EXHIBIT 10.2
FORM OF
SHARE CLAIM PURCHASE AND REGISTRATION RIGHTS AGREEMENT
EVCI Career Colleges Incorporated
00 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This will confirm the agreement of the undersigned ("Purchaser") to
purchase the portion (the "Share Claim Portion") of the "Share Claim," as that
term is defined in the Settlement Agreement between Amaranth Trading L.L.C.
("Amaranth") and EVCI Career Colleges Incorporated ("EVCI") dated October 3,
2003 (the "Settlement Agreement"). The Share Claim Portion entitles Purchaser to
receive the number of newly issued shares of common stock of EVCI that are
indicated on the Signature Page to this Agreement (the "Signature Page").
Purchaser acknowledges that it is a "Designee," as that term is defined in the
Settlement Agreement. EVCI represents and warrants that it has delivered a true
and complete copy of the Settlement Agreement to Purchaser, receipt of which
Purchaser hereby acknowledges..
Section 1. PURCHASE OF THE SHARE CLAIM PORTION
1.1 PURCHASE. Purchaser agrees to purchase the Shares Claim Portion at
the Closing, referred to below. The full purchase price (the "Purchase Price")
for the Share Claim Portion (and , accordingly, the Shares) is indicated on the
Signature Page. The Purchase Price has been or is, contemporaneously herewith,
being wire transferred to the non-interest bearing XXXX account of Xxxxxxxxx
Xxxxxxx Xxxxxx Xxxxxxx ("FBWH") at Commerce Bank, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 in accordance with wire instructions previously
provided to Purchaser. Purchaser is also delivering to FBWH a completed and
signed copy of the Signature Page and a copy of the signature page (the "TI
Acknowledgement Page") of the Transfer Instrument (Exhibit A to the Settlement
Agreement) signed by Purchaser where indicated below "AGREED AND ACKNOWLEDGED."
1.2 ESCROW. The Purchase Price, Signature Page and TI Acknowledgement
Page (collectively, the "Closing Items") will be held in escrow by FBWH until
the Closing under the Settlement Agreement (the "Closing"), presently scheduled
for October 9, 2003, or until the Settlement Agreement becomes null and void AB
INITIO by its terms, whichever happens first. If the Closing does not occur, the
Closing Items will be returned to Purchaser promptly (without interest on or
deduction from the Purchase Price), in accordance with instructions provided by
Purchaser, whereupon this Agreement shall become null and void AB INITIO.
Purchaser acknowledges that EVCI, in its sole discretion, will
determine the portion, if any, of the Share Claim (and, therefore, the Shares)
Purchaser can acquire, provided such amount does not exceed the number of Shares
and Purchase Price specified on the Signature Page. Purchaser also acknowledges
that the Purchase Price includes an amount for the payment of flotation costs of
EVCI in connection with its negotiation, preparation and Closing of the
Settlement Agreement and this Agreement.
1.3 CERTIFICATE. Upon Purchaser's purchase of the Share Claim Portion,
EVCI will deliver a certificate registered in Purchaser's name representing the
Shares. Upon such delivery the Share Claim Portion shall be deemed fully
satisfied and extinguished.
Section 2. PURCHASER'S REPRESENTATIONS AND WARRANTIES AND ACKNOWLEDGMENT
AND AGREEMENT
2.1 REPRESENTATIONS AND WARRANTIES. In order to induce Amaranth to
sell and deliver the Share Claim Portion to Purchaser at the Closing and to
induce EVCI to instruct its transfer agent to issue the Shares for delivery at
or promptly after the Closing, Purchaser represents and warrants to EVCI (all of
which representations and warranties shall be true and correct on the date of
the Closing and, those representations and warranties, in Sections 2.1(b), (c),
and (d), shall also inure to the benefit of Amaranth) that:
(a) Purchaser has full power and authority to enter into this
Agreement and to carry out the purchase of the Share Claim Portion. The
execution, delivery and consummation of this Agreement have been duly and
validly authorized by all necessary action on the part of Purchaser. This
Agreement is a valid and binding agreement of Purchaser enforceable in
accordance with its terms except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights; and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(b) Purchaser is an "accredited investor" as that term is defined
in Regulation D under the Securities Act of 1933, as amended (the "Securities
Act"), and that Purchaser is able to fend for itself, can bear the economic risk
of its investment, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of an
investment in the Share Claim and any securities of EVCI that it receives in
connection with the settlement thereof.
(c) Any securities to be issued by EVCI in satisfaction of the
Share Claim are being acquired by Purchaser solely for its own account and not
for the resale, assignment, distribution, subdivision or fractionalization
thereof, except as permitted by applicable securities laws.
(d) Purchaser has received from EVCI all information that it
considers necessary or appropriate for deciding whether to purchase the Share
Claim and any securities issued by EVCI in satisfaction of the Share Claim and,
that, other than as expressly set forth in Section 2 of the Settlement
Agreement, it has not relied on Amaranth or any of its affiliates or any of
their respective directors, officers, employees, members or partners for any
information whatsoever.
(e) Purchaser is relying upon its own counsel, accountant and/or
business advisor(s) concerning legal, tax, business and related aspects of its
purchase of the Share Claim Portion and the issuance of the Shares in
satisfaction hereof.
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(f) Purchaser understands that Purchaser's purchase of the Share
Claim Portion and EVCI's issuance of the Shares in satisfaction thereof have not
been registered under the Securities Act, or any state securities laws in
reliance on exemptions from such registration, that, unless the Shares are
resold pursuant to the Registration Statement referred to in Section 3.1, the
Shares cannot be resold or otherwise disposed of unless an exemption from
registration is available and, further, that the Certificate(s) for the Shares
will bear a restrictive legend to such effect. Purchaser also understands that
it will have no rights to require that the Shares be registered under the
Securities Act or any state securities laws, except as provided in Section 3.
(g) The issuance of the Shares to Purchaser will not result in
Purchaser and its "affiliates," as defined in Rule 144 of the Securities
Exchange Act of 1934, being deemed the owner of more than 9.99% of outstanding
shares of common stock of EVCI, assuming that there are at least 10,400,000
shares of Common Stock outstanding immediately after giving effect to such
issuance. Purchaser agrees that Purchaser and its affiliates will not alone or
as a part of a "group," as that term is used in Regulation 13D-G under the
Securities Exchange Act of 1934, at any time after the issuance of the Shares
own more than 9.99% of EVCI's outstanding common stock unless otherwise
authorized by EVCI's board of directors and agreed to in writing by EVCI.
2.2 ACKNOWLEDGMENT AND AGREEMENT. Purchaser acknowledges and agrees
that it is acquiring the Share Claim Portion subject to the limitations in
clause (e)(iv) of Section 3 of the Settlement Agreement.
Section 3. REGISTRATION RIGHTS
3.1 CONTINUING REGISTRATION. EVCI represents, warrants and covenants:
(a) The resale of the Shares has been registered pursuant to a
currently effective Form S-3, Registration No. 333-48934 (the "Registration
Statement").
(b) Promptly after Purchaser purchases the Shares, EVCI shall
prepare and file with the Securities and Exchange Commission ("SEC") a
supplement to the final prospectus dated January 18, 2001, included in the
Registration Statement (the "Prospectus") in order to include Purchaser as a
selling stockholder in the Prospectus, subject to Purchaser's compliance with
Section 3(k).
(c) EVCI shall use its best efforts to cause the Registration
Statement to remain effective until the earlier of the date (i) as of which
Purchaser may sell all of the Shares without restriction pursuant to Rule 144(k)
and (ii) when Purchaser shall have sold all of the Shares.
(d) EVCI shall prepare and file with the SEC such amendments and
supplements to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement continuously effective, pursuant to Rule 415,
for the period specified in Section 3(c) and comply with the provisions of the
Securities Act with respect to the disposition of all the Shares covered by the
Registration Statement in accordance with Purchaser's intended method of
disposition set forth in the Registration Statement for such period; PROVIDED,
HOWEVER, notwithstanding the foregoing provisions of this Section 3(d), EVCI may
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suspend the use of the Registration Statement for a period not to exceed 60 days
(whether or not consecutive) in any 12-month period if EVCI's Board of Directors
determines in good faith (after consulting with EVCI's counsel and, if
appropriate, its independent auditors) that because of valid and material
business developments (which, under applicable securities laws, would be
required to be disclosed in an amendment to the Prospectus), including pending
mergers or other business combination transactions, the planned acquisition or
divestiture of assets, pending material corporate developments and similar
events, it is advisable to suspend such use and, prior to or contemporaneously
with suspending such use, EVCI provides Purchaser with written notice of such
suspension, which notice need not specify the nature of the event giving rise to
such suspension. At the end of any such suspension period, EVCI shall provide
Purchaser with written notice of the termination of such suspension.
(e) EVCI shall permit Purchaser to review and comment upon the
Registration Statement and, at least three days prior to their filing with the
SEC, upon all future amendments and supplements thereto. After Purchaser reviews
the Registration Statement in the form declared effective on January 18, 2001,
Purchaser may request that EVCI file an amendment or supplement thereto for
reasons specified in writing by Purchaser and reasonably acceptable to EVCI and
its counsel.
(f) EVCI shall furnish to Purchaser such number of copies of the
Registration Statement and the Prospectus as Purchaser reasonably may request in
order to facilitate the public sale or other disposition of the Shares pursuant
to the Prospectus.
(g) EVCI shall use its best efforts to register or qualify the
Shares covered by the Registration Statement under the securities or "blue sky"
laws of such jurisdictions as Purchaser reasonably shall request; PROVIDED,
HOWEVER, EVCI shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction.
(h) While a Prospectus relating to the Shares is required to be
delivered under the Securities Act, EVCI shall promptly notify Purchaser of the
happening of any event of which EVCI has knowledge and as a result of which the
Prospectus, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing.
(i) Purchaser agrees that, upon receipt of any notice from EVCI
of the happening of any event of the kind specified in Section 3(h), Purchaser
will immediately discontinue disposition of the Shares pursuant to the
Prospectus until Purchaser's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(h), and, if so directed by EVCI,
Purchaser will deliver to EVCI all copies, other than permanent file copies then
in Purchaser's possession, of the most recent Prospectus at the time of receipt
of such notice.
(j) EVCI shall make available for inspection by Purchaser, and
any attorney, accountant or other agent retained by Purchaser, all financial and
other records, pertinent corporate documents and properties of EVCI, and cause
EVCI's officers, directors and employees to supply all information reasonably
requested by Purchaser or such attorney, accountant or agent in connection with
the Registration Statement, provided appropriate confidentiality agreements are
first received by EVCI.
(k) Purchaser shall furnish to EVCI in writing such information
with respect to it and the proposed distribution by it, as reasonably shall be
necessary and reasonably requested by EVCI's counsel in writing, in order to
assure compliance with applicable federal and state securities laws.
3.2 EXPENSES. All expenses incurred by EVCI in complying with Section
3.1 including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for EVCI, fees and expenses (including counsel fees) incurred in connection with
complying with state securities or "blue sky" laws, Nasdaq listing fees, fees of
transfer agents and registrars, and costs of issuing the Shares, but excluding
any Selling Expenses and fees and disbursements of any counsel, or any
accountant or agent of Purchaser, are called "Registration Expenses." All
underwriting discounts and selling commissions applicable to the sale of the
Shares are called "Selling Expenses."
EVCI will pay all Registration Expenses and the Purchaser will pay all
Selling Expenses.
3.3 INDEMNIFICATION.
(a) In connection with the registration and sale of the Shares
pursuant to the Registration Statement, to the fullest extent permitted by law,
EVCI will indemnify and hold harmless Purchaser together with Purchaser's
officers, directors, members, partners, employees and agents, and each other
person, if any, who controls Purchaser within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
Purchaser and Purchaser's officers, directors, members, partners, employees and
agents, or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or the Prospectus or any amendment or supplement thereof, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by EVCI of the Securities Act, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Shares pursuant to the Registration Statement (but not
Purchaser's failure to comply with the prospectus delivery requirements or other
rules and regulations under the Securities Exchange Act of 1934 relating to
Purchaser's conduct in offering and selling the Shares). EVCI will promptly
reimburse Purchaser and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigation or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that EVCI will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by Purchaser or any such controlling
person in writing specifically for use in the Registration Statement or the
Prospectus. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the indemnified party.
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(b) In connection with the registration and sale of the Shares
pursuant to the Registration Statement, Purchaser will indemnify and hold
harmless EVCI, each person, if any, who controls EVCI within the meaning of the
Securities Act, each officer of EVCI who signs the Registration Statement, and
each director of EVCI, against all losses, claims, damages or liabilities, joint
or several, to which EVCI or such officer, director, or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus contained
therein, or any amendment or supplement thereof, or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will promptly
reimburse EVCI and each such officer, director, and controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that Purchaser will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
pertaining to Purchaser and furnished in writing to EVCI by Purchaser
specifically for use in the Registration Statement or the Prospectus; and
PROVIDED, FURTHER, HOWEVER, that the liability of Purchaser hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the public offering price of the Shares
sold by Purchaser under the Registration Statement bears to the total public
offering price of all securities sold thereunder, but not in any event to exceed
the net proceeds received by Purchaser from the sale of the Shares covered by
the Registration Statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party under this Section 3.3 except and to the extent the
indemnifying party is prejudiced by such omission. In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such indemnified party,
and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 3.3 for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; PROVIDED, HOWEVER, that if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
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(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i)
Purchaser or any controlling person of Purchaser makes a claim for
indemnification pursuant to this Section 3.3 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction as
to which time to appeal or the denial of the last right of appeal has expired)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 3.3 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of Purchaser
or any such controlling person in circumstances for which indemnification is
provided under this Section 3.3, then, and in each such case, EVCI and Purchaser
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so that
Purchaser is responsible for the portion represented by the percentage that the
public offering price of the Shares offered by the Registration Statement bears
to the public offering price of all securities offered by the Registration
Statement, and EVCI is responsible for the remaining portion; PROVIDED, HOWEVER,
that, in any such case, (A) Purchaser shall not be required to contribute any
amount in excess of the public offering price of all the Shares offered by it
pursuant to the Registration Statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
3.4 ENFORCEMENT. EVCI acknowledges that there is no adequate remedy at
law for failure by it to comply with the provisions of this Section 3 and that
such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Section 3 may be specifically
enforced. In the event that EVCI fails to comply with its obligations and
agreements in this Section 3, then, in addition to any other rights or remedies
Purchaser may have at law or in equity, EVCI shall indemnify and hold harmless
Purchaser from and against any and all manner of loss which it may incur as a
result of such a failure. In addition, EVCI shall also reimburse Purchaser for
any and all reasonable legal fees and expenses incurred by it in enforcing its
rights pursuant to this Section 3, regardless of whether any litigation was
commenced.
Section 4. MARKET STANDOFF. In connection with an underwritten public
offering by EVCI of at least $5 million in total offering price, if any,
Purchaser hereby agrees to be subject to a lockup for up to 180 days following
the effective date of EVCI's registration statement filed with the SEC in
connection with the offering as required by the underwriter(s) thereof. During
such period, Purchaser agrees not to sell, transfer or hypothecate any
securities of EVCI without the prior written consent of the underwriter(s). This
provisions is self-operating but Purchaser agrees to execute and furnish
directly to, and for the express benefit of, the underwriter(s) any confirmation
requested by the underwriter(s).
Section 5. REVOCATION. Purchaser agrees that it cannot cancel, terminate or
revoke all or any portion of this Agreement and that, if Purchaser is an
individual, this Agreement shall survive Purchaser's death or disability, except
as provided by any applicable laws.
Section 6. MISCELLANEOUS.
6.1 NOTICES. All notices or other communications given or made
hereunder shall be in writing and shall be delivered by hand, against written
receipt (which shall include delivery by Federal Express or similar service), or
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sent by telecopier, receipt confirmed, or mailed by registered or certified
mail, return receipt requested, postage prepaid, to Purchaser at its address set
forth below and to EVCI at its address set forth above, with a copy to Xxxxxxxxx
Xxxxxxx Xxxxxx Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxxxx, Esq. Notices shall be deemed given on the date of receipt or,
if mailed, three business days after mailing, except notices of change of
address, which shall be deemed given when received.
6.2 GOVERNING LAW. Notwithstanding the place where this Agreement may
be executed by Purchaser or EVCI, all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of New York
without regard to principles of conflict of laws.
6.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and may be amended
only by a writing executed by the party to be charged.
6.4 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of each of the parties and their respective heirs, legal
representatives, successors and assigns.
6.5 JURISDICTION. The parties each hereby submit to the non-exclusive
jurisdiction of the courts located in the County of Westchester with respect to
any action or legal proceeding commenced by either of us with respect to this
Agreement. Each of EVCI and Purchaser irrevocably waives any objection it now
has or hereafter may have respecting the venue of any such action or proceeding
brought in such a court or respecting the fact that such court is an
inconvenient forum and consents to the service of process in any such action or
proceeding by means of registered or certified mail, return receipt requested,
in care of the address set forth above or below or at such other address as
either of us shall furnish in writing to the other.
6.6 SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
6.7 WAIVER. No waiver by either of EVCI or Purchaser shall be valid
unless in a writing executed by the party to be changed. The waiver by either
party of a breach of any provision of this Agreement shall not operate, or be
construed, as a waiver of any subsequent breach of any provision of this
Agreement.
6.8 FURTHER ASSURANCES. The parties agree to execute and deliver all
further documents, agreements and instruments and to take such other further
action as may be necessary or appropriate to carry out the purposes and intent
of this Agreement.
6.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS.]
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SIGNATURE PAGE TO SHARE CLAIM PURCHASE AND
REGISTRATION RIGHTS AGREEMENT
Purchaser has signed this Share Claim Purchase and Registration Rights
Agreement as of the date indicated below.
Dated:
-------------------------- PURCHASER:
No. of Shares: IF AN ENTITY: Name of Entity:
------------------
Purchase Price: $
--------------- By:
-------------------------------------
Name:
Title:
Address:
Taxpayer Identification Number:
---------
IF AN INDIVIDUAL *:
Signature:
------------------------------
Name:
-----------------------------------
(print)
Address:
Social Security Number:
-----------------
ACCEPTED:
EVCI CAREER COLLEGES INCORPORATED
By:
------------------------------
Name:
Title:
No. of Shares:
-------------------
Acceptance Date:
-----------------
----------------------------
* If joint tenants or tenants in common, each must complete and sign
this Signature Page.
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