaning of
Regulation X.
Xxxxxxx was not formed specifically for the purpose of acquiring the
shares of Consideration Stock purchased pursuant to this Agreement.
Xxxxxxx is purchasing the shares of Consideration Stock for its own
account and risk and not for the account or benefit of a U.S. Person as defined
in Regulation S and no other person has any interest in or participation in the
shares of Consideration Stock or any right, option, security interest, pledge or
other interest in or to the shares of Consideration Stock. Xxxxxxx understands,
acknowledges and agrees that it must bear the economic risk of its investment in
the shares of Consideration Stock for an indefinite period of time and that
prior to any such offer or sale, VisiJet, Inc. may require, as a condition to
effecting a transfer of the shares of Consideration Stock, an opinion of
counsel, acceptable to VisiJet, Inc., as to the registration or exemption
therefrom under the Securities Act and any state securities acts, if applicable.
11
Xxxxxxx will, after the expiration of the Restricted Period, as set
forth under Regulation S Rule 903(b)(3)(iii)(A), offer, sell, pledge or
otherwise transfer the shares of Consideration Stock only in accordance with
Regulation S, or pursuant to an available exemption under the Securities Act
and, in any case, in accordance with applicable state securities laws. The
transactions contemplated by this Agreement have neither been pre-arranged with
a purchaser who is in the U.S. or who is a U.S. Person, nor are they part of a
plan or scheme to evade the registration provisions of the United States federal
securities laws.
The offer leading to the sale evidenced hereby was made in an "offshore
transaction." For purposes of Regulation S, Xxxxxxx understands that an
"offshore transaction" as defined under Regulation S is any offer or sale not
made to a person in the United States and either (A) at the time the buy order
is originated, the purchaser is outside the United States, or the seller or any
person acting on his behalf reasonably believes that the purchaser is outside
the United States; or (B) for purposes of (1) Rule 903 of Regulation S, the
transaction is executed in, or on or through a physical trading floor of an
established foreign exchange that is located outside the United States or (2)
Rule 904 of Regulation S, the transaction is executed in, on or through the
facilities of a designated offshore securities market, and neither the seller
nor any person acting on its behalf knows that the transaction has been
prearranged with a buyer in the U.S.
Neither Xxxxxxx nor any affiliate or any person acting on Xxxxxxx'x
behalf, has made or is aware of any "directed selling efforts" in the United
States, which is defined in Regulation S to be any activity undertaken for the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for any of the shares of
Consideration Stock being purchased hereby.
Xxxxxxx understands that VisiJet, Inc. is the seller of the shares of
Consideration Stock which are the subject of this Agreement, and that, for
purpose of Regulation S, a "distributor" is any underwriter, dealer or other
person who participates, pursuant to a contractual arrangement, in the
distribution of securities offered or sold in reliance on Regulation S and that
an "affiliate" is any partner, officer, director or any person directly or
indirectly controlling, controlled by or under common control with any person in
question. Xxxxxxx agrees that Xxxxxxx will not, during the Restricted Period set
forth under Rule 903(b)(iii)(A), act as a distributor, either directly or though
any affiliate, nor shall it sell, transfer, hypothecate or otherwise convey the
shares of Consideration Stock other than to a non-U.S. Person.
Xxxxxxx acknowledges that the shares of Consideration Stock will bear a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED AND SOLD IN AN
"OFFSHORE TRANSACTION" IN RELIANCE UPON REGULATION S AS PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION. ACCORDINGLY, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") AND MAY NOT BE TRANSFERRED OTHER THAN IN ACCORDANCE WITH
REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
12
AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING
TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE
SECURITIES ACT.
VisiJet, Inc. acknowledges and agrees that Xxxxxxx makes no 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 MANNER OF OFFERING. The Consideration Stock is being issued
pursuant to section 4(2) of the Securities Act and Regulation S thereunder. The
Xxxxxxx Consideration Shares are being issued pursuant to section 4(2) of the
Securities Act.
4.2 NOTICE OF CERTAIN EVENTS. VisiJet, Inc. shall, on a continuing
basis, (i) advise Xxxxxxx promptly after obtaining knowledge of, and, if
requested by Xxxxxxx, confirm such advice in writing, of (A) the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of the shares of Consideration Stock, for offering
or sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or other regulatory authority, or (B)
any event that makes any statement of a material fact made by VisiJet, Inc. in
SECTION 3.1 or in the Disclosure Documents untrue or that requires the making of
any additions to or changes in SECTION 3.1 or in the Disclosure Documents in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, (ii) use its best efforts to prevent the
issuance of any stop order or order suspending the qualification or exemption
from qualification of the Securities under any state securities or Blue Sky
laws, and (iii) if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Securities under any such laws, and use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
4.3 BLUE SKY LAWS. VisiJet, Inc. agrees that it will execute all
necessary documents and pay all necessary state filing or notice fees to enable
VisiJet, Inc. to sell the Securities to Xxxxxxx.
4.4 INTEGRATION. VisiJet, Inc. shall not and shall use its best efforts
to ensure that no Affiliate shall sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to Xxxxxxx.
13
4.5 FURNISHING OF RULE 144(C) MATERIALS. VisiJet, Inc. shall, for so
long as any of the Securities remain outstanding and during any period in which
VisiJet, Inc. is not subject to Section 13 or 15(d) of the Exchange Act, make
available to any registered holder of the Securities ("HOLDER" or "HOLDERS") in
connection with any sale thereof and any prospective purchaser of such
Securities from such Person, such information in accordance with Rule 144(c)
promulgated under the Securities Act as is required to sell the Securities under
Rule 144 promulgated under the Securities Act.
4.6 SOLICITATION MATERIALS. VisiJet, Inc. shall not (i) distribute any
offering materials in connection with the offering and sale of the shares of
Consideration Stock and the Underlying Shares other than the Disclosure
Documents and any amendments and supplements thereto prepared in compliance
herewith or (ii) solicit any offer to buy or sell the shares of Consideration
Stock by means of any form of general solicitation or advertising.
4.7 LISTING OF COMMON STOCK. If the Common Stock is or shall become
listed on the OTCBB or on another exchange, VisiJet, Inc. shall (a) use its best
efforts to maintain the listing of its Common Stock on the OTCBB or such other
exchange on which the Common Stock is then listed until two years from the date
hereof, and (b) shall provide to Xxxxxxx evidence of such listing.
4.8 INDEMNIFICATION.
(a) INDEMNIFICATION.
(i) VisiJet, Inc. shall, notwithstanding termination of this
Agreement and for a period of six (6) years, indemnify and hold harmless Xxxxxxx
and its officers, directors, agents, employees and affiliates, each Person who
controls or Xxxxxxx (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) (each such Person, a "CONTROL PERSON") and the
officers, directors, agents, employees and affiliates of each such Control
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "LOSSES"), as incurred, arising out of, or relating to, a breach
or breaches of any representation, warranty, covenant or agreement by VisiJet,
Inc. under this Agreement or any other Transaction Document.
(ii) Xxxxxxx shall, notwithstanding termination of this
Agreement and for a period of six (6) years, indemnify and hold harmless
VisiJet, Inc., its officers, directors, agents and employees, each Control
Person and the officers, directors, agents and employees of each Control Person,
to the fullest extent permitted by applicable law, from and against any and all
Losses, as incurred, arising out of, or relating to, a breach or breaches of any
representation, warranty, covenant or agreement by Xxxxxxx under this Agreement
or the other Transaction Documents, except for Losses solely arising out of
negligence, bad faith or breach of this Agreement by VisiJet, Inc..
(iii) VisiJet, Inc. and Xxxxxxx acknowledge that in the SEC's
opinion, directors, officers and persons controlling a company subject to the
Securities Act can not be indemnified for liabilities arising under the
Securities Act by such company.
14
(b) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed to
pay such fees and expenses; or (2) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of the claim against the Indemnified Party but will
retain the right to control the overall Proceedings out of which the claim arose
and such counsel employed by the Indemnified Party shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party to which the
Indemnified Party is entitled hereunder (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend
such Proceeding in a manner not inconsistent with this Section) shall be paid to
the Indemnified Party, as incurred, within ten (10) Business Days of written
notice thereof to the Indemnifying Party.
No right of indemnification under this Section shall be
available as to a particular Indemnified Party if the Indemnifying Party obtains
a non-appealable final judicial determination that such Losses arise solely out
of the negligence or bad faith of such Indemnified Party in performing the
obligations of such Indemnified Party under this Agreement or a breach by such
Indemnified Party of its obligations under this Agreement.
(c) CONTRIBUTION. If a claim for indemnification under this
Section is unavailable to an Indemnified Party or is insufficient to hold such
Indemnified Party harmless for any Losses in respect of which this Section would
15
apply by its terms (other than by reason of exceptions provided in this
Section), then each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Losses in such proportion as is appropriate to reflect the
relative benefits received by the Indemnifying Party on the one hand and the
Indemnified Party on the other and the relative fault of the Indemnifying Party
and Indemnified Party in connection with the actions or omissions that resulted
in such Losses as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether there was a judicial
determination that such Losses arise in part out of the negligence or bad faith
of the Indemnified Party in performing the obligations of such Indemnified Party
under this Agreement or the Indemnified Party's breach of its obligations under
this Agreement. The amount paid or payable by a party as a result of any Losses
shall be deemed to include any attorneys' or other fees or expenses incurred by
such party in connection with any Proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party.
(d) NON-EXCLUSIVITY. The indemnity and contribution agreements
contained in this Section are in addition to any obligation or liability that
the Indemnifying Parties may have to the Indemnified Parties.
4.9 ATTORNEY-IN-FACT. For the sole purpose of effectuating the terms
and provisions of this Agreement and the Certificate of Designation, VisiJet,
Inc. hereby agrees to give a power of attorney to G&P as is evidenced by EXHIBIT
B annexed hereto. All acts done under such power of attorney are hereby ratified
and approved and neither the Attorney-in-Fact nor any designee or agent thereof
shall be liable for any acts of commission or omission, for any error of
judgment or for any mistake of fact or law, as long as the Attorney-in-Fact is
operating within the scope of the power of attorney and this Agreement and its
exhibits. The power of attorney, being coupled with an interest, shall be
irrevocable while any of the shares of Consideration Stock remain unconverted,
or any portion of this Agreement remains unsatisfied. In addition, VisiJet, Inc.
shall give the Attorney-in-Fact resolutions executed by the Board of Directors
of VisiJet, Inc. which authorize transfers of the shares of Consideration Stock
and future issuances of the Underlying Shares for the shares of Consideration
Stock, and which resolutions state that they are irrevocable while any of the
shares of Consideration Stock remain unconverted, or any portion of this
Agreement remains unsatisfied.
4.10 SALE OF XXXXXXX CONSIDERATION SHARES. Xxxxxxx shall assist
VisiJet, Inc. in setting up and maintaining a trading account at a registered
broker in the United Kingdom to facilitate the sale of the Xxxxxxx Consideration
Shares. Broker's commissions in the trading account shall not exceed one half
percent (0.5%).
4.11 LOCK UP BY XXXXXXX. Xxxxxxx shall not sell, transfer or assign all
or any of the shares of Consideration Stock or the Underlying Shares for a
period of one (1) year following the Closing, without the written consent of
VisiJet, Inc., which consent may be withheld in VisiJet, Inc.'s sole discretion.
16
4.12 XXXXXXX'X OWNERSHIP OF COMMON STOCK. In addition to and not in
lieu of the limitations on conversion set forth in the Certificate of
Designation, the conversion and exercise rights of Xxxxxxx set forth in the
Certificate of Designation shall be limited, solely to the extent required, from
time to time, such that, unless Xxxxxxx gives written notice seventy five (75)
days in advance to VisiJet, Inc. of Xxxxxxx'x intention to exceed the Limitation
on Conversion as defined herein, with respect to all or a specified amount of
the shares of Consideration Stock and the corresponding number of the Underlying
Shares, in no instance shall the maximum number of shares of Common Stock which
Xxxxxxx (singularly, together with any Persons who in the determination of
Xxxxxxx, together with Xxxxxxx, constitute a group as defined in Rule 13d-5 of
the Exchange Act) may receive in respect of any conversion of the shares of
Consideration Stock, exceed, at any one time, an amount equal to four and ninety
nine one hundredths percent (4.99%) of the then issued and outstanding shares of
Common Stock of VisiJet, Inc. following such conversion (the foregoing being
herein referred to as the "LIMITATION ON Conversion"); PROVIDED, HOWEVER, that
the Limitation on Conversion shall not apply to any forced or automatic
conversion pursuant to this Agreement or the Certificate of Designation; and
PROVIDED, FURTHER that if Xxxxxxx shall have declared an Event of Default and,
if a cure period is provided, VisiJet, Inc. shall not have properly and fully
cured such Event of Default within any such cure period, the provisions of this
Section 4.12 shall be null and void from and after such date. VisiJet, Inc.
shall, promptly upon its receipt of a Notice of Conversion tendered by Xxxxxxx
(or its sole designee) for the Consideration Stock, as applicable, notify
Xxxxxxx by telephone and by facsimile of the number of shares of Common Stock
outstanding on such date and the number of Underlying Shares which would be
issuable to Xxxxxxx (or its sole designee, as the case may be) if the conversion
requested in such Notice of Conversion or exercise requested in such Notice of
Exercise were effected in full, whereupon, in accordance with the Certificate of
Designation and notwithstanding anything to the contrary set forth therein,
Xxxxxxx may within one (1) Business Day of its receipt of VisiJet, Inc. notice
required by this Section 4.12 by facsimile revoke such conversion or exercise to
the extent (in whole or in part) that Xxxxxxx determines that such conversion or
exercise would result in the ownership by Xxxxxxx of shares of Common Stock in
excess of the Limitation on Conversion.
4.13 NO VIOLATION OF APPLICABLE LAW. Notwithstanding any provision of
this Agreement to the contrary, if the redemption of the Consideration Stock
otherwise required under this Agreement or the Certificate of Designation would
be prohibited by the relevant provisions of Delaware law, such redemption shall
be effected as soon as it is permitted under such law; PROVIDED, HOWEVER, that
interest payable by VisiJet, Inc. with respect to any such redemption shall
accrue at fifteen percent (15%) per annum.
4.14 REDEMPTION RESTRICTIONS. Notwithstanding any provision of this
Agreement to the contrary, if any redemption of the shares of Consideration
Stock otherwise required under this Agreement or the Certificate of Designation
would be prohibited in the absence of consent from any lender to VisiJet, Inc.
or any of the Subsidiaries, or by the holders of any class of securities of
VisiJet, Inc., VisiJet, Inc. shall use its best efforts to obtain such consent
as promptly as practicable after any such redemption is required. Interest
payable by VisiJet, Inc. with respect to any such redemption shall accrue at
fifteen percent (15%) per annum until such consent is obtained. Nothing
contained in this Section 4.14 shall be construed as a waiver by Xxxxxxx of any
rights they may have by virtue of any breach of any representation or warranty
of VisiJet, Inc. herein as to the absence of any requirement to obtain any such
consent.
17
ARTICLE V
MISCELLANEOUS
5.1 FEES AND EXPENSES. Except as set forth in this Agreement, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. VisiJet, Inc. shall pay all stamp and other taxes and duties levied
in connection with the issuance of the shares of Consideration Stock (and, upon
conversion or exercise thereof, the Underlying Shares) pursuant hereto. Xxxxxxx
shall be responsible for any taxes payable by Xxxxxxx that may arise as a result
of the investment hereunder or the transactions contemplated by this Agreement
or any other Transaction Document. VisiJet, Inc. agrees to pay a total Xxxxxxx'x
counsel $7,500 for legal fees associated with the transactions contemplated by
this Agreement at Closing. VisiJet, Inc. shall pay all costs, expenses, fees and
all taxes incident to and in connection with: (A) the issuance and delivery of
the Securities, and the filing of the Certificate of Designation, (B) the
exemption from registration of the Securities for offer and sale to Xxxxxxx
under the securities or Blue Sky laws of the applicable jurisdictions, and (C)
the preparation of certificates for the Securities (including, without
limitation, printing and engraving thereof), and (D) all fees and expenses of
counsel and accountants of VisiJet, Inc.
5.2 ENTIRE AGREEMENT This Agreement, together with all of the Exhibits
and Schedules annexed hereto, and any other Transaction Document contains 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. This Agreement shall be deemed to have been drafted and
negotiated by both parties hereto and no presumptions as to interpretation,
construction or enforceability shall be made by or against either party in such
regard.
5.3 NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been duly
given upon facsimile transmission (with written transmission confirmation
report) at the number designated below (if delivered on a Business Day during
normal business hours where such notice is to be received), or the first
Business Day following such delivery (if delivered other than on a Business Day
during normal business hours where such notice is to be received) whichever
shall first occur. The addresses for such communications shall be:
If to VisiJet, Inc.:
With copies to: VisiJet, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxxxx
Tel: (000) 000-0000 Ext. 29
Fax: (000) 000-0000
18
If to Xxxxxxx: Xxxxxxx Park Investments PLC
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attn: Xxxxx Xxxxx
Tel: 00.000.000.0000
Fax: 00.000.000.0000
With copies to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address as may be designated hereafter by notice given pursuant to
the terms of this Section 5.3.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both VisiJet, Inc. and Xxxxxxx, or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
5.5 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.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. The assignment by a party of this Agreement or any rights
hereunder shall not affect the obligations of such party under this Agreement.
5.7 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
5.8 GOVERNING LAW; VENUE; SERVICE OF PROCESS. The parties hereto
acknowledge that the transactions contemplated by this Agreement and the
exhibits hereto bear a reasonable relation to the State of New York. The parties
hereto agree that the internal laws of the State of New York shall govern this
Agreement and the exhibits hereto, including, but not limited to, all issues
related to usury. Any action to enforce the terms of this Agreement or any of
its exhibits, or any other Transaction Document shall be brought exclusively in
the state and/or federal courts situated in the County and State of New York. If
and only if New York declines jurisdiction within the State of New York, such
action shall be brought in the State and County where VisiJet, Inc.'s principal
place of business is situated. Service of process in any action by Xxxxxxx or
19
VisiJet, Inc. to enforce the terms of this Agreement may be made by serving a
copy of the summons and complaint, in addition to any other relevant documents,
by commercial overnight courier to the other party at its principal address set
forth in this Agreement.
5.9 SURVIVAL. The representations and warranties of VisiJet, Inc. and
Xxxxxxx contained in Article III and the agreements and covenants of the parties
contained in Article IV and this Article V shall survive the Closing.
5.10 COUNTERPART SIGNATURES. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
5.11 PUBLICITY. VisiJet, Inc. and Xxxxxxx shall consult with each other
in issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and neither party shall issue any such
press release or otherwise make any such public statement without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed, unless counsel for the disclosing party deems such public statement
to be required by applicable federal and/or state securities laws. Except as
otherwise required by applicable law or regulation, VisiJet, Inc. will not
disclose to any third party (excluding its legal counsel, accountants and
representatives) the name of Xxxxxxx.
5.12 SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefore, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
5.13 LIMITATION OF REMEDIES. With respect to claims by VisiJet, Inc. or
any person acting by or through VisiJet, Inc., or by Xxxxxxx or any person
acting through Xxxxxxx, for remedies at law or at equity relating to or arising
out of a breach of this Agreement, liability, if any, shall, in no event,
include loss of profits or incidental, indirect, exemplary, punitive, special or
consequential damages of any kind.
[ SIGNATURE PAGE FOLLOWS ]
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first indicated above.
Target Company:
VisiJet, Inc.
By: /S/ XXXXXX X. XXXXXX
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
Xxxxxxx:
Xxxxxxx Park Investments Plc
By: /S/ XXXXX XXXXX
---------------------------
Name: Xxxxx Xxxxx
Title: Administrative Director
21
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF THE RIGHTS AND PREFERENCES
OF
SERIES A 0% CONVERTIBLE PREFERRED STOCK
OF
VISIJET, INC.
VisiJet, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), hereby certifies that the following
resolutions were adopted by the Board of Directors of the Company pursuant to
the authority of the Board of Directors as required by Section 151 of the
Delaware General Corporation Law (the "DGCL").
RESOLVED, that pursuant to the authority granted. to and vested in the
Board of Directors of said Company (the "Board of Directors" or the "Board"} in
accordance with the provisions of its Articles of Incorporation and Bylaws, each
as amended through the date hereof, the Board of Directors hereby authorizes a
series of the Company's previously authorized Preferred Stock, no par value (the
"Preferred Stock"), and hereby states the designation and number of shares, and
fixes the relative rights, preferences, privileges, powers and restrictions
thereof as follows:
I. CERTAIN DEFINITIONS
For purposes of this Certificate of Designation, capitalized terms are
defined in this Certificate of Designation or shall have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday, and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York are authorized or required by law or other government actions to close.
"COMMON STOCK" means the common stock of the Company, par value .001
per share.
"CONVERSION PERIOD" means the three (3) year period commencing on the
Issuance Date.
"FIXED CONVERSION PRICE" means the average of the Par Share Market
Value of the Common Stock during the ten (10) Trading Days immediately preceding
July 20, 2004.
"HOLDER" or "HOLDERS" means a holder or holders of the shares of Series
A Preferred Stock as they appear on the stock records of the Company.
"ISSUANCE DATE" means the date of the Closing under the Purchase
Agreement with respect to the initial issuance of the Series A Preferred Stock.
22
"PER SHARE MARKET VALUE" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on the Over-The-Counter
Bulleting Board, the OTC Bulletin Board(R) ("OTCBB") or other stock exchange on
which the Common Stock has been listed or if there is no such price on such
date, then the last bid price on such exchange on the date nearest preceding
such date, or (b) if the Common Stock is not listed on OTCBB or any stock
exchange, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the NASD, at the close of business on
such date, or (c) if the Common Stock is not quoted by the NASD, the closing bid
price for a share of Common Stock in the over-the-counter market as reported by
the Pinksheets LLC (or similar organization or agency succeeding to its
functions of reporting prices), or (d) if the Common Stock is no longer publicly
traded the fair market value of the share of Common Stock as determined by an
Appraiser (as defined in Section IV(c)(iv)) selected in good faith by the
Holders of a majority of the outstanding Series A Preferred Stock; provided,
however, that the Company, after receipt of the determination by such Appraiser,
shall have the right to select an additional Appraiser, in which case, the fair
market value shall be equal to the average of the determinations by each such
Appraiser, in each case as reported by Bloomberg Financial Markets, or if not
available, a comparable reporting service chosen by the Company reasonably
acceptable to the Holder of majority of the outstanding shares of Series A
Preferred Stock.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock. company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"PURCHASE AGREEMENT" means the Convertible Preferred Stock Purchase
Agreement dated August 24 2004, by and between the Company and Xxxxxxx Park
Investments PLC (the "Purchaser").
"TRADING DAY" means (a) a day on which the Common Stock is quoted on
the OTCBB or principal stork exchange on which the Common Stock has been listed,
or {b) if the Common Stock is not quoted on the OTCBB or any stock exchange, a
day on which the Common Stock is quoted in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. ("NASD"), or
(c) if the Common Stock is not quoted on the NASD, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the Pinksheets LLC
(or any similar organization or agency succeeding its functions of reporting
prices).
II. DESIGNATION AND AMOUNT
The designation of this series, which consists of. Four Hundred and
Fifty Thousand 450,000 shares of Preferred Stock, is the Series A 0% Convertible
Preferred Stock (the "Series A Preferred Stock") and the Stated Value shall be
U.S. ten dollars ($10.00) per share (the "Stated Value").
III. DIVIDENDS
The holder of the shares of Series A Preferred Stock as they appear on
the stock records of the Company ("Holder" or "Holders") shall not be entitled
to receive any dividends.
23
IV. CONVERSION
(a) The outstanding shares of Series A Preferred Stock shall be
convertible into shares of Common Stock as is determined by dividing the Stated
Value by the Conversion Price as defined below, at the option of the Holder in
whole or in part, at any time commencing on the Issuance Date and through the
expiration of the Conversion Period. Any conversion under this Section IV (a)
shall be for a minimum Stated Value of $10,000.00 of Series A Preferred Stock.
The Holder shall effect conversions by sending the form of conversion notice
attached hereto as Appendix I (the "Notice of Conversion") in the manner set
forth in Section IV (J). Each Notice of Conversion shall specify the Stated
Value of Series A Preferred Stock to be converted. The date on which such
conversion is to be effected (the "Conversion Date") shall be on the date the
Notice of Conversion is delivered pursuant to Section IV (j) hereof. Except as
provided herein, each Notice of Conversion, once given shall be irrevocable. If
the Holder is converting less than all of the Stated Value represented by a
certificate for the Series A Preferred Stock(s) tendered by the Holder in the
notice of Conversion, the Company shall deliver to the Holder a new Series A
Preferred Stock certificate for such Stated Value as has not been converted
within five (5) Business Days of the Company's receipt of the original Series A
Preferred Stock and Notice of Conversion. Upon the entire conversion of the
Series A Preferred Stock or the redemption of the Series A Preferred Stock,
Series A Preferred Stock shall be returned to the Company for cancellation.
(b) On the first business day occurring after the expiration of the
Conversion Period (the "Automatic Conversion Date"), for each share of Series A
Preferred Stock shall be automatically convertible into shares of Common Stock
at the Conversion Price; provided, however, that no shares of Series A Preferred
Stock shall be converted (i) unless the Company shall have duly reserved for
issuance to the Holder a sufficient number of shares of common Stock to issue
upon such conversion or (ii) if an Event of Default shall have occurred
hereunder and is continuing. In connection with such conversion, the Company
shall deliver to the Holder of such shares of Series A Preferred Stock a written
notice (the "Company Conversion Notice"). The Company Conversion Notice shall
specify the number of shares of Series A Preferred Stock that will be subject to
automatic conversion on the Company Conversion Date. The Company shall deliver
or cause to be delivered the Company Conversion Notice at least two (2) Business
Days before the Company Conversion Date. The Holder of the Series A Preferred
Stock shall surrender the certificates representing such shares at the office of
the Company not later than five (5) Business Days after the Company Conversion
Date. Each of a Notice of Conversion and a Company Conversion Notice is
sometimes referred to herein as a Notice of Conversion, and each of a Conversion
Date and a Company Conversion Date is sometimes referred to herein as a
Conversion Date.
(c) Not later than two (2) Business Days after the Conversation Date,
the Company will deliver to the individual (i) a certificate or certificates
representing the number of shares of Common Stock being acquired upon the
conversion of Series A Preferred Stock and (ii) once received from the Company,
Series A Preferred Stock in principal amount equal to the principal amount of
Series A Preferred Stock not converted; provided, however, that the Company
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon conversion of any Series A Preferred Stock until the Series
A Preferred Stock are either delivered for conversion to the Company that such
Series A Preferred Stock have been lost, stolen or destroyed and provides an
24
agreement reasonably acceptable to the Company to indemnify the Company from any
loss incurred by it in connection therewith. In the case of a conversion
pursuant to a Notice of Conversion, if such certificate or certificates are not
delivered by the date required under this Section (V(c)), the Holder shall be
entitled by providing written notice of the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the Series A
Preferred Stock tendered for conversion.
(d) (i) The Conversion Price for each. share of Series A Preferred
Stock in effect on any Conversion date shall be the lesser of (a} the Fixed
Conversion Price or (b) eighty percent (80%) of the lowest Per Share Market
Value for the Common Stock in the ten (10) Trading Days preceding the date of
conversion, but in no event less than 20 percent (30%) of the Fixed Conversion
Price (the "Floating Conversion Price"). For purpose of determining the closing
bid price on any day, reference shall be to the closing bid price for a share of
Common Stock on such date on the NASD OTC Bulletin Board, as reported on
Bloomberg, L.P. (or similar organization or agency succeeding to its functions
or reporting prices).
(ii) If the Company, at any time while any Series A Preferred
Stock are outstanding, (a) shall pay a stock dividend or otherwise make a
distribution or distributions on shares to its Junior Securities payable in
shares of its capital stock (whether payable in shares of its Common Stock or of
capital stock of any class), (b) subdivide outstanding shares of Common Stock
into larger number of shares, (c) combine outstanding shares of Common Stock
into a smaller number of shares, or (d) issue by reclassification of shares of
Common Stock any shares of capital stock of the Company, the Fixed Conversion
Price designed in Section IV(d)(i) shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock of the Company
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made
pursuant to this Section IV (d) (ii) shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(iii) If the Company, at any time while any Series A Preferred
Sock are outstanding, shall issue or sell shares of Common Stock, or options,
warrants or other rights to subscribe for or purchase shares of Common Stock,
(excluding shares of Common Stock issuable upon exercise of options, warrants or
conversion rights granted prior to the date hereof) and at a price per share
less than the Per Share Market Value of Common Stock at the issue date mentioned
below, the Fixed Conversion Price designated in Section IV(d)(i) shall be
multiplied by a fraction, of which the denominator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding on the date of
issuance of such rights or warrants plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the numerator
shall be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such shares, options, warrants or
rights plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at such Per Share market Value. Such
adjustment shall be made whenever such rights or warrant are issued, and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. However, upon the
expiration of any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Conversion Price designated in Section
25
IV(d)(i) pursuant to this Section IV(d)(iii), if any such right or warrant shall
expire and shall not have been exercised, the Fixed Conversion Price designated
in Section IV(d)(i) shall immediately upon such expiration be recomputed and
effective immediately upon such expiration be increased to the price which it
would have been (but reflecting any other adjustments in the Conversion Price
made pursuant to the provisions of this Article IV after the issuance of such
rights or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights or warrants been made on the basis of offering for
subscription or purchase only that number or shares of Common Stock actually
purchased upon the exercise of such rights or warrants actually exercised.
(iv) If the Company, at any time while Series A Preferred
Stock are outstanding, shall distribute to all holders of Common Stock (and not
to Holders of Series A Preferred Stock) evidences of its indebtedness or assets
or rights or warrants to subscribe for or purchase any security (excluding those
referenced in Section IV(d)(iii) above) then in each such case the Conversion
Price at which each Series A Preferred Stock shall thereafter be convertible
shall be determined by multiplying the Fixed Conversion Price in effect
immediately prior to the record date filed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator
shall be the Per Share Market Value of Common Stock determined as of the record
date mentioned above, and of which the numerator shall be such Per Share Market
Value of the Common Stock on such record date less the then fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Board of Directors in good faith; provided, however, that in the event of a
distribution exceeding ten percent (10%) of the net assets of the Company, such
fair market value shall be determined by a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountant or recognized standing (which may be the firm that regularly examines
the financial statement of the Company) (an "Appraiser") selected in good faith
by the Holders of a majority of a principal amount of the Series A Preferred
Stock then outstanding; and provided, further, that the Company, after receipt
of the determination by such Appraiser shall have the right to select an
additional Appraiser, in which case the fair market value shall be equal to the
average of the determination by each such Appraiser. In either case the
adjustments shall be described in a statement provided to the Holder and all
other Holders of Series A Preferred Stock of the portion of assets or evidences
of indebtedness so distributed or such subscription rights applicable to one
share of Common Stock. Such Adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.
(v) All calculations under this Article IV shall be made to
the nearest 1/1000th of a cent or the nearest 1/1000th of a share, as the case
may be. Any calculation over .005 shall be rounded up to the next cent or share
and any calculation less than .005 shall be rounded down to the previous cent or
share.
(vi) In the event the Fixed Conversion Price is not adjusted
pursuant to Section IV(d)(ii), (iii), (iv), or (v), within the (10) Business
Days following the occurrence of an event described therein, the Holder shall
have the right to require the Company to redeem all of the Holder's Series A
Preferred Stock at 130% of the Stated Value of such Holder's Series A Preferred
Stock an the Company shall pay such amount to the holder pursuant to the written
instructions provided by the Holder.
26
(vii) Whenever the Fixed Conversion Price is adjusted pursuant
to Section IV(d) (ii),(iii), (iv) or (v), or redeemed pursuant to Section
IV(d)(vi), the Company shall within two (2) days after the determination of the
new Fixed Conversion Price mail and fax to the Holder and to each other Holder
of Series A Preferred Stock, a notice setting forth the Fixed Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
(viii) In case of any reclassification of the Common Stock,
any consolidation or merger of the Company with or into another person., the
sale or transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then each holder of Series A Preferred Stock
then outstanding shah have the right thereafter to convert such Series A
Preferred Stock only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification, consolidation., merger, sale, transfer or share exchange
(except in the event the property is cash, then the Holder shall have the right
to convert the Series A Preferred Stock and receive cash in the same manner as
other stockholders), and the Holder shall be entitled upon such even to receive
such amount of securities or property as the shares of the Common Stock into
which such Series A Preferred Stock could have been converted immediately prior
to such classification, consolidation, merger, sale, transfer or share exchange
would have been entitled. The terms of any such consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue to give to
the Holder the right to receive the securities or property set forth in this
Section IV(d)(viii) upon any conversion following such consolidation, merger,
sale, transfer of share exchange. This provision shall similarly apply to
successive reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
(ix) If:
(A) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(B) the Company shall declare a special
nonrecurring cash dividend on or a
redemption of its Common Stock; or
(C) the Company shall authorize the granting to
all holders of the Common Stock rights or
warrants to subscribe for or purchase any
shares of capital stock of any class or of
any rights; or
(D) the approval of any stockholders of the
Company shall be required in connection with
any classification of the Common Stock of
the Company (other than a subdivision or
combination of the outstanding shares of
Common Stock), any consolidation or merger
to which the Company is a party, any sale or
transfer of all or substantially all of the
assets of the Company, or any compulsory
share exchange whereby the Common Stock is
converted into other securities, cash or
property; or
27
(E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or
winding-up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Series A Preferred Stock., and shall cause to be
mailed and faxed to the Holders of Series A Preferred Stock at their last
addresses as it shall appear upon the Series A Preferred Stock Register, at
least thirty (30) calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassifications, consolidation merger, sale,
transfer, share exchange, dissolution, liquidation or winding-up; provided,
however, that the failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the corporate action required
to be specified in such notice.
(e) If at any time conditions shall arise by reason of action or
inaction taken by the Company which in he opinion of the Board of Directors are
not adequately covered by the other provisions hereof and which might materially
and adversely affect the rights of the Holders of Series A Preferred Stock
(different than or distinguished from the effect generally on rights of holders
of any class of the Company's capital stock), the Company shall, at least thirty
(30) calendar days prior to the effective date of such action, mail and fax a
written notice to each Holder of Series A Preferred Stock briefly describing the
action contemplated and the material adverse effects of such action on the
rights of such Holders and an Appraiser selected by the Holders of majority of
the outstanding Series A Preferred Stock shall give its opinion as to the
adjustment, if any (not inconsistent with the standard established in this
Article IV), of the Fixed Conversion Price (including, if necessary, any
adjustment as to the securities into which Series A Preferred Stock may
thereafter be convertible) and any distribution which is or would be required to
preserve without diluting the rights of the Holders of Series A Preferred Stock;
provided, however, that the Company, after receipt of the determination by such
Appraiser, shall have the right to select an additional Appraiser, in which case
the adjustment shall be equal to the average of the adjustments recommended by
each such Appraiser. The Board of Directors shall make the adjustment
recommended forthwith upon the receipt of such opinion or opinions or the taking
of any such action contemplated, as the case may be; provided, however, that no
such adjustment of the Fixed Conversion Price shall be made which in the opinion
of the Appraiser(s) giving the a foresaid opinion or opinions would result in an
increase of the Fixed Conversion Price to more than the Fixed Conversion Price
then in effect.
(f) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued Common Stock solely for the purpose
of issuance upon conversion of Series A Preferred Stock as herein provided, free
from preemptive rights or any other actual contingent purchase rights of persons
other than the Holders of Series A Preferred Stock, such number of shares of
Common Stock as shall be issuable (taking into account the adjustment and
restrictions of Section IV(d) and Section IV(e) hereof) upon the conversion of
the aggregate principal amount of all outstanding Series A Preferred Stock. The
28
Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued and fully paid and
nonassessable.
(g) No fractional share of Common Stock shall be issuable upon a
conversion hereunder and the number of shares to be issued shall be rounded up
to the nearest whole share. If a fractional share interest arises upon any
conversion hereunder, the Company shall eliminate such fractional share interest
by issuing Holder an additional full share of Common Stock.
(h) The issuance of certificates for shares of Common Stock on
conversion of Series A Preferred stock shall be made without charge to the
Holder for any documentary stamp or similar taxes that maybe payable in respect
of the issue or delivery of such certificate, provided that the Company shall
not be required top ay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in
a name other than that of the Holder and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
(i) Series A Preferred Stock converted into Common Stock shall be
cancelled upon conversion.
(j) Each Notice of Conversion shall be given by facsimile to the
Company no later than 2:00 pm New York time. Each Company Notice of Conversion
shall be given by facsimile addressed to each Holder of Series A Preferred Stock
at the facsimile telephone number and address of such Holder appearing on the
books of the Company as provided to the Company by such Holder for the purpose
of such Company Notice of Conversion. Any such notice shall be deemed given and
effective upon the transmission of such facsimile at the facsimile telephone
number specified in this Section IV (j) (with printed confirmation of
transmission). In the event that the Company receives the Notice of Conversion
after 4:00 p.m. New York time, the Conversion Date shall be deemed to be the
next Business Day. In the event that the Company receives the Notice of
Conversion after the end of the Business Day, notice will be deemed to have been
given the next Business Day.
V. EVENTS OF DEFAULT AND REMEDIES
(a) "Event of Default", wherever used herein, means any one of the
following events:
(i) the Company shall fail to observe or perform any material
covenant, agreement or warranty contained in this Series A Preferred Stock
Certificate of Designation, and such failure shall not have been remedied within
ten (10) Business Days after the date on which written notice of such failure
shall have been given;
(ii) the occurrence of any event or breach or default by the
Company under the Purchase Agreement or any other Transaction Document (as
defined in the Purchase Agreement) and such failure or breach shall not have
been remedied within the applicable cure period provided for therein, if any;
29
(iii) the Company or any of its subsidiaries shall commence a
voluntary case under the United Sates Bankruptcy Code as now or hereafter in
effect or any successor thereto (the "Bankruptcy Code"); or an involuntary case
is commenced against the Company under the Bankruptcy Code and the Company fails
to pursue dismissal of the case within sixty (60) days after the commencement of
the case; or the Company commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or there is commenced against the
Company any such proceeding and the Company fails to pursue dismissal of the
case within sixty (60) days after commencement of the case; or the Company
suffers any appointment of any custodian or the like for it or any substantial
part of its property and the Company fails to pursue dismissal of the custodian
within sixty (6)) says after the appointment; or the Company makes a general
assignment for the benefit of creditors; or any corporate or other action is
taken by the Company for the purpose of effecting any of the foregoing.
(iv) trading in the common stock of the Company shall have
been suspended, delisted, or otherwise ceased by the Securities and Exchange
Commission or the NASD or other exchange or the Nasdaq (whether the National
Market or otherwise), and trading is not reinstated within twenty (20) Trading
Days, except for (i) any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company, and trading
is reinstated promptly after such dissemination and (ii) any general suspension
of trading for all companies trading on such exchange or market or OTCBB;
(v) the Company shall issue a press release, or otherwise make
publicly known, that it is not honoring properly executed Notice of Conversion
for any reason whatsoever, or
(iv) the Company shall issue or enter into an agreement to
issue any equity or equity equivalent security with a floating conversion price
substantially similar to the Series A Preferred Stock.
(b) If any Event of Default occurs and continues, beyond any cure
period, if any, then so long as such Event of Default shall then be continuing
any Holder may, by notice to the Company demand redemption of the Shares of
Series A Preferred Stock at the Redemption Price (as defined herein), and such
Holder may immediately and without expiration of any grace period enforce any
and al of its rights and remedies hereunder and all other remedies available to
it under applicable law. Such declaration may be rescinded and annulled by such
Holder at any time prior to payment hereunder. No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent
thereon. This shall include, but not be limited to the right to temporary,
preliminary and permanent injunctive relief without the requirement of posting
any bond or undertaking.
(c) Such Holder may thereupon proceed to protect and enforce its rights
either by suit in equity, or by action at law, or by other appropriate
proceedings whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Series A preferred Stock
30
Certificate of Designation or in aid of the exercise of any power granted in
this Series A Preferred Stock Certificate of Designation, and proceed to enforce
the redemption of any of the Series A Preferred Stock held by it, and to enforce
any other legal or equitable right of such Holder.
(d) As a non-exclusive remedy, in the Event of a Default, the Holder
can convert the outstanding shares of Series A Preferred Stock at the lesser of
the Fixed Conversion Price or the Floating Conversion Price upon giving a notice
of conversion to the Company. The Company shall not have the right to object to
the conversion or the calculation of the applicable Conversion Price.
(e) To effectuate the terms and provisions of this Certificate of
Designation of Series A Preferred Stock, the Holder may send notice of any
default to the Attorney-in-Fact (as defined in the Purchase Agreement) and send
a copy of such notice to the Company and its counsel, simultaneously, and
request the Attorney-in-Fact, to comply with the terms of this Certificate of
Designation of Series A Preferred Stock and the Purchase Agreement and all
agreements entered into pursuant to the Purchase Agreement on behalf of the
Company.
VI. REDEMPTION
(a) Except as provided in this section VI (a), neither the Holder nor
the Company may demand that the Series A Preferred Stock be redeemed. Until all
of the Series A Preferred Stock has been converted, in the event that the
Company engages in a single transaction or a series of related transactions that
cause it to (i) consolidate with or merge with or into any other Person, (ii)
permit any other Person to consolidate with or merge into it, or (iii) undergo a
Change in Control, then at the option of the Company exercisable by giving
thirty (30) days written notice to the Holder, the Company may request that the
Holder convert all shares of Series A Preferred Stock then held by the Holder
into Common Stock upon the terms and conditions set forth in this Certificate of
Designation. If the Holder does not comply with such request, the Company may
redeem all Series A Preferred Stock held by the Purchaser at their Stated Value
(the "Redemption Price"). The Company is not obligated to provide for redemption
of the Series A Preferred Stock through a sinking fund.
(b) Shares of Series A Preferred Stock which have been redeemed or
converted shall be deemed retired pursuant to the DGCL and shall thereafter
resume the status of authorized and unissued shares of Preferred Stock,
undesignated as to series, and may be redesignated and reissued as part of any
new series of Preferred Stock other than Series A Preferred Stock.
(c) No redemption shall be made and no sum set aside for such
redemption unless at the time thereof (i) all required mandatory redemption on
Senior Security have been made in full and (ii) all optional redemptions of
Senior Securities, if any, previously declared, have been made in full. No
redemption shall be made and no sum set aside for such redemption at any time
that the terms or provisions of any indenture or agreement of the Company,
including any agreement relating to indebtedness, specifically prohibits such
redemption or setting aside or provides that such redemption or setting aside
would constitute a breach or default thereunder (after notice or lapse of time
or both), except with the written consent of the lender or other parties to said
agreement as the case may be.
31
(d) If any redemption shall at any time be prohibited by the DGCL, the
same shall be deferred until such time as the redemption can occur in full
compliance with such statute.
(e) In the event the Company shall redeem shares of Series A Preferred
Stock notice of such redemption shall be given by first class mail, postage
prepaid, or by confirmed facsimile transmission, not less than thirty (30)
business days prior to the date fixed by the Board for redemption to each holder
of Series A Preferred Stock at the address that appears on the Company's stock
record books; provided, however, that no failure to provide such notice or any
defect therein shall affect the validity of the redemption proceeding except as
to the holder to whom the Company has failed to send such notice or whose notice
was defective. Each notice shall state (i) the redemption date, (ii) the number
of shares of Series A Preferred Stock to be redeemed, (iii) the Redemption
Price; and (iv) the place of places where certificates for shares of aforesaid
then from and after the redemption date (unless default shall be made by the
Company in providing money for the payment of the Redemption Price of the shares
called for redemption) said shares shall no longer be deemed to be outstanding
and all rights of the holders thereof shall cease (other than the right to
receive the Redemption Price or Common Stock with respect to converted Series A
Preferred Stock). Upon surrender of the certificates for Series A Preferred
Stock accompanied by appropriate stock powers, the shares shall be redeemed by
the Company at the Redemption Price. In case fewer than all shares represented
by any such certificates are redeemed, a new certificate representing the shares
of Series A Preferred Stock not so redeemed shall be issued to the holder
without cost.
VII. RANK
The Series A. Preferred Stock shall, as to redemptions and the
distribution of assets upon liquidation, dissolution or winding up of the
Company, rank (i) prior to the Company's Common Stock; (ii) prior to any class
or series of capital stock of the Company hereafter created that, by its terms,
ranks junior to the Series A Preferred Stock ("Junior Securities"); (iii) junior
to any class or series of capital stock of the Company hereafter created (with
the consent of the Holders of a majority of the outstanding Series A Preferred
Stock) which by its terms and ranks senior to the Series A Preferred Stock
("Senior Securities"); and (iv) pari passu with any other series of preferred
stock of the Company hereafter created (with the consent of the Holders of a
majority of the outstanding Series A Preferred Stock) which by its terms ranks
on a parity ("Pari Passu Securities") with the Series A Preferred Stock.
VIII. LIQUIDATION PREFERENCE
If the Company shall commence a voluntary case under the U.S. Federal
bankruptcy laws or any other applicable bankruptcy, insolvency or similar law,
or consent to the entry of an order for relief in an involuntary ease under any
law or to the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Company or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due, or if a decree or order for relief in respect of the Company shall
32
be entered by a court having jurisdiction in the premises in an involuntary case
under the U.S. Federal bankruptcy laws or any other applicable bankruptcy,
insolvency or similar law resulting in the appointment of a receiver,
liquidator, assignee, custodian, trustee sequestrator (or other similar
official) of the Company or of any substantial part of its property, or ordering
the winding up or liquidation of its affairs and any such decree or order shall
be unstayed and in effect for a period of sixty (60) consecutive days and, on
account of any such event, the Company shall liquidate, dissolve or wind up, or
if the Company shall otherwise liquidate, dissolve or wind up, including, but
not limited to, the sale or transfer of all or substantially all of the
Company's assets in one transaction or in a series of related transactions (a
"Liquidation Event"), no distribution shall be made to the holders of any shares
of capital stock of the received the Liquidation Preference (as defined below)
with respect to each share. If, upon the occurrence of a Liquidation Event, the
assets and funds available for distribution among the Holders of the Series A
Preferred Stock and Holders of Pari Passu Securities shall be insufficient to
permit the payment to such holders of the preferential amounts payable thereon,
then the entire assets and funds of the Company legally available for
distribution to the Series A Preferred Stock and the Pari Passu Securities shall
be distributed ratably among such shares in proportion to the ratio that the
Liquidation Preference payable on each share bears to the aggregate Liquidation
Preference payable on all such shares. The purchase or redemption by the Company
of stock of any class, in any manner permitted by law, shall not, for the
purposes hereof, be regarded as a liquidation, dissolution or winding up of the
Company. Neither the consolidation or merger of the Company with or into any
other entity not the sale or transfer by the Company of less than substantially
all of its assets shall, for the purposes hereof, be deemed to be a liquidation,
dissolution or winding up of the Company. The "Liquidation Preference" with
respect to a share of Series A Preferred Stock means an amount equal to the
Stated Value thereof. The Liquidation Preference with respect to any Pari Passu
Securities shall be as set forth in the Certificate of Designation filed in
respect thereof.
IX. VOTING RIGHTS
The Holders of the Series A Preferred Stock have no voting power
whatsoever, except as otherwise provided by the DGCL. To the extent that under
the DGCL the vote of the Holders of the Series A Preferred Stock, voting
separately as a class or series, as applicable, is required to authorize a given
action of the Company, the affirmative vote or consent of the Holders of at
least a majority of the ten outstanding shares of the Series A Preferred Stock
represented at a duly held meeting at which a quorum is present or by written
consent of the Holders of at least a majority of the then outstanding shares of
Series A Preferred Stock (except as otherwise may be required under the DGCL)
shall constitute the approval of such action by the class. To the extent that
under the DGCL Holders of the Series A Preferred Stock are entitled to vote on a
matter with holders of Common Stock, voting together as one class, each share of
Series A Preferred Stock shall be entitled to a number of votes equal to the
number of shares of Common Stock into which it is then convertible (subject to
the limitations contained in Articles IV) using the record date for the taking
of such vote of shareholders as the date as of which the Conversion Price is
calculated.
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X. MISCELLANEOUS
(a) If any shares of Series A Preferred Stock are converted pursuant to
Article IV, the shares so converted shall be canceled, shall return to the
status of authorized, but unissued preferred stock of no designated series, and
shall not be issuable by the Company as Series A Preferred Stock.
(b) Upon receipt by the Company of (i) evidence of the loss, theft,
destruction or mutilation of any Preferred Stock certificate(s) and (ii) (y) in
the case of loss, theft or destruction, of indemnity (without any bond or other
security) reasonably satisfactory to the Company, or (z) in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
certificate(s), the Company shall execute and deliver new Preferred Stock
certificate(s) of like tenor and date. However, the Company shall not be
obligated to reissue such lost or stolen Preferred Stock certificate(s) if the
Holder contemporaneously requests the Company to convert such Series A Preferred
Stock.
(c) Upon submission of a Notice of Conversion by a Holder of Series A
Preferred Stock, (i) the shares covered thereby shall be deemed converted into
shares of Common Stock and (ii) the Holder's rights as a Holder of such
converted shares of Series A preferred Stock shall cease and terminate,
excepting only the right to receive certificates for such shares of Common Stock
and to any remedies provided herein or otherwise available at law or in equity
to such Holder be cause of a failure by the Company to comply with the terms of
this Certificate of Designation. Notwithstanding the foregoing, if a Holder has
not received certificates for all Shares of Common Stock prior to the tenth
(10th) business day after the expiration of the Delivery Period with respect to
a conversion of Series A Preferred Stock for any reason, then (unless the Holder
otherwise elects to retain its status as a holder of Common Stock by so
notifying the Company within five (5) business days after the expiration of such
ten (10) business day period) the Holder otherwise elects to retain its status
as a holder of Common Stock by so notifying the Company within five (5) business
days after the expiration of such ten (10) business day period) the Holder shall
regain the rights of a Holder of Series A Preferred Stock with respect to such
unconverted shares of Series A p[referred Stock and the Company shall, as soon
as practicable, return such unconverted shares to the Holder. In all cases, the
Holder shall retain all of its rights and remedies for the Company's failure to
convert Series A Preferred Stock.
(d) The remedies provided in this Certificate of Designation shall be
cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit a
Holder's right to pursue actual damages for any failure by the Company to comply
with the terms of this Certificate of Designation. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the
Holders of Series A Preferred Stock and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees, in the event of any such
breach or threatened breach, that the Holders of Series A Preferred Stock shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
34
IN WITNESS WHEREOF, the undersigned, being the President and Secretary
of VisiJet Inc., hereby declares under penalty of perjury that the foregoing is
a true and correct copy of the Certificate of Designation of the Rights and
Preferences of the Series A 0% Convertible Preferred Stock of VisiJet, Inc. duly
adopted by the Board of Directors of VisiJet, Inc. on August 24, 2004, and this
Certificate of Designation is executed by the undersigned on behalf of VisiJet,
Inc. this 24th day of August, 2004.
VisiJet, Inc.
By: /S/ XXXXXX X. XXXXXX
-------------------------------
Xxxxxx Xxxxxx, President
By: /S/ XXXXXXXX XXXXXXXXX
-------------------------------
Xxxxxxxx Xxxxxxxxx, Secretary
35
APPENDIX I
NOTICE OF CONVERSION
AT THE ELECTION OF THE HOLDER
(To be Executed by the Registered Holder
in order to Convert the Series A preferred Stock of VisiJet, Inc.
The undersigned hereby irrevocably elects to convert the Series A Preferred
Stock into shares of Common Stock, par value $.001 per share (the "Common
Stock"), of VisiJet, Inc. (the "Company") according to the provisions of the
Certificate of Designation hereof, as of the date written below. If shares are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith.
Conversion calculations: ______________________________________________________
Date of Effective Conversion
______________________________________________________
Number of Shares to be Converted
______________________________________________________
Applicable Conversion Price
______________________________________________________
Number of Shares to be Issued Upon Conversion
______________________________________________________
Signature
______________________________________________________
Name
______________________________________________________
Address
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