SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated
as of April 26, 1999 (the "Closing Date"), is entered into by and
among DynamicWeb Enterprises Inc., a New Jersey corporation, with
headquarters located at 000 Xxxxx 00 Xxxx, Xxxx. X, Xxxxxxxxx,
Xxx Xxxxxx 00000 (the "Company"), and the investors listed on
Schedule 1 attached hereto (individually, a "Buyer" and
collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 of Regulation D
("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "1933 Act");
B. The Buyers wish to purchase, upon the terms and
conditions stated in this Agreement, an aggregate of 235,295
shares of the Company's Common Stock, par value $.0001 per share
(the "Common Shares"), in the respective amounts set forth
opposite each Buyer's name on Schedule 1; and
C. Contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement substantially in the form attached
hereto as Exhibit A (the "Registration Rights Agreement")
pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state
securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON SHARES.
(a) Purchase of Common Shares. In connection with the
offering (the "Offering") by the Company of its common stock to
certain purchasers, including without limitation, the Buyers, and
subject to the satisfaction (or waiver) of the conditions set
forth in Sections 6 and 7 below, the Company shall issue and sell
to each Buyer and each Buyer severally agrees to purchase from
the Company the respective number of shares of Common Shares set
forth opposite such Buyer's name on Schedule 1 (the "Closing").
The purchase price (the "Purchase Price") of the Common Shares at
the Closing shall be $1,000,003.75.
(b) Form of Payment. Upon the completion of the
conditions contained in Sections 6 and 7 of this Agreement, each
Buyer shall pay the Purchase Price to the Company for the Common
Shares to be issued and sold to such Buyer at the Closing, by
wire transfer of immediately available funds in
accordance with the Company's written wire instructions. On the
Closing Date, the Company shall deliver to the Escrow Agent (as
defined in Section 7 of this Agreement),on behalf of each Buyer,
stock certificates (in the denominations as such Buyer shall
request) (the "Common Share Certificates") representing such
number of the Common Shares which such Buyer is then purchasing
(as indicated opposite such Buyer's name on Schedule 1)
hereunder, duly executed on behalf of the Company and registered
in the name of such Buyer or its designee. Upon the completion
of the conditions contained in Sections 6 and 7 of this
Agreement, the Escrow Agent shall deliver the certificates
representing the Common Shares to the Buyers via overnight
courier.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only
itself that:
(a) Investment Purpose. Such Buyer is acquiring the
Common Shares (the Common Shares may also be referred to herein
as the "Securities"), for its own account for investment only and
not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not
agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities
at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
(b) Accredited Investor Status. Such Buyer is an
"accredited investor" as that term is defined in Rule 501(a)(3)
of Regulation D and such Buyer has in excess of $20,000,000 in
assets under its investment management.
(c) Reliance on Exemptions. Such Buyer understands
that the Securities are being offered and sold to it in reliance
on specific exemptions from the registration requirements of
United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire such
Securities.
(d) Information. Such Buyer and its advisors, if any,
have been furnished with all materials relating to the business,
finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by
such Buyer. Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any,
or its representatives shall modify, amend or affect such Buyer's
right to rely on the Company's representations and warranties
contained in Section 3 below. Such Buyer understands that its
investment in the Securities involves a high degree of risk.
Such Buyer has sought such accounting, legal and tax advice as it
has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities. Such Buyer
has been informed that the Company had filed a registration
statement on Form S-2 and had as of April 8, 1999 withdrawn such
registration statement. Neither Buyer nor their respective
advisors have been furnished with a copy of such registration
statement and neither Buyer has reviewed nor relied upon the
registration statement in any way in determining to enter into
this transaction.
(e) No Governmental Review. Such Buyer understands
that no United States federal or state agency or any other
government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness
or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of
the Securities.
(f) Transfer or Resale. Such Buyer understands that
except as provided in the Registration Rights Agreement: (i) the
Common Shares have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to
the effect that such Common Shares to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) such Buyer provides the
Company with reasonable assurance that such Common Shares can be
sold, assigned or transferred pursuant to Rule 144 promulgated
under the 1933 Act, as amended, (or a successor rule thereto)
("Rule 144"); and (ii) any sale of the Common Shares made in
reliance on Rule 144 may be made only in accordance with the
terms of Rule 144 and further, and if Seller intends to utilize
Rule 144 but Rule 144 is not applicable to such resale, any
resale of the Common Shares under circumstances in which the
Seller (or the person through whom the sale is made) may be
deemed to be an underwriter (as that term is defined in the 0000
Xxx) may require compliance with some other exemption under the
1933 Act or the rules and regulations of the SEC thereunder.
Each Buyer shall not deliver a portion or all of the Common
Shares to cover any short position entered into by such Buyer.
(g) Legends. Such Buyer understands that the
certificates or other instruments representing the Commons
Shares, until such time as the sale of the Common Shares has been
registered under the 1933 Act as contemplated by the Registration
Rights Agreement, except as set forth below, shall bear
a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(1) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE
STATE SECURITIES LAWS, OR (2) IN THE ABSENCE OF AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR
(3) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO
RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of the
Securities upon which it is stamped, if, unless otherwise
required by state securities laws, (i) such Securities are
registered for sale under the 1933 Act, (ii) in connection with a
sale transaction, such holder provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect
that a public sale, assignment or transfer of the Securities may
be made without registration under the 1933 Act, or (iii) such
holder provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.
(h) Validity; Enforcement. This Agreement has been
duly and validly authorized, executed and delivered on behalf of
such Buyer and is a valid and binding agreement of such Buyer
enforceable against such Buyer in accordance with its terms,
subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and
remedies.
(i) Residency. Such Buyer is a resident of that
country specified in its address on Schedule 1.
(j) Section 11 Liability. Each Buyer acknowledges
that the Company agrees to accept liability pursuant to and under
Section 11 and Section 12(a) of the 1933 Act.
AC REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
(a) Organization and Qualification. The Company and
its "Subsidiaries" (which for purposes of this Agreement means
any entity in which the Company, directly or indirectly, owns a
controlling position of capital stock or holds a controlling
position of an equity or similar interest) are corporations duly
organized and validly existing in good standing under the laws of
the jurisdiction in which they are incorporated, and have the
requisite corporate power and authorization to own their
properties and to carry on their business as now being conducted.
Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material
Adverse Effect. As used in this Agreement, "Material Adverse
Effect" means any material adverse effect on the business,
properties, assets, operations, results or operations, financial
condition or prospects of the Company and its Subsidiaries, if
any, taken as a whole, or on the transactions contemplated hereby
or by the agreements and instruments to be entered into in
connection herewith, or on the authority or ability of the
Company to perform its obligations under the Transaction
Documents (as defined below).
(b) Authorization; Enforcement; Validity. (i) The
Company has the requisite corporate power and authority to enter
into and perform this Agreement, the Registration Rights
Agreement, the Transfer Agent Instructions (as defined in
Section 5) and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated
by this Agreement (collectively, the "Transaction Documents"),
and to issue the Securities in accordance with the terms hereof
and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without
limitation the issuance of the Common Shares, have been duly
authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) the Transaction Documents
have been duly executed and delivered by the Company, and (iv)
the Transaction Documents constitute the valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies.
(c) Issuance of Securities. The Common Shares are
duly authorized and, upon issuance in accordance with the terms
hereof, shall be (i) validly issued, fully paid and non-
assessable and (ii) free from all taxes, liens and charges with
respect to the issue thereof. The issuance by the Company of the
Common Shares is exempt from registration under the 1933 Act.
(d) No Conflicts. The execution, delivery and
performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the Company's
issuance of the Common Shares) will not (i) result in a violation
of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "Certificate of Incorporation")
or the Company's By-laws, as amended and as in effect on the date
hereof (the "By-laws") or (ii) except with respect to prior
agreements with the Share Fund (which has or will consent to the
transactions contemplated by the Agreement), 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 material agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and
the rules and regulations of the Principal Market (as defined
below)) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Neither the Company nor its
Subsidiaries is in violation of any term of or in default under
its Certificate of Incorporation, or By-laws or their
organizational charter or by-laws, respectively. Neither the
Company or any of its Subsidiaries is in violation or any term of
or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or
any statute, rule or regulation applicable to the Company or its
Subsidiaries, except for possible conflicts, defaults,
terminations, amendments which would not have a Material Adverse
Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any
law, ordinance, regulation of any governmental entity, except for
possible violations the sanctions for which either individually
or in the aggregate would not have a Material Adverse Effect.
Except as specifically contemplated by this Agreement and as
required under the 1933 Act, the Company is not required to
obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated
by the Transaction Documents in accordance with the terms hereof
or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior
to the date hereof. The Company and its Subsidiaries are unaware
of any facts or circumstances which might give rise to
any of the foregoing. The Company is not in violation of the
listing requirements of the Principal Market (as defined below).
(e) SEC Documents; Financial Statements. As of the
Closing, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto
and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As
of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or
on behalf of the Company to the Buyers which is not included in
the SEC Documents, including, without limitation contains any
untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein,
in the light of the circumstance under which they are or were
made, not misleading. Neither the Company nor any of its
Subsidiaries or any of their officers, directors, employees or
agents have provided the Buyers with any material, nonpublic
information.
(f) Absence of Certain Changes. Since the most recent
filing by the Company with the SEC, there has been no material
adverse change and no material adverse development in the
business, properties, operations, financial condition, results of
operations or prospects of the Company or its Subsidiaries. The
Company has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any bankruptcy law
nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings.
(g) Absence of Litigation. Except as set forth in the
SEC Documents, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company, the Company's common stock, the
Common Shares or any of the Company's Subsidiaries or any of the
Company's or the Company's Subsidiaries' officers or directors in
their capacities as such which would have a Material Adverse
Effect or which has been previously disclosed to Buyer in
writing.
(h) [Reserved].
(i) No Undisclosed Events, Liabilities, Developments
or Circumstances. No event, liability, development or
circumstance has occurred or exists, or is contemplated to occur,
with respect to the Company or its Subsidiaries or their
respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by
the Company under applicable securities laws on a registration
statement filed with the SEC relating to an issuance and sale by
the Company of its common stock and which has not been publicly
announced.
(j) No General Solicitation. Neither the Company, nor
any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the
0000 Xxx) in connection with the offer or sale of the Securities.
(k) No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under
circumstances that would require registration of any of the
Securities under the 1933 Act or cause this offering of the
Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable stockholder
approval provisions, including, without limitation, under the
rules and regulations of any exchange or automated quotation
system on which any of the securities of the Company are listed
or designated, nor will the Company or any of its Subsidiaries
take any action or steps that would require registration of any
of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings.
(l) Employee Relations. Neither the Company nor any
of its Subsidiaries is involved in any union labor dispute nor,
to the knowledge of the Company or any of its Subsidiaries, is
any such dispute threatened.
(m) Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use
all trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations,
trade secrets and rights necessary to conduct their respective
businesses as now conducted. None of the Company's trademarks,
trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or are
expected to expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any
knowledge of any infringement by the Company or its Subsidiaries
of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks,
service xxxx registrations, trade secret or other similar rights
of others, or of any such development of similar or identical
trade secrets or technical information by others and the Company
and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company and
its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their
intellectual properties.
(n) Environmental Laws. The Company and its
Subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
(o) Title. The Company and its Subsidiaries have good
and marketable title in fee simple to all real property and good
and marketable title to all personal property owned by them which
is material to the business of the Company and its Subsidiaries,
in each case free and clear of all liens, encumbrances and
defects except such as are described in the SEC Documents or such
as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any
of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its Subsidiaries.
(p) Insurance. The Company and each of its
Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts
as management of the Company believes to be prudent and
customary in the businesses in which the Company and its
Subsidiaries are engaged and the Company does not have any reason
to believe it will not be able to renew its existing insurance
coverage under substantially similar terms for the next two (2)
years.
(q) Regulatory Permits. The Company and its
Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and
neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit.
(r) Tax Status. The Company and each of its
Subsidiaries has made or filed all federal and state income and
all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set
aside on its books provisions reasonably adequate for the payment
of all unpaid and unreported taxes) and has paid all taxes and
other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and
has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
(s) Transactions With Affiliates. Except as set forth
in the SEC Documents filed at least ten days prior to the date
hereof, none of the officers, control parties, control entities,
directors, or employees of the Company is presently a party to
any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to
the knowledge of the Company, any corporation, partnership, trust
or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner.
(t) Eligibility. The Company is currently eligible to
register the resale of the Common Shares on a registration
statement on Form S-2 under the 1933 Act.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best
efforts timely to satisfy each of the conditions to be satisfied
by it as provided in Sections 6 and 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file a
Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof to each Buyer promptly
after such filing. The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify
the Securities for sale to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of
the states of the United States, and shall provide evidence of
any such action so taken to the Buyers on or prior to the Closing
Date. The Company shall make all filings and reports relating
the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States
following the Closing Date.
(c) Reporting Status. Until the earlier of (i) the
date which is one year after the date as of which the Investors
(as that term is defined in the Registration Rights Agreement)
may sell all of the Common Shares without restriction pursuant to
Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which the Investors shall have sold
all the Common Shares (the "Registration Period"), the Company
shall file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status
as an issuer required to file reports under the 1934 Act even if
the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination.
(d) [Reserved].
(e) [Reserved].
(f) Listing. The Company shall promptly secure the
listing of all of the Registrable Securities (as that term is
defined in the Registration Rights Agreement) upon each national
securities exchange, automated quotation system or bulletin board
system, if any, upon which shares of the Company's common stock
are then listed (subject to official notice of issuance) and
shall maintain, so long as any other shares of common stock shall
be so listed, such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's
authorization for quotation on the Nasdaq Bulletin Board System,
Nasdaq Small-Cap Market, The New York Stock Exchange, Inc. or The
American Stock Exchange, Inc., as applicable (the "Principal
Market"). Neither the Company nor any of its Subsidiaries shall
take any action which would be reasonably expected to result in
the delisting or suspension of Company common stock on the
Principal Market. The Company shall promptly, and in
no event later than the following business day, provide to each
Buyer copies of any notices it receives from the Principal Market
regarding the continued eligibility of Company common stock for
listing on such automated quotation system or securities
exchange. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this
Section 4(f).
(g) [Reserved].
(h) [Reserved].
(i) Limitation on Filing Registration Statements.
Except as provided for in the Registration Rights Agreement, the
Company shall not file a registration statement (other than the
Registration Statement (as defined in the Registration Rights
Agreement) or a registration statement on Form S-8) covering the
sale or resale of shares of Company common stock with the SEC
during the period beginning on the date hereof and ending on the
date which is 30 days after the Registration Statement has been
declared effective by the SEC.
(j) Independent Auditors. The Company shall, until at
least three (3) years after the Closing Date, maintain as its
independent auditors an accounting firm authorized to practice
before the SEC.
(k) Corporate Existence and Taxes. The Company shall,
until at least the later of (i) the date that is three (3) years
after the Closing Date or (ii) the sale of all of the Common
Shares purchased pursuant to this Agreement, maintain its
corporate existence in good standing (provided, however, that the
foregoing covenant shall not prevent the Company from entering
into any merger or corporate reorganization as long as the
surviving entity in such transaction, if not the Company, has
common stock listed for trading on the Principal Market and shall
pay all its taxes when due except for taxes which the Company
disputes).
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to the
Transfer Agent, and any subsequent transfer agent, substantially
in the form of Exhibit B hereto (the "Transfer Agent
Instructions"). Prior to registration of the Common Shares under
the 1933 Act, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Transfer Agent
Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof will be given
by the Company to its Transfer Agent and that the Securities
shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement. Nothing in this
Section 5 shall affect in any way each Buyer's obligations and
agreements set forth in Section 2(g) to comply with all
applicable prospectus delivery requirements, if any, upon resale
of the Securities. If a Buyer provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect
that a public sale, assignment or transfer of the Securities may
be made without registration under the 1933 Act or the Buyer
provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company
shall permit the transfer, and, promptly instruct its Transfer
Agent to issue one or more certificates in such name and in such
denominations as specified by such Buyer and without any
restrictive legend. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the
Buyers by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this
Section 5 will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this
Section 5, that the Buyers shall be entitled, in addition to all
other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and
without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell
the Common Shares to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any
time in its sole discretion by providing each Buyer with prior
written notice thereof:
(a) Such Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the
same to the Escrow Agent for the transactions contemplated by
this Agreement.
(b) The representations and warranties of such Buyer
shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a
specific date), and such Buyer shall have performed, satisfied
and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Buyer at or prior
to the Closing Date.
(c) Such Buyer shall have delivered to the Escrow
Agent such other documents relating to the transactions
contemplated by this Agreement as the Escrow Agent or its counsel
may reasonable request.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the
Common Shares at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions,
provided that these conditions are for each Buyer's sole benefit
and may be waived by such Buyer at any time in its sole
discretion by providing the Company with prior written notice
thereof:
(a) The Company shall have executed each of the
Transaction Documents and delivered the same to Xxxxxx Xxxxxx &
Xxxxx, c/o Xxxxxxx X. Xxxxxxx, Esq., located at 000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 (the "Escrow Agent").
(b) The Company's common stock shall be authorized for
quotation on the Principal Market and trading in Company common
stock shall not have been suspended by the SEC or the Principal
Market.
(c) The representations and warranties of the Company
shall be true and correct as of the date when made and as of the
Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied with
the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with
by the Company at or prior to the Closing Date.
(d) The Company shall have delivered to the Escrow
Agent the opinion of the Company's counsel dated as of the
Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer and in substantially the form of
Exhibit C attached hereto.
(e) The Company shall have executed and delivered to
the Escrow Agent the certificates representing Common Shares (in
such denominations as such Buyer shall request) for the Common
Shares being purchased by such Buyer at the Closing.
(f) The Transfer Agent Instructions, in the form of
Exhibit B attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent and a
copy of the executed Transfer Agent Instructions shall have been
delivered to the Escrow Agent.
(g) The Company shall have made all filings, other
than those contemplated by the Registration Rights Agreement,
under all applicable federal and state securities laws necessary
to consummate the issuance of the Securities pursuant
to this Agreement in compliance with such laws.
(h) The Company shall have delivered to the Escrow
Agent such other documents relating to the transactions
contemplated by this Agreement as the Escrow Agent may reasonably
request.
(i) Subject to Section 11(l) below, at Closing, the
Company shall reimburse the Buyers for the Buyers' attorneys'
fees and expenses (in an amount not to exceed $15,000.00)
incurred by the Buyers concerning the due diligence review of the
contemplated transactions and the Company, and the negotiation
and preparation of the Transaction Documents and the consummation
of the transactions contemplated thereby.
8. INDEMNIFICATION.
In consideration of each Buyer's execution and delivery of
the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under
the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each other holder of
the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of
the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with
the transactions contemplated by this Agreement) (collectively,
the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the
action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by any Indemnitee as a
result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty
made by the Company in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or
thereby, (b) any breach of any covenant, agreement or obligation
of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or
thereby, (c) any cause of action, suit or claim brought or made
against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (d) any transaction
financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities
or (e) the status of such Buyer or holder of the Securities as an
investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law.
9. ANTI-DILUTION ADJUSTMENTS.
If the Corporation shall, at any time or from time to time,
(a) declare a dividend on the Company common stock payable in
shares of its capital stock (including Company common stock) or,
(b) subdivide the outstanding Company common stock or, (c)
combine the outstanding Company common stock into a smaller
number of shares, or (d) issue any shares of its capital stock in
a reclassification of the Company common stock (excluding any
such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing corporation),
then in each such case, the number of shares of Company common
stock constituting the Common Shares at the time of the record
date for such dividend or of the effective date of such
subdivision, combination or reclassification and the number and
kind of Common Shares on such date shall be proportionately
adjusted by virtue of such dividend, subdivision, combination or
reclassification. Any such adjustment to the Common Shares shall
become effective immediately after the record date of such
dividend or the effective date of such subdivision, combination
or reclassification. Such adjustment to the Common Shares shall
be made successively whenever any event listed above shall occur.
10. LIQUIDATED DAMAGES.
The Company agrees that Buyers will suffer damages if the
Company violates any provision of or fails to fulfill any of its
obligations or duties pursuant to the Transaction Documents,
other than the Registration Rights Agreement (a "Company
Violation"), and that it would not be possible to ascertain the
extent of such damages. Accordingly, in the event of such
Company Violation, the Company hereby agrees to pay liquidated
damages ("Liquidated Damages") to each Buyer following the
occurrence of such Company Violation in an amount determined by
multiplying (i) $.085 per Common Share then held by such Buyer by
(ii) the percentage derived by dividing (A) the actual number of
days elapsed from the first day of the date of the Company
Violation or the prior 30-day period, as applicable, to the day
such Company Violation has been completely cured by (B) 30, in
cash, or at the Buyer's option, in the number of shares of
Company common stock equal to the quotient of (v) the dollar
amount of the Liquidated Damages on the Payment Date (as defined
below) by (w) the closing bid price of the Company's common stock
as of the date of the Company Violation (as quoted in the
Principal Market or the market or exchange where the Company's
common stock is then traded). The Liquidated Damages payable
pursuant hereto shall be payable within five (5) business days
from the end of the calendar month commencing on the first
calendar month in which the Company Violation occurs (each, a
"Payment Date"). In the event the Buyer elects to receive the
Liquidated Damages amount in shares of Company common stock, such
shares shall also be considered Common Shares and shall
have the registration rights set forth in the Registration Rights
Agreement.
11. GOVERNING LAW; MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. This
Agreement shall be governed by and construed in all respects by
the internal laws of the State of Illinois (except for the proper
application of the United States federal securities laws),
without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other
jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of Illinois. Each party
hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in the City of Chicago.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in
two or more identical counterparts, all of which 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; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were
an original, not a facsimile signature.
(c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision
of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the
Buyers, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein contain the
entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Buyer makes any
representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and
the Buyers, and no provision hereof may be waived other than by
an instrument in writing signed by the party against
whom enforcement is sought.
(f) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms
of this Agreement must be in writing and will be deemed to have
been delivered: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation
of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day
after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
DynamicWeb Enterprises Inc.
000 Xxxxx 00 Xxxx, Xxxx. X
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxx
With a copy to:
Xxxxxxx & Xxx, P.C.
0000 Xxxxxxxx Xxxx
One Glenhardie Xxxxxxxxx Xxxxxx, Xxx. 000
Xxxxx, XX 00000-0000
Telephone: (000)000-0000
Facsimile: (000)000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000)000-0000
Facsimile: (000)000-0000
Attention: Xxxxxxx Xxxxx
If to a Buyer, to it at the address and facsimile number set
forth on Schedule 1 with copies to such Buyer's representatives
as set forth on Schedule 1, or at such other address and/or
facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each
other party five days prior to the effectiveness of such change.
(g) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and assigns, including any purchasers of
the Common Shares. The Company shall not assign this Agreement
or any rights or obligations hereunder without the
prior written consent of the Buyers. A Buyer may assign some or
all of its rights hereunder without the consent of the Company,
provided, however, that any such assignment shall not release
such Buyer from its obligations hereunder unless such obligations
are assumed by such assignee and the Company has consented to
such assignment and assumption.
(h) 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.
(i) Survival. Unless this Agreement is terminated
under Section 11(l), the agreements and covenants set forth in
Sections 4, 5 and 11, the indemnification provisions set forth in
Section 8, the anti-dilution adjustments and provisions set forth
in Section 9 and the liquidated damages provisions set forth in
Section 10 shall survive the Closing. Each Buyer shall be
responsible only for its own representations, warranties,
agreements and covenants hereunder.
(j) [Reserved].
(k) Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
(l) Termination. In the event that the Closing shall
not have occurred with respect to a Buyer on or before three (3)
business days from the date hereof due to the Company's or such
Buyer's failure to satisfy the conditions set forth in Sections 6
and 7 above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of
any party to any other party; provided, however, that if this
Agreement is terminated pursuant to this Section 11(l), the
Company shall remain obligated to reimburse the nonbreaching
Buyers for the expenses described in Section 4(g) above.
(m) [Reserved.]
(n) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict
construction will be applied against any party.
(o) Remedies. Each Buyer and each holder of the
Securities shall have all rights and remedies set forth in the
Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement
or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of
this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
(p) Payment Set Aside. To the extent that the Company
makes a payment or payments to the Buyers hereunder or pursuant
to the Transaction Documents or the Buyers enforce or exercise
their rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any
law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to
the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred.
IN WITNESS WHEREOF, the Buyers and the Company have caused
this Securities Purchase Agreement to be duly executed as of the
date first written above.
COMPANY: BUYERS:
DYNAMICWEB ENTERPRISES INC. CRANSHIRE CAPITAL, L.P.
By: Downsview Capital,
the General Partner
By:_________________________ By:___________________________
Name: Xxxxx Xxxxxxxxxx Name: Xxxxxxxx Xxxxx
Title: Chief Executive Officer Title: President
KEEWAY INVESTMENTS LTD.
By:___________________________
Name:
Title:
PAGE 20
SCHEDULE 1: LIST OF INVESTORS
Investor's Legal
Investor's Investor Address Purchase Number of Representatives
Name and Facsimile Number Price Common Shares Address and Facsimile Number
Cranshire Capital, L.P. 000 Xxxxxxxx Xx., $400,001.50 94,118 Xxxxxx Xxxxxx & Zavis
St. 134 000 X. Xxxxxx Xxxxxx
Attn: Xxxxxxxx Xxxxx Xxxxxxx, XX 00000-0000
(p) 847/784-1544 Attn: Xxxxxxx X. Xxxxxxx, Esq.
(f) 847/784-1546 (p) 312/902-5521
(f) 312/577-8763
Keeway Investments, Ltd. 19 Mount Havelock $600,002.25 141,177
Xxxxxxx, Xxxx xx Xxx
Xxxxxx Xxxxxxx
0X0 0XX
(p) 011-44-171-323-2131
(f) 011-44-171-323-0773
Attn: Xxxxxx Xxxxxx
EXHIBITS
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Transfer Agent Instructions
Exhibit C Form of Company Counsel Opinion
