Exhibit 10.1
EXECUTION COPY
COMMON STOCK PURCHASE AGREEMENT
COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as
of February 25, 2004, by and between COMPETITIVE TECHNOLOGIES,
INC., a Delaware corporation (the "Company"), and FUSION CAPITAL
FUND II, LLC, an Illinois limited liability company (the "Buyer").
Capitalized terms used herein and not otherwise defined herein are
defined in Section 10 hereof.
WHEREAS:
Subject to the terms and conditions set forth in this
Agreement, the Company wishes to sell to the Buyer, and the Buyer
wishes to buy from the Company, up to Five Million Dollars
($5,000,000) of the Company's common stock, par value $0.01 per
share (the "Common Stock"). The shares of Common Stock to be
purchased hereunder are referred to herein as the "Purchase
Shares." In addition, as set forth in Section 1 (h) hereof, the
Company may, in its sole discretion, at any time after the date
hereof and until 20 days after such date as the Available Amount
is equal to $0, deliver an irrevocable written notice to the Buyer
stating that the Company elects to enter into a second Common
Stock Purchase Agreement with the Buyer for the purchase of an
additional Five Million Dollars ($5,000,000) of Common Stock.
NOW THEREFORE, the Company and the Buyer hereby agree as
follows:
1. PURCHASE OF COMMON STOCK.
Subject to the terms and conditions set forth herein, the
Company hereby agrees to sell to the Buyer, and the Buyer hereby
agrees to purchase from the Company, shares of Common Stock as
follows:
(a) Commencement of Purchases of Common Stock. The purchase
and sale of Common Stock hereunder shall commence (the
"Commencement") within five (5) Trading Days following the date of
satisfaction (or waiver) of the conditions to the Commencement set
forth in Sections 6 and 7 below (or such later date as is mutually
agreed to by the Company and Buyer) (the date of such
Commencement, the "Commencement Date").
(b) Buyer's Purchase Rights and Obligations. Subject to the
Company's right to suspend purchases under Section 1(d)(ii)
hereof, the Buyer shall purchase shares of Common Stock on each
Trading Day during each Monthly Period equal to the Daily Purchase
Amount (as defined in Section 1(c)(i)) at the Purchase Price.
Within one (1) Trading Day of receipt of Purchase Shares, the
Buyer shall pay to the Company an amount equal to the Purchase
Amount with respect to such Purchase Shares as full payment for
the purchase of the Purchase Shares so received. The Company
shall not issue any fraction of a share of Common Stock upon any
purchase. All shares of Common Stock (including fractions
thereof) issuable upon a purchase under this Agreement shall be
aggregated for purposes of determining whether the purchase would
result in the issuance of a fraction of a share of Common Stock.
If, after the aforementioned aggregation, the issuance would
result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock
up or down to the nearest whole share. All payments made under
this Agreement shall be made in lawful money of the United States
of America by wire transfer of immediately available funds to such
account as the Company may from time to time designate by written
notice in accordance with the provisions of this Agreement.
Whenever any amount expressed to be due by the terms of this
Agreement is due on any day that is not a Trading Day, the same
shall instead be due on the next succeeding day which is a Trading
Day.
(c) The Daily Purchase Amount; Company's Right to Decrease
or Increase the Daily Purchase Amount.
(i) The Daily Purchase Amount. As used herein the
term "Original Daily Purchase Amount" shall mean Twelve
Thousand Five Hundred Dollars ($12,500) per Trading Day. As
used herein, the term "Daily Purchase Amount" shall mean
initially Twelve Thousand Five Hundred Dollars ($12,500) per
Trading Day, which amount may be increased or decreased from
time to time pursuant to this Section 1(c).
(ii) Company's Right to Decrease the Daily Purchase
Amount. The Company shall always have the right at any time
to decrease the amount of the Daily Purchase Amount by
delivering written notice (a "Daily Purchase Amount Decrease
Notice") to the Buyer which notice shall specify the new
Daily Purchase Amount. The decrease in the Daily Purchase
Amount shall become effective one Trading Day after receipt
by the Buyer of the Daily Purchase Amount Decrease Notice.
Any purchases by the Buyer which have a Purchase Date on or
prior to the first (1st) Trading Day after receipt by the
Buyer of a Daily Purchase Amount Decrease Notice must be
honored by the Company as otherwise provided herein. The
decrease in the Daily Purchase Amount shall remain in effect
until the Company delivers to the Buyer a Daily Purchase
Amount Increase Notice (as defined below).
(iii) Company's Right to Increase the Daily Purchase
Amount. The Company shall have the right (but not the
obligation) to increase the amount of the Daily Purchase
Amount in accordance with the terms and conditions set forth
in this Section 1(c)(iii) by delivering written notice to the
Buyer stating the new amount of the Daily Purchase Amount (a
"Daily Purchase Amount Increase Notice"). A Daily Purchase
Amount Increase Notice shall be effective five (5) Trading
Days after receipt by the Buyer. The Company shall always
have the right at any time to increase the amount of the
Daily Purchase Amount up to the Original Daily Purchase
Amount. With respect to increases in the Daily Purchase
Amount above the Original Daily Purchase Amount, as the
market price for the Common Stock increases the Company shall
have the right from time to time to increase the Daily
Purchase Amount as follows. For every $0.25 increase in
Threshold Price above $4.50 (subject to equitable adjustment
for any reorganization, recapitalization, non-cash dividend,
stock split or other similar transaction), the Company shall
have the right to increase the Daily Purchase Amount by up to
an additional $2,500 in excess of the Original Daily Purchase
Amount. "Threshold Price" for purposes hereof means the
lowest Sale Price of the Common Stock during the five (5)
consecutive Trading Days immediately prior to the submission
to the Buyer of a Daily Purchase Amount Increase Notice
(subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other
similar transaction). For example, if the Threshold Price is
$5.00, the Company shall have the right to increase the Daily
Purchase Amount to up to $17,500 in the aggregate. If the
Threshold Price is $5.50, the Company shall have the right to
increase the Daily Purchase Amount to up to $22,500 in the
aggregate. Any increase in the amount of the Daily Purchase
Amount shall continue in effect until the delivery to the
Buyer of a Daily Purchase Amount Decrease Notice. However,
if at any time during any Trading Day the Sale Price of the
Common Stock is below the applicable Threshold Price, such
increase in the Daily Purchase Amount shall be void and the
Buyer's obligations to buy Purchase Shares hereunder in
excess of the applicable maximum Daily Purchase Amount shall
be terminated. Thereafter, the Company shall again have the
right to increase the amount of the Daily Purchase Amount as
set forth herein by delivery of a new Daily Purchase Amount
Increase Notice only if the Sale Price of the Common Stock is
above the applicable Threshold Price on each of five (5)
consecutive Trading Days immediately prior to such new Daily
Purchase Amount Increase Notice.
(d) Limitations on Purchases.
(i) Limitation on Beneficial Ownership. The
Company shall not effect any sale under this Agreement and
the Buyer shall not have the right to purchase shares of
Common Stock under this Agreement to the extent that after
giving effect to such purchase the Buyer together with its
affiliates would beneficially own in excess of 9.9% of the
outstanding shares of the Common Stock following such
purchase. For purposes hereof, the number of shares of
Common Stock beneficially owned by the Buyer and its
affiliates or acquired by the Buyer and its affiliates, as
the case may be, shall include the number of shares of Common
Stock issuable in connection with a purchase under this
Agreement with respect to which the determination is being
made, but shall exclude the number of shares of Common Stock
which would be issuable upon (1) a purchase of the remaining
Available Amount which has not been submitted for purchase,
and (2) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company
(including, without limitation, any warrants) subject to a
limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Buyer
and its affiliates. If the 9.9% limitation is ever reached
this shall not affect or limit the Buyer's obligation to
purchase the Daily Purchase Amount as otherwise provided in
this Agreement. Specifically, even though the Buyer may not
receive additional shares of Common Stock in the event that
the 9.9% limitation is ever reached, the Buyer is still
obligated to pay to the Company the Daily Purchase Amount on
each Trading Day as otherwise obligated under this Agreement,
e.g. no Event of Default (as defined in Section 9 hereof) has
occurred, nor any event which, after notice and/or lapse of
time, would become an Event of Default. Under such
circumstances, the Buyer would have the right to acquire
additional shares of Common Stock in the future only at such
time as its ownership subsequently becomes less than the 9.9%
limitation. For purposes of this Section, in determining the
number of outstanding shares of Common Stock the Buyer may
rely on the number of outstanding shares of Common Stock as
reflected in (1) the Company's most recent Form 10-Q or Form
10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other written
communication by the Company or its Transfer Agent setting
forth the number of shares of Common Stock outstanding. Upon
the reasonable written or oral request of the Buyer, the
Company shall promptly confirm orally and in writing to the
Buyer the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to any purchases
under this Agreement by the Buyer since the date as of which
such number of outstanding shares of Common Stock was
reported. Except as otherwise set forth herein, for purposes
of this Section 1(d)(i), beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended.
(ii) Company's Right to Suspend Purchases. The
Company may, at any time, give written notice (a "Purchase
Suspension Notice") to the Buyer suspending purchases of
Purchase Shares by the Buyer under this Agreement. The
Purchase Suspension Notice shall be effective only for
purchases that have a Purchase Date later than one (1)
Trading Day after receipt of the Purchase Suspension Notice
by the Buyer. Any purchase by the Buyer that has a Purchase
Date on or prior to the first (1st) Trading Day after receipt
by the Buyer of a Purchase Suspension Notice from the Company
must be honored by the Company as otherwise provided herein.
Such purchase suspension shall continue in effect until a
revocation in writing by the Company, at its sole discretion.
So long as a Purchase Suspension Notice is in effect, the
Buyer shall not be obligated to purchase any Purchase Shares
from the Company under Section 1 of this Agreement.
(iii) Purchase Price Floor. The Company shall not
effect any sales under this Agreement and the Buyer shall not
have the right or the obligation to purchase any Purchase
Shares under this Agreement on any Trading Day on which the
Purchase Price for any purchases of Purchase Shares would be
less than the Floor Price.
(e) Records of Purchases. The Buyer and the Company shall
each maintain records showing the remaining Available Amount at
any given time and the dates and Purchase Amounts for each
purchase or shall use such other recordkeeping method, reasonably
satisfactory to the Buyer and the Company.
(f) Taxes. The Company shall pay any and all transfer,
stamp or similar taxes that may be payable with respect to the
issuance and delivery of any shares of Common Stock to the Buyer
made under this Agreement.
(g) Compliance with Principal Market Rules. The Company
shall not effect any sale under this Agreement and the Buyer shall
not have the right to purchase shares of Common Stock under this
Agreement to the extent that after giving effect to such purchase
the "Exchange Cap" shall be deemed to be reached. The "Exchange
Cap" shall be deemed to have been reached if, at any time prior to
the shareholders of the Company approving the transaction
contemplated by this Agreement, upon a purchase under this
Agreement, the Purchase Shares issuable pursuant to such purchase
would, together with all Purchase Shares previously issued under
this Agreement, exceed 1,248,115 shares of Common Stock (19.99% of
the 6,243,697 outstanding shares of Common Stock as of the date of
this Agreement). The Company may, but shall be under no
obligation to, request its shareholders to approve the transaction
contemplated by this Agreement. The Company shall not be required
or permitted to issue any shares of Common Stock under this
Agreement if such issuance would breach the Company's obligations
under the rules or regulations of the Principal Market.
(h) Option for Second Tranche; Second Common Stock Purchase
Agreement. The Company may, in its sole discretion, at any time
after the date hereof and until 20 days following the first date
on which the Available Amount is equal to $0 (the "Second Tranche
Expiration Date"), deliver an irrevocable written notice (the
"Second Tranche Notice") to the Buyer stating that the Company
elects to enter into an additional Common Stock Purchase Agreement
(the "Second Common Stock Purchase Agreement") with the Buyer for
the purchase of Five Million Dollars ($5,000,000) of additional
Common Stock. It is agreed and acknowledged by the parties hereto
that entering into the Second Common Stock Purchase Agreement
shall be at the option of the Company in its sole discretion until
such time as the Company shall have delivered the Second Tranche
Notice to the Buyer. The Buyer shall not be obligated to enter
into the Second Common Stock Purchase Agreement unless the Company
has delivered the Second Tranche Notice prior to the Second
Tranche Expiration Date. The Second Common Stock Purchase
Agreement may not be entered into until the aggregate Available
Amount under this Agreement is fully used to buy Purchase Shares
hereunder. Upon delivery of the Second Tranche Notice to the
Buyer prior to the Second Tranche Expiration Date, the Buyer and
the Company shall be obligated to enter into the Second Common
Stock Purchase Agreement no later than the date that is 10 Trading
Days after the Second Tranche Expiration Date. If the Buyer and
the Company have not entered into the Second Common Stock Purchase
Agreement by the date that is 10 Trading Days after the Second
Tranche Expiration Date, the Buyer shall not be obligated to enter
into such additional Common Stock Purchase Agreement. The terms
and conditions of the Second Common Stock Purchase Agreement shall
be in form and substance identical in all respects to this
Agreement, provided, however, that for purposes of the Second
Common Stock Purchase Agreement, this Section 1(h) shall be
omitted.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants to the Company that as of
the date hereof and as of the Commencement Date:
(a) Investment Purpose. The Buyer is entering into this
Agreement and acquiring the Commitment Shares, (as defined in
Section 4(f) hereof) (this Agreement and the Commitment Shares are
collectively 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; provided however, by making the representations herein,
the Buyer does not agree to hold any of the Securities for any
minimum or other specific term.
(b) Accredited Investor Status. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation
D promulgated under the 1933 Act.
(c) Reliance on Exemptions. The 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 the Buyer's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein
in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Securities.
(d) Information. The Buyer has 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 that have been reasonably requested by the Buyer,
including, without limitation, the SEC Documents (as defined in
Section 3(f) hereof). The Buyer understands that its investment
in the Securities involves a high degree of risk. The Buyer (i)
is able to bear the economic risk of an investment in the
Securities including a total loss, (ii) has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment in the
Securities and (iii) has had an opportunity to ask questions of
and receive answers from the officers of the Company concerning
the financial condition and business of the Company and others
matters related to an investment in the Securities. Neither such
inquiries nor any other due diligence investigations conducted by
the Buyer or its representatives shall modify, amend or affect the
Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. The 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.
(e) No Governmental Review. The 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. The Buyer understands that except
as provided in the Registration Rights Agreement (as defined in
Section 4(a) hereof): (i) the Securities 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 or (B) an exemption
exists permitting such Securities to be sold, assigned or
transferred without such registration; (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances
in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is 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;
and (iii) neither the Company nor any other person is under any
obligation to register the Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions
of any exemption thereunder.
(g) Validity; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Buyer
and is a valid and binding agreement of the Buyer enforceable
against the 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.
(h) Residency. The Buyer is a resident of the State of
Illinois.
(i) No Prior Short Selling. The Buyer represents and
warrants to the Company that at no time prior to the date of this
Agreement has any of the Buyer, its agents, representatives,
associates or affiliates engaged in or effected, in any manner
whatsoever, directly or indirectly, any (i) "short sale" (as such
term is defined in Rule 3b-3 of the 0000 Xxx) of the Common Stock
or (ii) hedging transaction, which establishes a net short
position with respect to the Common Stock.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that as of
the date hereof and as of the Commencement Date:
(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 50% or
more of the voting stock or capital stock or other similar equity
interests) 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 authority
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 could not reasonably be
expected to have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means any material adverse
effect on any of: (i) the business, properties, assets,
operations, results of operations or financial condition of the
Company and its Subsidiaries, if any, taken as a whole, or (ii)
the authority or ability of the Company to perform its obligations
under the Transaction Documents (as defined in Section 3(b)
hereof). The Company has no Subsidiaries except as set forth on
Schedule 3(a).
(b) Authorization; Enforcement; Validity. (i) The Company
has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Registration
Rights Agreement and each of the other agreements entered into by
the parties on the Commencement Date and attached hereto as
exhibits to 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 Commitment Shares and the
reservation for issuance and the issuance of the Purchase Shares
issuable under this Agreement, 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 shareholders, (iii) this Agreement has been, and each other
Transaction Document shall be on the Commencement Date, duly
executed and delivered by the Company and (iv) this Agreement
constitutes, and each other Transaction Document upon its
execution on behalf of the Company, shall 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. No other
approvals or consents of the Company's Board of Directors and/or
shareholders is necessary under applicable laws and the Company's
Certificate of Incorporation and/or Bylaws to authorize the
execution and delivery of this Agreement or any of the
transactions contemplated hereby, including, but not limited to,
the issuance of the Commitment Shares and the issuance of the
Purchase Shares.
(c) Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 20,000,000 shares of
Common Stock, of which as of the date hereof, 6,243,697 shares are
issued and outstanding, no shares are held as treasury shares,
1,845,692 shares are reserved for issuance pursuant to the
Company's stock option plans of which only approximately 503,379
shares remain available for future grants and no shares are
issuable and reserved for issuance pursuant to securities (other
than stock options issued pursuant to the Company's stock option
plans) exercisable or exchangeable for, or convertible into,
shares of Common Stock and (ii) 35,920 shares of Preferred Stock,
$25.00 par value with a $25.00 per share liquidation preference,
of which as of the date hereof 2,427 shares are issued and
outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), as of the
date of this Agreement (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights
or any liens or encumbrances suffered or permitted by the Company,
(ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock
of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock
of the Company or any of its Subsidiaries, (iv) there are no
agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except the Registration Rights
Agreement), (v) there are no outstanding securities or instruments
of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries, (vi) there are
no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the
Securities as described in this Agreement and (vii) the Company
does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement. The Company
has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation, as amended and as in
effect on the date hereof (the "Certificate of Incorporation"),
and the Company's By-laws, as amended and as in effect on the date
hereof (the "By-laws"), and summaries of the terms of all
securities convertible into or exercisable for Common Stock, if
any, and copies of any documents containing the material rights of
the holders thereof in respect thereto.
(d) Issuance of Securities. The Commitment Shares have been
duly authorized and, upon issuance in accordance with the terms
hereof, the Commitment Shares 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. Upon issuance and
payment therefor in accordance with the terms and conditions of
this Agreement, the Purchase Shares shall be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof, with the holders being entitled
to all rights accorded to a holder of Common Stock.
(e) No Conflicts. Except as disclosed in Schedule 3(e), 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 reservation for issuance and issuance of the
Purchase Shares) will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred
stock of the Company or the By-laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the 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 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,
except in the case of conflicts, defaults and violations under
clause (ii), which could not reasonably be expected to result in a
Material Adverse Effect. Except as disclosed in Schedule 3(e),
neither the Company nor any of its Subsidiaries is in violation of
any term of or is in default under any material 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
conflicts, defaults, terminations or amendments which could not
reasonably be expected to 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 or regulation of any governmental entity, except for
violations, the sanctions for which either individually or in the
aggregate could not reasonably be expected to have a Material
Adverse Effect. Except as specifically contemplated by this
Agreement and as required under the 1933 Act or applicable state
securities laws, 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. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding sentence
shall be obtained or effected on or prior to the Commencement
Date. Except as listed in Schedule 3(e), during the period from
January 1, 2003 to the date of this Agreement, the Company has not
received or delivered any notices or correspondence from or to the
Principal Market and the Principal Market has not commenced any
delisting proceedings against the Company.
(f) SEC Documents; Financial Statements. Except as disclosed
in Schedule 3(f), since January 1, 2003, the Company has timely
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 after January
1, 2003 and 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
(except as they have been correctly amended), 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 (except as
they may have been properly amended), 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 (except
as they have been properly amended), 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 presented 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). Except as listed in Schedule 3(f),
the Company has received no notices or correspondence from the SEC
since January 1, 2003 and the SEC has not commenced any
enforcement proceedings against the Company or any of its
Subsidiaries.
(g) Absence of Certain Changes. Except as disclosed in
Schedule 3(g), since October 31, 2003, there has been no material
adverse change in the business, properties, operations, financial
condition or results of operations 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 or insolvency proceedings. The
Company is financially solvent and is generally able to pay its
debts as they become due.
(h) Absence of Litigation. 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 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 could reasonably be expected to have a Material
Adverse Effect. A description of each action, suit, proceeding,
inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body which, as
of the date of this Agreement, is pending or threatened in writing
against or affecting the Company 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,
is set forth in Schedule 3(h).
(i) Acknowledgment Regarding Buyer's Status. The Company
acknowledges and agrees that the Buyer is acting solely in the
capacity of arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby.
The Company further acknowledges that the Buyer is not acting as a
financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and any advice given
by the Buyer or any of its representatives or agents in connection
with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Buyer's purchase of
the Securities. The Company further represents to the Buyer that
the Company's decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and
its representatives and advisors.
(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) Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all
material 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. Except as set forth on Schedule
3(k), none of the Company's registrations in respect of material
trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights,
or licenses has expired or terminated, or, by the terms and
conditions thereof, could 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 any material 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, except as set forth on Schedule 3(k), as of the date
hereof there is no claim, action or proceeding being made or
brought against, or to the Company's knowledge, being threatened
against, the Company or its Subsidiaries regarding trademark,
trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service xxxx registrations, trade
secret or other infringement, which could reasonably be expected
to have a Material Adverse Effect.
(l) 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, except where,
in each of the three foregoing clauses, the failure to so comply
or receive such permits, licenses or other approvals could not
reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
(m) Title. The Company and its Subsidiaries own no real
property and have good and marketable title to all personal
property owned by them which is material to the business of the
Company and its Subsidiaries, free and clear of all liens,
encumbrances and defects except such as are described in Schedule
3(m) 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.
(n) 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. Neither the
Company nor any such Subsidiary has been refused any insurance
coverage sought or applied for and neither the Company nor any
such Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not
materially and adversely affect the condition, financial or
otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.
(o) Regulatory Permits. The Company and its Subsidiaries
possess all material certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and,
as of the date of this Agreement 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.
(p) Tax Status. The Company and each of its Subsidiaries
has filed (after taking into account any extensions to file) all
federal and state income and all other material 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.
(q) Transactions With Affiliates. Except as set forth on
Schedule 3(q) and other than the grant or exercise of stock
options disclosed on Schedule 3(c), none of the officers,
directors, or employees of the Company is as of the date of this
Agreement 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 an interest or is an
officer, director, trustee or partner.
(r) Application of Takeover Protections. The Company and
its board of directors have taken or will take prior to the
Commencement Date all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of
Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the
transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of the Securities and the
Buyer's ownership of the Securities.
(s) Foreign Corrupt Practices. Neither the Company, nor any
of its Subsidiaries, nor any director, officer, agent, employee or
other person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf
of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
4. COVENANTS.
(a) Filing of Registration Statement. The Company shall
within fifteen (15) Trading Days from the date hereof file a new
registration statement covering the sale of the Commitment Shares
and at least 1,159,552 Purchase Shares in accordance with the
terms of the Registration Rights Agreement between the Company and
the Buyer, dated as of the date hereof ("Registration Rights
Agreement."). Buyer shall furnish all information reasonably
requested by the Company for inclusion therein.
(b) Blue Sky. The Company shall take such action, if any, as
reasonably necessary in order to obtain an exemption for or to
qualify (i) the initial sale of the Commitment Shares and any
Purchase Shares to the Buyer under this Agreement and (ii) any
subsequent resale of the Commitment Shares and any Purchase Shares
by the Buyer, in each case, under applicable securities or "Blue
Sky" laws of the states of the United States in such states as is
reasonably requested by the Buyer from time to time, and shall
provide evidence of any such action so taken to the Buyer.
(c) No Variable Priced Financing. Other than pursuant to
this Agreement, the Company agrees that beginning on the date of
this Agreement and ending on the date of termination of this
Agreement (as provided in Section 11(k) hereof), neither the
Company nor any of its Subsidiaries shall, without the prior
written consent of the Buyer, contract for any equity financing
(including any debt financing with an equity component) or issue
any equity securities of the Company or any Subsidiary or
securities convertible or exchangeable into or for equity
securities of the Company or any Subsidiary (including debt
securities with an equity component) which, in any case (i) are
convertible into or exchangeable for an indeterminate number of
shares of common stock, (ii) are convertible into or exchangeable
for Common Stock at a price which varies with the market price of
the Common Stock, (iii) directly or indirectly provide for any "re-
set" or adjustment of the purchase price, conversion rate or
exercise price after the issuance of the security, or (iv) contain
any "make-whole" provision based upon, directly or indirectly, the
market price of the Common Stock after the issuance of the
security, in each case, other than reasonable and customary anti-
dilution adjustments for issuance of shares of Common Stock at a
price which is below the market price of the Common Stock.
(d) Listing. The Company shall promptly secure the listing
of all of the Purchase Shares and Commitment Shares upon each
national securities exchange and automated quotation system, if
any, upon which shares of 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 such 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 Principal Market.
Neither the Company nor any of its Subsidiaries shall take any
action that would be reasonably expected to result in the
delisting or suspension of the Common Stock on the Principal
Market. The Company shall promptly, and in no event later than
the following Trading Day after receipt thereof, provide to the
Buyer copies of any notices it receives from the Principal Market
regarding the continued eligibility of the 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.
(e) Limitation on Short Sales and Hedging Transactions. The
Buyer agrees that beginning on the date of this Agreement and
ending on the date of termination of this Agreement as provided in
Section 11(k), the Buyer and its agents, representatives and
affiliates shall not in any manner whatsoever enter into or
effect, directly or indirectly, any (i) "short sale" (as such term
is defined in Rule 3b-3 of the 0000 Xxx) of the Common Stock or
(ii) hedging transaction, which establishes a net short position
with respect to the Common Stock.
(f) Issuance of Commitment Shares; Limitation on Sales of
Commitment Shares. Immediately upon the execution of this
Agreement, the Company shall issue to the Buyer 53,138 shares of
Common Stock (the "Initial Commitment Shares"). In connection
with each purchase of Purchase Shares hereunder, the Company
agrees to issue to the Buyer a number of shares of Common Stock
(the "Additional Commitment Shares" and together with the Initial
Commitment Shares, the "Commitment Shares") equal to the product
of (x) 35,425 and (y) the Purchase Amount Fraction. The "Purchase
Amount Fraction" shall mean a fraction, the numerator of which is
the Purchase Amount purchased by the Buyer with respect to such
purchase of Purchase Shares and the denominator of which is Five
Million Dollars ($5,000,000). The Additional Commitment Shares
shall be equitably adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction. The Initial Commitment Shares shall be issued in
certificated form and (subject to Section 5 hereof) shall bear the
following restrictive legend:
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 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF BUYER'S COUNSEL, IN A
CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.
The Buyer agrees that the Buyer shall not transfer or sell
the Commitment Shares until the earlier of 400 Trading Days (20
Monthly Periods) from the date hereof or the date on which this
Agreement has been terminated, provided, however, that such
restrictions shall not apply: (i) in connection with any transfers
to or among affiliates (as defined in the 1934 Act), (ii) in
connection with any pledge in connection with a bona fide loan or
margin account, or, (iii) if an Event of Default has occurred, or
any event which, after notice and/or lapse of time, would become
an Event of Default, including any failure by the Company to
timely issue Purchase Shares under this Agreement.
Notwithstanding the foregoing, the Buyer may transfer Commitment
Shares to a third party in order to settle a sale made by the
Buyer where the Buyer reasonably expects the Company to deliver
Purchase Shares to the Buyer under this Agreement so long as the
Buyer maintains ownership of the same overall number of shares of
Common Stock by "replacing" the Commitment Shares so transferred
with Purchase Shares when the Purchase Shares are actually issued
by the Company to the Buyer.
(g) Due Diligence. The Buyer shall have the right, from
time to time as the Buyer may reasonably deem appropriate, to
perform reasonable due diligence on the Company during normal
business hours. The Company and its officers and employees shall
provide information and reasonably cooperate with the Buyer in
connection with any reasonable request by the Buyer related to the
Buyer's due diligence of the Company, including, but not limited
to, any such request made by the Buyer in connection with (i) the
filing of the registration statement described in Section 4(a)
hereof and (ii) the Commencement. Each party hereto agrees not to
disclose any Confidential Information of the other party to any
third party and shall not use the Confidential Information for any
purpose other than in connection with, or in furtherance of, the
transactions contemplated hereby. Each party hereto acknowledges
that the Confidential Information shall remain the property of the
disclosing party and agrees that it shall take all reasonable
measures to protect the secrecy of any Confidential Information
disclosed by the other party.
5. TRANSFER AGENT INSTRUCTIONS.
Immediately upon the execution of this Agreement, the Company
shall deliver to the Transfer Agent a letter in the form as set
forth as Exhibit E attached hereto with respect to the issuance of
the Initial Commitment Shares. On the Commencement Date, the
Company shall cause any restrictive legend on the Initial
Commitment Shares to be removed and all of the Purchase Shares and
Additional Commitment Shares, to be issued under this Agreement
shall be issued without any restrictive legend. The Company shall
issue irrevocable instructions to the Transfer Agent, and any
subsequent transfer agent, to issue Purchase Shares in the name of
the Buyer for the Purchase Shares in accordance therewith (the
"Irrevocable Transfer Agent Instructions"). The Company warrants
to the Buyer that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5, will be
given by the Company to the Transfer Agent with respect to the
Purchase Shares and that the Commitment Shares and the Purchase
Shares 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 subject to the
provisions of Section 4(f) in the case of the Commitment Shares.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO COMMENCE
SALES OF SHARES OF COMMON STOCK.
The obligation of the Company hereunder to commence sales of
the Purchase Shares is subject to the satisfaction of each of the
following conditions on or before the Commencement Date (the date
that sales may begin) and once such conditions have been initially
satisfied, there shall not be any ongoing obligation to satisfy
such conditions after the Commencement has occurred; 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 the Buyer with prior written notice thereof:
(a) The Buyer shall have executed each of the Transaction
Documents and delivered the same to the Company.
(b) Subject to the Company's compliance with Section 4(a), a
registration statement covering the sale of all of the Commitment
Shares, and at least 1,159,552 Purchase Shares shall have been
declared effective under the 1933 Act by the SEC and no stop order
with respect to the Registration Statement shall be pending or
threatened by the SEC.
(c) The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made
and as of the Commencement Date as though made at that time
(except for representations and warranties that speak as of a
specific date), and the 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 the Buyer at or prior to the
Commencement Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO COMMENCE
PURCHASES OF SHARES OF COMMON STOCK.
The obligation of the Buyer to commence purchases of Purchase
Shares under this Agreement is subject to the satisfaction of each
of the following conditions on or before the Commencement Date
(the date that sales may begin) and once such conditions have been
initially satisfied, there shall not be any ongoing obligation to
satisfy such conditions after the Commencement has occurred;
provided that these conditions are for the Buyer's sole benefit
and may be waived by the 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 the Buyer. The Board of
Directors of the Company shall have approved the resolutions (the
"Signing Resolutions") substantially in the form as set forth as
Exhibit C-1 attached hereto to authorize this Agreement and the
transactions contemplated hereby. The Signing Resolutions shall
be valid, in full forth and effect and have not been modified or
supplemented in any respect other than by the resolutions set
forth in Exhibit C-2 attached hereto regarding the registration
statement referred to in Section 4 hereof. The Company shall
deliver to the Buyer a true and correct copy of a unanimous
written consent adopting the Signing Resolutions executed by all
of the members of the Board of Directors of the Company.
(b) The Company shall have issued to the Buyer the Initial
Commitment Shares and shall have removed or caused to be removed
the restrictive transfer legend from the certificate representing
the Initial Commitment Shares.
(c) The Common Stock shall be authorized for quotation on
the Principal Market, trading in the Common Stock shall not have
been within the last 365 days suspended by the SEC or the
Principal Market and the Purchase Shares and the Commitment Shares
shall be approved for listing upon the Principal Market.
(d) The Buyer shall have received the opinions of the
Company's legal counsel dated as of the Commencement Date in a
form reasonably acceptable to Buyer.
(e) The representations and warranties of the Company shall
be true and correct in all material respects (except to the extent
that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case,
such representations and warranties shall be true and correct
without further qualification) as of the date when made and as of
the Commencement 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 Commencement Date. The Buyer
shall have received a certificate, executed by the CEO, President
or CFO of the Company, dated as of the Commencement Date, to the
foregoing effect in the form attached hereto as Exhibit B.
(f) The Board of Directors of the Company shall have adopted
resolutions in the form attached hereto as Exhibit C which shall
be in full force and effect without any amendment or supplement
thereto as of the Commencement Date.
(g) As of the Commencement Date, the Company shall have
reserved out of its authorized and unissued Common Stock, (A)
solely for the purpose of effecting purchases of Purchase Shares
hereunder, at least 1,159,552 shares of Common Stock and (B) as
Additional Commitment Shares in accordance with Section 4(f)
hereof, 35,425 shares of Common Stock.
(h) The Irrevocable Transfer Agent Instructions, in form
acceptable to the Buyer shall have been delivered to and
acknowledged in writing by the Company and the Company's Transfer
Agent.
(i) The Company shall have delivered to the Buyer a
certificate evidencing the incorporation and good standing of the
Company in the State of Delaware issued by the Secretary of State
of the State of Delaware as of a date within ten (10) Trading Days
of the Commencement Date.
(j) The Company shall have delivered to the Buyer a
certified copy of the Certificate of Incorporation as certified by
the Secretary of State of the State of Delaware within ten (10)
Trading Days of the Commencement Date.
(k) The Company shall have delivered to the Buyer a
secretary's certificate executed by the Secretary of the Company,
dated as of the Commencement Date, in the form attached hereto as
Exhibit D.
(l) A registration statement covering the sale of all of the
Commitment Shares and at least 1,159,552 Purchase Shares shall
have been declared effective under the 1933 Act by the SEC and no
stop order with respect to the registration statement shall be
pending or threatened by the SEC. The Company shall have prepared
and delivered to the Buyer a final form of prospectus to be used
by the Buyer in connection with any sales of any Commitment Shares
or any Purchase Shares. The Company shall have made all filings
under all applicable federal and state securities laws necessary
to consummate the issuance of the Commitment Shares and the
Purchase Shares pursuant to this Agreement in compliance with such
laws.
(m) No Event of Default shall have occurred, or any event
which, after notice and/or lapse of time, would become an Event of
Default shall have occurred.
(n) On or prior to the Commencement Date, the Company shall
have taken all necessary action, if any, and such actions as
reasonably requested by the Buyer, in order to render inapplicable
any control share acquisition, business combination, shareholder
rights plan or poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under
the Certificate of Incorporation or the laws of the state of its
incorporation which is or could become applicable to the Buyer as
a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities.
(o) The Company shall have provided the Buyer with the
information requested by the Buyer in connection with its due
diligence requests made prior to, or in connection with, the
Commencement, in accordance with the terms of Section 4(g) hereof.
8. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities hereunder and
in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless the Buyer and all of its affiliates,
shareholders, 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, or (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, other than with respect to
Indemnified Liabilities which directly and primarily result from
the gross negligence or willful misconduct of the Indemnitee. 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.
Promptly after receipt by an Indemnitee of notice of the
commencement of any action or proceeding (including any
governmental action or proceeding) for which indemnification may
be sought hereunder, such Indemnitee shall deliver to the company
a written notice of the commencement thereof, and the Company
shall have the right to participate in, and, to the extent the
Company so desires, to assume control of the defense thereof with
counsel mutually satisfactory to the Company and the Indemnitee,
as the case may be; provided, however, that an Indemnitee shall
have the right to retain its own counsel with the reasonable fees
and expenses to be paid by the Company, if, in the reasonable
opinion of counsel retained by the Indemnitee, the representation
by such counsel of the Indemnitee and the Company would be
inappropriate due to actual or potential differing interests
between such Indemnitee and any other party represented by such
counsel in such proceeding. The Indemnitee shall cooperate in all
reasonable respects with the Company in connection with any
negotiation or defense of such action or claim by the Company and
shall furnish to the Company all information reasonably available
to the Indemnitee which relates to such action or claim. The
Company shall keep the Indemnitee fully apprised at all times as
to the status of the defense or any settlement negotiations with
respect thereto. The Company shall not be liable for any
settlement of any action, claim or proceeding effected without its
written consent, provided, however, that the Company shall not
unreasonably withhold, delay or condition its consent. Following
indemnification as provided for hereunder, the Company shall be
subrogated to all rights of the Indemnitee with respect to all
third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver
written notice to the Company within a reasonable time of the
commencement of any such action shall not relieve the Company of
any liability to the Indemnitee under this Section 8, except to
the extent that the Company is prejudiced in its ability to defend
such action.
9. EVENTS OF DEFAULT.
An "Event of Default" shall be deemed to have occurred at any
time as any of the following events occurs:
(a) while any registration statement is required to be
maintained effective pursuant to the terms of the Registration
Rights Agreement, the effectiveness of such registration statement
lapses for any reason (including, without limitation, the issuance
of a stop order) or is unavailable to the Buyer for sale of all of
the Registrable Securities (as defined in the Registration Rights
Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period
of ten (10) consecutive Trading Days or for more than an aggregate
of thirty (30) Trading Days in any 365-day period;
(b) the suspension from trading or failure of the Common
Stock to be listed on the Principal Market for a period of three
(3) consecutive Trading Days;
(c) the delisting of the Company's Common Stock from the
Principal Market, provided, however, that the Common Stock is not
immediately thereafter trading on the New York Stock Exchange, the
Nasdaq National Market, the Nasdaq SmallCap Market, or the Nasdaq
OTC Bulletin Board;
(d) the failure for any reason by the Transfer Agent to
issue Purchase Shares to the Buyer within five (5) Trading Days
after the applicable Purchase Date which the Buyer is entitled to
receive;
(e) if at any time after the Commencement Date, the
"Exchange Cap" is reached (the "Exchange Cap" shall be deemed to
be reached at such time if, upon submission of a Purchase Notice
under this Agreement, the issuance of such shares of Common Stock
would exceed that number of shares of Common Stock which the
Company may issue under this Agreement without breaching the
Company's obligations under the rules or regulations of the
Principal Market);
(f) the Company breaches any representation, warranty,
covenant or other term or condition under any Transaction Document
if such breach could have a Material Adverse Effect and in the
case of a breach of a covenant which is reasonably curable, only
if such breach continues for a period of at least ten (10) Trading
Days;
(g) any payment default under any contract whatsoever or any
acceleration prior to maturity of any mortgage, indenture,
contract or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money
borrowed by the Company or for money borrowed the repayment of
which is guaranteed by the Company, whether such indebtedness or
guarantee now exists or shall be created hereafter, which, with
respect to any such payment default or acceleration prior to
maturity, involves an amount in excess of $1,000,000;
(h) if any Person commences a proceeding against the Company
pursuant to or within the meaning of any Bankruptcy Law;
(i) if the Company pursuant to or within the meaning of any
Bankruptcy Law; (A) commences a voluntary case, (B) consents to
the entry of an order for relief against it in an involuntary
case, (C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, (D) makes a general
assignment for the benefit of its creditors, (E) becomes
insolvent, or (F) is generally unable to pay its debts as the same
become due; or
(j) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (A) is for relief against the
Company in an involuntary case, (B) appoints a Custodian of the
Company or for all or substantially all of its property, or (C)
orders the liquidation of the Company or any Subsidiary.
In addition to any other rights and remedies under applicable law
and this Agreement, including the Buyer termination rights under
Section 11(k) hereof, so long as an Event of Default has occurred
and is continuing, or if any event which, after notice and/or
lapse of time, would become an Event of Default, has occurred and
is continuing, or so long as the Purchase Price is below the
Purchase Price Floor, the Buyer shall not be obligated to purchase
any shares of Common Stock under this Agreement. If pursuant to
or within the meaning of any Bankruptcy Law, the Company commences
a voluntary case or any Person commences a proceeding against the
Company, a Custodian is appointed for the Company or for all or
substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would
be an Event of Default as described in Section 9(h), 9(i) or 9(j)
hereof) this Agreement shall automatically terminate without any
liability or payment to the Company without further action or
notice by any Person. No such termination of this Agreement under
Section 11(k)(i) shall affect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases
and the Company and the Buyer shall complete their respective
obligations with respect to any pending purchases under this
Agreement.
10. CERTAIN DEFINED TERMS.
For purposes of this Agreement, the following terms shall
have the following meanings:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "Available Amount" means initially Five Million Dollars
($5,000,000) in the aggregate which amount shall be reduced by the
Purchase Amount each time the Buyer purchases shares of Common
Stock pursuant to Section 1 hereof.
(c) "Bankruptcy Law" means Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
(d) "Closing Sale Price" means, for any security as of any
date, the last closing trade price for such security on the
Principal Market as reported by Bloomberg, or, if the Principal
Market is not the principal securities exchange or trading market
for such security, the last closing trade price of such security
on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg.
(e) "Confidential Information" means any information
disclosed by either party to the other party, either directly or
indirectly, in writing, orally or by inspection of tangible
objects (including, without limitation, documents, prototypes,
samples, plant and equipment), which is designated as
"Confidential," "Proprietary" or some similar designation.
Information communicated orally shall be considered Confidential
Information if such information is confirmed in writing as being
Confidential Information within ten (10) business days after the
initial disclosure. Confidential Information may also include
information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any
information which (i) was publicly known and made generally
available in the public domain prior to the time of disclosure by
the disclosing party; (ii) becomes publicly known and made
generally available after disclosure by the disclosing party to
the receiving party through no action or inaction of the receiving
party; (iii) is already in the possession of the receiving party
at the time of disclosure by the disclosing party as shown by the
receiving party's files and records immediately prior to the time
of disclosure; (iv) is obtained by the receiving party from a
third party without a breach of such third party's obligations of
confidentiality; (v) is independently developed by the receiving
party without use of or reference to the disclosing party's
Confidential Information, as shown by documents and other
competent evidence in the receiving party's possession; or (vi) is
required by law to be disclosed by the receiving party, provided
that the receiving party gives the disclosing party prompt written
notice of such requirement prior to such disclosure and assistance
in obtaining an order protecting the information from public
disclosure.
(f) "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
(g) "Floor Price" means initially $3.00, which amount may be
increased or decreased from time to time as provided below, except
that in no case shall the Floor Price be less than $1.00. The
Company may at any time give written notice (a "Floor Price Change
Notice") to the Buyer increasing or decreasing the Floor Price.
The Floor Price Change Notice shall be effective only for
purchases that have a Purchase Date later than one (1) Trading Day
after receipt of the Floor Price Change Notice by the Buyer. Any
purchase by the Buyer that has a Purchase Date on or prior to the
first Trading Day after receipt of a Floor Price Change Notice
from the Company must be honored by the Company as otherwise
provided herein. The Floor Price shall be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction.
(h) "Maturity Date" means the date that is 400 Trading Days
(20 Monthly Periods) from the Commencement Date which such date
may be extended by up to an additional six (6) Monthly Periods by
the Company, in its sole discretion, by written notice to the
Buyer.
(i) "Monthly Period" means each successive 20 Trading Day
period commencing with the Commencement Date.
(j) "Person" means an individual or entity including any
limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
(k) "Principal Market" means the American Stock Exchange;
provided, however, that in the event the Company's Common Stock is
ever listed or traded on the Nasdaq National Market, the Nasdaq
SmallCap Market, the Nasdaq OTC Bulletin Board, or the New York
Stock Exchange, then the "Principal Market" shall mean such other
market or exchange on which the Company's Common Stock is then
listed, traded or quoted.
(l) "Purchase Amount" means the portion of the Available
Amount to be purchased by the Buyer pursuant to Section 1 hereof.
(m) "Purchase Date" means the actual date that the Buyer is
to buy Purchase Shares pursuant to Section 1 hereof.
(n) "Purchase Price" means, as of any date of determination
the lower of the (A) the lowest Sale Price of the Common Stock on
such date of determination and (B) the arithmetic average of the
three (3) lowest Closing Sale Prices for the Common Stock during
the twelve (12) consecutive Trading Days ending on the Trading Day
immediately preceding such date of determination (to be
appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction).
(o) "Sale Price" means, for any security as of any date,
any trade price for such security on the Principal Market as
reported by Bloomberg, or, if the Principal Market is not the
principal securities exchange or trading market for such security,
the trade price of such security on the principal securities
exchange or trading market where such security is listed, traded
or quoted as reported by Bloomberg.
(p) "SEC" means the United States Securities and Exchange
Commission.
(q) "Transfer Agent" means the transfer agent of the Company
as set forth in Section 11(f) hereof or such other person who is
then serving as the transfer agent for the Company in respect of
the Common Stock.
(r) "Trading Day" means any day on which the Principal
Market is open for customary trading.
11. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. The corporate
laws of the State of Delaware shall govern all issues concerning
the relative rights of the Company and its shareholders. All
other questions concerning the construction, validity, enforcement
and interpretation of this Agreement and the other Transaction
Documents shall be governed by the internal laws of the State of
Illinois, 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 exclusive jurisdiction of the
state and federal courts sitting in the City of Chicago, for the
adjudication of any dispute hereunder or under the other
Transaction Documents or in connection herewith or therewith, or
with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law.
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. With the exception of the
Mutual Nondisclosure Agreement between the parties dated as of
January 27, 2004, this Agreement supersedes all other prior oral
or written agreements between the Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the other
Transaction Documents, such Mutual Nondisclosure 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 the Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. The
provisions of this Agreement may be amended from time to time as
the parties may mutually agree and any provision hereof may be
waived 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 Trading 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:
Competitive Technologies, Inc.
0000 Xxxxxxx Xxxx, Xxxxxxxx 0
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Chief Executive Officer
With a copy to:
Seyfarth Xxxx LLP
00 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: 312-346-8000-
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxx, Esq.
If to the Buyer:
Fusion Capital Fund II, LLC
000 Xxxxxxxxxxx Xxxx Xxxxx, Xxxxx 0-000
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
If to the Transfer Agent:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Mr. Xxx Xxxxxx
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 three (3)
Trading Days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine
containing the time, date, and recipient facsimile number or (C)
provided by a nationally recognized overnight delivery service,
shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii)
above, respectively.
(g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior
written consent of the Buyer, including by merger or
consolidation. The Buyer may not assign its rights or obligations
under this Agreement.
(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) Publicity. The Buyer shall have the right to approve
before issuance any press releases or any other public disclosure
(including any filings with the SEC) with respect to the
transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of the
Buyer, to make any press release or other public disclosure
(including any filings with the SEC) with respect to such
transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure
prior to its release and shall be provided with a copy thereof).
(j) 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.
(k) Termination. This Agreement may be terminated only as
follows:
(i) By the Buyer any time an Event of Default
exists without any liability or payment to the Company.
However, if pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any
Person commences a proceeding against the Company, a
Custodian is appointed for the Company or for all or
substantially all of its property, or the Company makes a
general assignment for the benefit of its creditors, (any of
which would be an Event of Default as described in Sections
9(h), 9(i) and 9(j) hereof) this Agreement shall
automatically terminate without any liability or payment to
the Company without further action or notice by any Person.
No such termination of this Agreement under this Section
11(k)(i) shall affect the Company's or the Buyer's
obligations under this Agreement with respect to pending
purchases and the Company and the Buyer shall complete their
respective obligations with respect to any pending purchases
under this Agreement.
(ii) In the event that the Commencement shall not
have occurred, the Company shall have the option to terminate
this Agreement for any reason or for no reason without
liability of any party to any other party.
(iii) In the event that the Commencement shall not
have occurred on or before June 30, 2004, due to either
party's failure to satisfy the conditions applicable to it
set forth in Sections 6 and 7 above with respect to the
Commencement (and the nonbreaching party's failure to waive
such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement at the close of
business on such date or thereafter without liability of any
party to any other party.
(iv) If by the Maturity Date (including any
extension thereof by the Company pursuant to Section 10(g)
hereof), for any reason or for no reason the full Available
Amount under this Agreement has not been purchased as
provided for in Section 1 of this Agreement, by the Buyer
without any liability or payment to the Company.
(v) At any time after the Commencement Date, the
Company shall have the option to terminate this Agreement for
any reason or for no reason by delivering notice (a "Company
Termination Notice") to the Buyer electing to terminate this
Agreement without any liability or payment to the Buyer. The
Company Termination Notice shall not be effective until one
(1) Trading Day after it has been received by the Buyer.
(vi) This Agreement shall automatically terminate
on the date that the Company sells and the Buyer purchases
the full Available Amount as provided herein, without any
action or notice on the part of any party.
Except as set forth in Sections 11(k)(i) (in respect of an Event
of Default under Sections 9(h), 9(i) and 9(j)) and 11(k)(vi), any
termination of this Agreement pursuant to this Section 11(k) shall
be effected by written notice from the Company to the Buyer, or
the Buyer to the Company, as the case may be, setting forth the
basis for the termination hereof. The representations and
warranties of the Company and the Buyer contained in Sections 2
and 3 hereof, the indemnification provisions set forth in Section
8 hereof and the agreements and covenants set forth in Section
1(h) and Section 11, shall survive the Commencement and any
termination of this Agreement. No termination of this Agreement
shall affect the Company's or the Buyer's obligations under this
Agreement with respect to pending purchases and the Company and
the Buyer shall complete their respective obligations with respect
to any pending purchases under this Agreement.
(l) No Financial Advisor, Placement Agent, Broker or Finder.
The Company acknowledges that it has retained Xxxxxx, Houghton &
Co., Inc., as financial advisor in connection with the
transactions contemplated hereby. The Company represents and
warrants to the Buyer that it has not engaged any other financial
advisor, placement agent, broker or finder in connection with the
transactions contemplated hereby. The Buyer represents and
warrants to the Company that it has not engaged any financial
advisor, placement agent, broker or finder in connection with the
transactions contemplated hereby. The Company shall be
responsible for the payment of any fees or commissions, if any, of
any financial advisor, placement agent, broker or finder retained
by it relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold the Buyer harmless
against, any liability, loss or expense (including, without
limitation, attorneys' fees and out of pocket expenses) arising in
connection with any such claim.
(m) 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.
(n) Remedies, Other Obligations, Breaches and Injunctive
Relief. The Buyer's remedies provided in this Agreement shall be
cumulative and in addition to all other remedies available to the
Buyer under this Agreement, at law or in equity (including a
decree of specific performance and/or other injunctive relief), no
remedy of the Buyer contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and
nothing herein shall limit the Buyer's right to pursue actual
damages for any failure by the Company to comply with the terms of
this Agreement. The Company acknowledges that a breach by it of
its obligations hereunder may cause irreparable harm to the Buyer
and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach
or threatened breach, the Buyer shall be entitled, in addition to
all other available remedies, to seek an injunction restraining
any breach, without the necessity of showing economic loss and
without any bond or other security being required.
(o) Changes to the Terms of this Agreement. This Agreement
and any provision hereof may only be amended by an instrument in
writing signed by the Company and the Buyer. The term "Agreement"
and all reference thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented.
(p) Enforcement Costs. If: (i) this Agreement is placed by
the Buyer in the hands of an attorney for enforcement or is
enforced by the Buyer through any legal proceeding; or (ii) an
attorney is retained to represent the Buyer in any bankruptcy,
reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Agreement, then
the Company shall pay to the Buyer, as incurred by the Buyer, all
reasonable costs and expenses including attorneys' fees incurred
in connection therewith, in addition to all other amounts due
hereunder.
(q) Failure or Indulgence Not Waiver. No failure or delay
in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or
privilege.
* * * * * *
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Common Stock Purchase Agreement to be duly executed as of the date
first written above.
THE COMPANY:
COMPETITIVE TECHNOLOGIES, INC.
By:_s/Xxxx X. Nano________
Name: Xxxx X. Nano
Title: President and CEO
BUYER:
FUSION CAPITAL FUND II, LLC
BY: FUSION CAPITAL PARTNERS, LLC
BY: SGM HOLDINGS CORP.
By:_s/Xxxxxx X. Martin____
Name: Xxxxxx X. Xxxxxx
Title: President
