EXHIBIT 99.6
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of September
12, 2001, is entered into by and among EMB CORPORATION, a Hawaii corporation,
with headquarters located at 0000 Xxxxxx Xxxxxx, Xxxxx X, Xxxxxxxxxx Xxxxx,
Xxxxxxxxxx 00000 (the "Company"), and the investors listed on Schedule 1
attached hereto (individually, a "Buyer"; and, collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");
B. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, up to an aggregate of (i) 1,000,000 shares of the Series D
Preferred Stock (the "Preferred Shares"), no par value per share, in the
respective amounts set forth opposite each Buyer's name on Schedule 1 and (ii)
warrants, in substantially thes same form attached hereto as Exhibit B (the
"Warrants"), to acquire up to 500,000 shares of Company's Common Stock; no par
value per shares, (as exercised, collectively, the "Warrant Shares"); and
NOW, THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.
a. Purchase of Preferred Shares. In connection with the offering (the
"Offering") by the Company of the Preferred Shares and the Warrants to the
Buyers, and subject to the satisfaction (or waiver) of the conditions set forth
in Sections 5 and 6, below, the Company shall issue and sell to each Buyer and
each Buyer severally agrees to purchase from the Company the respective number
of Preferred Shares set forth opposite such Buyer's name on Schedule 1 along
with Warrants to acquire the respective number of Warrant Shares set forth
opposite such Buyer's name on Schedule 1 (the "Closing"). The maximum aggregate
purchase price (the "Purchase Price") of the Preferred Shares and the related
Warrants at the Closing, at $1.00 per share, shall be $1,000,000.00.
b. Closing Date. The date and time of the Closing (the "Closing Date")
shall be 10:00 a.m. Pacific Time, within five (5) Business Days following the
date hereof, subject to notification of satisfaction (or waiver) of the
conditions to the Closing set forth in Sections 5 and 6, below (or such later
date as is mutually agreed to by the Company and the Buyers). The Closing shall
occur on the Closing Date at the offices of the "Company's Counsel" (as that
term is defined in Section 8(f), below), or at such other location as agreed by
the Company and the Buyers. A "Business Day" means any day in which the
Principal Market is open for business. The Closing may, if the Company and Buyer
mutually agree, occur in one or more separate events at one or more times. Each
such event shall be deemed to be a Closing Date with respect to the number of
Preferred Shares and Warrants being acquired and the consideration therefore
paid at such Closing. Collectively, all such Closings shall be deemed to
constitute the transaction provided for in this Agreement.
c. Form of Payment. On the Closing Date, (i) subject to the
satisfaction (or waiver) of the conditions set forth in Section 6, below, each
Buyer shall pay and deliver the Purchase Price to the "Company's Counsel", for
the Preferred Shares and Warrants to be issued and sold to such Buyer at the
Closing, by wire transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) subject to the satisfaction (or
waiver) of the conditions set forth in Section 5, below, the Company shall
deliver to the Buyers stock certificates (in the denominations as such Buyer
shall request) (the "Preferred Stock Certificates"), representing such number of
the Preferred Shares that such Buyer is then purchasing (as indicated opposite
such Buyer's name on Schedule 1) along with the Warrants such Buyer is
purchasing (as indicated opposite such Buyer's name on Schedule 1) hereunder,
duly executed on behalf of the Company and registered in the name of such Buyer
or its designee. Upon the completion of the conditions contained in Sections 5
and 6 of this Agreement, the Company's Counsel shall deliver the certificates
representing the Preferred Shares and the Warrants to the Buyers' Counsel, if
any, or to such Buyer, via a nationally recognized overnight delivery service.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. Investment Purpose. Such Buyer is acquiring the Preferred Shares
and Warrants (the Preferred Shares and Warrants may also be referred to herein,
collectively, as the "Securities") for its own account, for investment only and
not with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the
1933 Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D. Buyer has completed and
returned to the Company a form of Confidential Prospective Investor
Questionnaire (the "Questionnaire") and warrants and represents to the Company
that all information provided by Buyer to the Company, as contained in the
Questionnaire, is true and correct.
c. Reliance on Exemptions. Such Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such Securities.
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d. Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
that have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Such Buyer
understands that its investment in the Securities involves a high degree of
risk. Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.
e. No Governmental Review. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Such Buyer understands that: (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, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such Buyer provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated
under the 1933 Act, as amended (or a successor rule thereto) ("Rule 144"); and
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, and if Seller intends to
utilize Rule 144 but Rule 144 is not applicable to such resale, any resale of
the 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.
g. Legends. Such Buyer understands that the Preferred Stock
Certificates and the certificates or other instruments representing the Warrants
and the stock certificates representing the shares of common stock into which
the Preferred Stock is convertible (the "Conversion Shares") and the Warrant
Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (1) IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT OR
APPLICABLE STATE SECURITIES LAWS, OR (2) IN THE ABSENCE OF AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER THE 1933 ACT OR (3) UNLESS SOLD, TRANSFERRED OR
ASSIGNED PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities, if, unless
otherwise required by state securities laws, (i) such Securities have been
registered for sale under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that a public sale, assignment or
transfer of the Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold.
h. Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable against such Buyer in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of, or domiciled in, the
jurisdiction specified in its address on Schedule 1.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. Organization and Qualification. The Company is a corporation duly
organized and validly existing in good standing under the laws of the State of
Hawaii, and has the requisite corporate power and authorization to own the
properties and to carry on the business as now being conducted.
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b. Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Certificate of Designation of Rights, Priviliges, Preferences and
Restrictions (the "Certificate of Designation") and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction Documents"), and
to issue the Securities in accordance with the terms hereof and thereof; (ii)
the execution and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Preferred Shares and the
Warrants and the reservation for issuance and the issuance of the Conversion
Shares and Warrant Shares issuable upon conversion or exercise thereof,
respectively, have been duly authorized by the Company's Board of Directors and
no further consent or authorization is required by the Company, its Board of
Directors or its stockholders; (iii) the Transaction Documents have been duly
executed and delivered by the Company; (iv) the Transaction Documents constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies; and (v)
prior to the Closing Date, the Certificate of Designation, or a comparable
document as required by the laws of the State of Hawaii, has been filed with the
Department of Commerce and Consumer Affairs of the State of Hawaii and will be
in full force and effect, enforceable against the Company in accordance with its
terms.
c. Issuance of Securities. The Securities are duly authorized and,
upon issuance in accordance with the terms hereof, shall be (i) validly issued,
fully paid and non-assessable and (ii) free from all taxes, liens and charges
with respect to the issue thereof. The Preferred Shares shall be entitled to the
rights and preferences set forth in the Certificate of Designation. 2,500,000
shares of Company common stock (subject to adjustment pursuant to the Company's
covenant set forth in Section 4(f), below) have been duly authorized and
reserved for issuance upon conversion of the Preferred Shares and exercise of
the Warrants. Upon conversion in accordance with the Certificate of Designation
or exercise in accordance with the Warrants, the Conversion Shares and Warrant
Shares will 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 Company common stock. The
issuance by the Company of the Securities is, and the issuance by the Company of
the Conversion Shares and Warrant Shares shall be, exempt from registration
under the 1933 Act.
d. No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
Company's issuance of the Securities and the reservation for issuance and
issuance of the Conversion Shares and the Warrant Shares) will not (i) result in
a violation of the Company's Articles of Incorporation, as amended and as in
effect on the date hereof (the "Articles of Incorporation") or the Company's
By-laws, as amended and as in
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effect on the date hereof (the "By-laws") or any Certificate of Designation of
any outstanding series of Preferred Stock of the Company 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 material agreement, indenture or
instrument to which the Company is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the Principal
Market (as defined in Section 4(e), below)) applicable to the Company or by
which any property or asset of the Company is bound or affected. The Company is
not in violation of any term of or in default under its Articles of
Incorporation, any Certificate of Designation of any outstanding series of
Preferred Stock of the Company or its By-laws, respectively. The Company is not
in violation of any term of or in default under any contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company, except for possible
conflicts, defaults, terminations, amendments which would not have a Material
Adverse Effect. As used in this Agreement, "Material Adverse Effect" means any
material adverse effect on the business, properties, assets, operations, results
or operations, financial condition or prospects of the Company, if any, taken as
a whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under the Transaction
Documents (as defined below in Section 3(b)). The business of the Company is not
being conducted, and shall not be conducted, in violation of any law, ordinance,
regulation of any governmental entity, except for possible violations the
sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect. Except as specifically contemplated by the Transaction
Documents and as required under the 1933 Act, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. All consents, authorizations, orders, filings
and registrations which the Company is required to obtain prior to Closing
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company is unaware of any facts or circumstances that might
give rise to any of the foregoing. The Company is not in violation of the
listing requirements of the Principal Market (as defined in Section 4(e),
below).
e. SEC Documents; Financial Statements. As of the Closing, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates, the SEC Documents substantially complied with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order
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to make the statements therein, in light of the circumstances under which they
were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents substantially complied
as to form with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyers which is not included in the SEC Documents, including, without
limitation, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstance under which they are or were made, not misleading.
Neither the Company nor any of its Subsidiaries or any of their respective
officers, directors, employees or agents have provided the Buyers with any
material, nonpublic information.
f. Absence of Certain Changes. Since the most recent filing by the
Company with the SEC, there has been no material adverse change and no material
adverse development in the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
the Company or any of its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings.
g. 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.
h. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of any of the Securities under the 1933 Act or cause the
offering of the Securities to be integrated with other offerings.
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4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 5
and 6 of this Agreement.
b. Form D and Blue Sky. The Company agrees, if required by law, to
file a Form D with respect to the Securities as required under Regulation D and
to provide a copy thereof to each Buyer promptly after such filing. The Company
shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of the
United States, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. The Company shall make all filings and
reports relating the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States following the
Closing Date.
c. Reporting Status. During the four-year period that commences at the
Closing Date, the Company shall file all reports required to be filed with the
SEC pursuant to the 1934 Act, and the Company shall not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would otherwise permit such termination.
d. [reserved]
e. Listing. The Company shall use its best efforts to maintain the
Common Stock's authorization for quotation on the OTC Bulletin Board (the
"Principal Market"); provided, however, that the Company may take such steps as
it deems commercially reasonable, under the circumstances, to cause the Common
Stock to be listed for trading on the NASDAQ Stock Market, Inc. (National Market
or SmallCap), the American Stock Exchange, the New York Stock Exchange, as well
as non-United States-based trading markets. 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 Company common stock on the Principal Market.
The Company shall promptly, and in no event later than the following business
day, provide to each Buyer copies of any notices it receives from the Principal
Market regarding the continued eligibility of Company common stock for listing
thereon. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(e).
f. Reservation of Shares. The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, the
number of shares of Common Stock needed to provide for the issuance of the
shares of Common Stock upon conversion of all outstanding Preferred Shares and
exercise of all outstanding Warrants.
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g. Issuance of Conversion Shares and Warrant Shares. The issuance of
the Conversion Shares and Warrant Shares shall be duly authorized, and when
issued in accordance with the Certificate of Designation or Warrants, the
Conversion Shares and Warrant Shares will be validly issued, fully paid and
non-assessable and free of all taxes, liens, charges and preemptive rights with
respect to the issue thereof.
h. Independent Auditors. During the four-year period referenced in
Section 4(c), above, the Company shall maintain as its independent auditors an
accounting firm authorized to practice before the SEC.
i. Corporate Existence and Taxes. During the four-year period
referenced in Section 4(c), above, the Company shall maintain its corporate
existence in good standing; provided, however, that the foregoing covenant shall
not prevent the Company from entering into any merger or corporate
reorganization as long as the surviving entity in such transaction, if not the
Company, has common stock listed for trading on the Principal Market (or such
other market(s) as are referenced in Section 4(e)) and shall pay all its taxes
when due except for taxes which the Company disputes).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Preferred Shares and Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:
a. Such Buyer shall have executed each of the Transaction Documents,
where appropriate, to which it is a party and delivered the same and the
Purchase Price, to be held in trust pending the Closing, to the Company's
Counsel; and
b. The representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Closing Date.
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6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Preferred
Shares and Warrants at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:
a. The Company shall have executed each of the Transaction Documents
and delivered the same to the Buyers' Counsel, if any, or to such Buyer;
b. The Common Stock shall be authorized for quotation on the Principal
Market and trading in Company common stock shall not have been suspended by the
SEC or the Principal Market;
c. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date) and the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date;
d. The Company shall have made all filings under all applicable
federal and state securities laws necessary to consummate the issuance of the
Securities pursuant to this Agreement in compliance with such laws;
e. As of the Closing Date, the Company shall have reserved out of its
authorized and unissued common stock, solely for the purpose of effecting the
conversion of the Preferred Shares and exercise of the Warrants, the number of
shares of Common Stock needed to provide for the issuance of the shares of
Common Stock upon conversion of all outstanding Preferred Stock and exercise of
all outstanding Warrants;
f. The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii), above, and in a form reasonably
acceptable to such Buyer;
g. If requested by a Buyer, the Company shall have delivered to such
Buyer a certificate evidencing the incorporation and good standing of the
Company and each Subsidiary in such corporation's state of incorporation issued
by the Secretary of State of such state of incorporation as of a date within 10
days of the Closing;
h. If requested by a Buyer, the Company shall have delivered to such
Buyer a secretary's certificate, dated as the Closing, as to (i) the resolutions
described in Section 6(f), (ii) the Articles of Incorporation and (iii) the
Bylaws, each as in effect at the Closing.
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7. INDEMNIFICATION.
In consideration of each Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each
other holder of the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of the foregoing
person's agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought or whether such Indemnitee commenced such action), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (d) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Securities or (e) the status of such Buyer or holder of the
Securities as an investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. This Agreement shall be
governed by and construed in all respects by the internal laws of the State of
California (except for the proper application of the United States federal
securities laws), without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of California or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of California. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the County
of Orange, State of California. 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.
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b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and holders of at least three-fifths (3/5) of the Preferred Shares then
outstanding, and no provision hereof may be waived other than by an instrument
in writing signed by the party against whom enforcement is sought.
f. Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
EMB Corporation
0000 Xxxxxx Xxxxxx
Xxxxx X
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
With a copy to "Company's Counsel":
(which shall not constitute notice)
Xxxxx Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
12
If to a Buyer:
At the address and facsimile number set forth on Schedule 1
With a copy to "Buyers' Counsel", if any:
(which shall not constitute notice)
-----------------------------------
-----------------------------------
-----------------------------------
or at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has
specified by written notice given to each other party five days
prior to the effectiveness of such change.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of holders of at least three-fifths (3/5) of the Preferred Shares then
outstanding. A Buyer may assign some or all of its rights hereunder without the
consent of the Company, provided, however, that any such assignment shall not
release such Buyer from its obligations hereunder unless such obligations are
assumed by such assignee and the Company has consented to such assignment and
assumption.
h. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
13
i. Survival. Unless this Agreement is terminated under Section 8(k),
the agreements and covenants set forth in Sections 4, and 10, the
indemnification provisions set forth in Section 7 and the liquidated damages
provisions set forth in Section 9 shall survive the Closing. Each Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
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. In the event that the Closing shall not have occurred
with respect to a Buyer on or before three (3) business days from the date
hereof due to the Company's or such Buyer's failure to satisfy the conditions
set forth in Sections 5 and 7, above (and the nonbreaching party's failure to
waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching party at the
close of business on such date without liability of any party to any other
party.
l. Placement Agent. The Company shall be responsible for the payment
of any placement agent's fees or broker's commissions relating to or arising out
of the transactions contemplated hereby. The Company shall pay, and hold each
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. Each Buyer and each holder of the Securities shall have
all rights and remedies set forth in the Transaction Documents and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
[SIGNATURE PAGE FOLLOWS]
14
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
EMB CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx, President
BUYERS:
Paramount Financial Group, Inc.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx, President
15
SCHEDULE 1: LIST OF BUYERS
--------------------------
Number of
Buyer's Name Buyer's Address Purchase Preferred Warrants
and Facsimile Number Price Shares
--------------------------------------------------------------------------------
Paramount Financial Stonegate Complex $1,000,000 1,000,000 500,000
Group, Inc. 00000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
EXHIBITS
--------
Exhibit A Form of Certificate of Designation of Rights, Preferences,
Privileges, and Restrictions of the Series D Preferred Stock
Exhibit B Form of Warrant
