EXHIBIT 4.7
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
NUCLEUS, INC.
AND THE
PURCHASERS
NAMED HEREIN
AS OF MARCH 1, 2000
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW. THEY ARE
BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION D
("REGULATION D") PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE
MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THOSE LAWS.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement" or the "Purchase
Agreement") is entered into as of March 1, 2000, by and between NUCLEUS, INC., a
Nevada corporation (the "Company"), and each of the undersigned (each a
"Purchaser" and collectively the "Purchasers").
R E C I T A L S:
WHEREAS, the Company is offering (the "Offering") for sale in a private
placement pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Act"), and Regulation D thereunder ("Regulation D"), a maximum of
$6,200,000 principal amount of promissory notes of the Company (the "Senior
Bridge Notes") and shares of the Company's Common Stock, par value $.001 per
share (the "Common Stock"); and
WHEREAS, each Purchaser wishes to subscribe for and receive a Senior
Bridge Note and Common Stock in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. SUBSCRIPTION AND CLOSING
1.1 PURCHASE. Subject to the terms and conditions of this
Agreement, the Purchasers hereby agree to purchase from the Company, and the
Company hereby agrees to issue and sell to the Purchasers (a) Senior Bridge
Notes upon the terms set forth in the form of Promissory Note attached as
Exhibit A, which terms are incorporated herein by reference and made a part
hereof, and (b) shares of Common Stock (the "Shares"). The aggregate principal
amount of Senior Bridge Notes, the number of Shares and the purchase price
therefor for each Purchaser shall be as indicated on Schedule 1.1 hereto.
Section 5.4 below sets forth the method of calculation of the number of Shares
to be issued to each Purchaser as of the Closing and the potential issuance of
additional shares of Common Stock on the Maturity Date of the Senior Bridge
Notes.
1.2 ESCROW OF FUNDS.
(a) All funds received from Purchasers shall be
deposited in an escrow account with Bank of America (the "Escrow
Agent"). Funds in the escrow account shall only be released to the
Company at Closing if subscription for a minimum of $3,000,000
principal amount of Senior Bridge Notes have been received. Subsequent
to the Closing, the Company may continue to offer Senior Bridge Notes
and Shares until April 1, 2000 or until subscription for a maximum of
$6,200,000 principal amount of Senior Bridge Notes or Shares have been
received.
(b) In the event that the minimum amount of Senior
Bridges Notes is not subscribed for by the Closing, all funds
collected to date by the Escrow Agent will be returned to the
Purchaser without interest and no Senior Bridge Notes or Shares will
be issued. All funds will be promptly refunded to Purchasers.
(c) Subscriptions held in the escrow account may be
revoked at any time prior to the Closing; provided, that written
notice of the revocation is sent by certified or registered mail,
return receipt requested, and is received by the Company at least two
(2) business days prior to the Closing. In the event any such
revocation is made by a Purchaser, such Purchaser's funds shall be
promptly refunded without interest.
1.3 PAYMENT OF PURCHASE PRICE AND DELIVERY OF SHARES AND SENIOR
BRIDGE NOTES. Payment of the purchase price for the Senior Bridge Notes and
Shares, and delivery of the Senior Bridge Notes and Shares by the Company (the
"Closing"), shall occur upon the execution hereof or at such other date, time
and place as the parties shall mutually agree in writing. The purchase price for
the Senior Bridge Notes shall be the principal amount of Senior Bridge Notes
purchased by each Purchaser and the purchase price for the Shares shall be $.001
per Share. The aggregate purchase price for the Senior Bridge Notes and the
Shares is payable by wire transfer of immediately available funds. Certificates
for the Senior Bridge Notes and Shares will be issued in the name of each of the
Purchasers not later than five (5) Business Days (as defined) from the Closing.
1.4 MULTIPLE PURCHASES. This Agreement may be executed by one or
more Purchasers. In the event this Agreement pertains to a purchase by a single
Purchaser, all references to the Purchasers or "each Purchaser" shall be deemed
to refer to such single Purchaser.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
The Company represents and warrants to and covenants with the
Purchasers as follows:
2.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada
and has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material
adverse effect on the business or properties of the Company and its
subsidiaries taken as a whole.
(b) Each subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to
be conducted. Each such subsidiary is duly qualified
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to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a material adverse effect
on the business or properties of such subsidiary.
2.2 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, and the performance of all obligations
of the Company hereunder and the authorization, issuance and delivery of the
Senior Bridge Notes, the Shares and shares of Common Stock issuable upon
conversion of the Senior Bridge Notes (the "Convertible Shares," and together
with the Shares, the Additional Shares (as herein defined) and the Senior Bridge
Notes, the "Securities"), has been taken.
2.3 AGREEMENT. This Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
of this Agreement by the Purchaser, is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
2.4 VALID ISSUANCE OF SENIOR BRIDGE NOTES AND OTHER SECURITIES.
When issued and delivered in accordance with the terms of this Agreement, the
Senior Bridge Notes, the Shares, the Additional Shares and the Convertible
Shares will be duly and validly issued and outstanding, fully paid and
non-assessable, free and clear of any claims or pre-emptive rights, and
(assuming the representations and warranties of the Purchaser herein are true
and correct in all material respects) will have been issued in compliance with
all applicable federal and state securities law.
2.5 SEC REPORTS. The Company has timely filed all forms, reports and
documents with the Securities and Exchange Commission (the "Commission") since
January 1, 1998, required to be filed by it under the Securities Exchange Act of
1934, as amended (the "1934 Act"), through the date hereof (collectively, the
"SEC Reports"). Such SEC Reports, at the time filed, complied as to form in all
material respects with the requirements of the 1934 Act.
2.6 CURRENT PUBLIC INFORMATION. The Company's Common Stock is
registered under Section 12(b) or 12(g) of the Act. The Company has delivered to
the Purchaser copies of the Company's most recent annual report on Form 10-KSB
(the "Annual Report"), each Quarterly Report on Form 10-QSB since the date of
its Annual Report, the most recent proxy statement for its Annual Meeting of
Shareholders, and each interim report on Form 8-K filed by the Company since the
date of its Annual Report. The Company has also delivered to each Purchaser a
Private Placement Memorandum dated February 7, 2000 relating to its Common Stock
(the "Private Placement Memorandum"). The information concerning the Company set
forth in any of the SEC reports and in the Private Placement Memorandum does
not, as of their respective dates, contain a misrepresentation of a material
fact or omit to state any fact required to make the statements contained therein
not misleading in any material respect. Since the date of the Private Placement
Memorandum there has been no Material Adverse Effect (as defined below) in
respect of the Company, except as disclosed on Schedule 2.6 annexed hereto.
2.7 NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby does not and will not
conflict with or result
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in a breach by the Company of any of the terms or provisions of, or constitute a
default under, the Certificate of Incorporation or bylaws of the Company, or any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
or any existing applicable decree, judgment or order of any court, federal or
state regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets.
2.8 COMPLIANCE WITH LAWS. As of the date hereof, the conduct
of the business of the Company complies in all material respects with all
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto, except for non-compliance which would not have a material
adverse effect on the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company (a "Material Adverse Effect").
The Company has not received notice of any alleged violation of any statute,
law, regulation, ordinance, rule, judgment, order or decree from any
governmental authority, which could have a Material Adverse Effect.
2.9 LITIGATION. Except as disclosed in the SEC Reports, there
is no action, suit or proceeding before or by any court or governmental agency
or body, domestic or foreign, now pending or, to the knowledge of the Company,
threatened, against or affecting the Company, or any of its properties, which
could reasonably be expected to result in any Material Adverse Effect or which
could reasonably be expected to interfere with the Company's ability to
consummate the transactions contemplated by this Agreement.
2.10 PRIOR PRIVATE PLACEMENTS. The offer and sale of the Securities
are exempt from registration under Section 5 of the Act. Neither the Company nor
any person acting on its behalf has taken or will take any action (including,
without limitation, any offering of any securities of the Company under
circumstances which would require the integration of such offering with the
offering of the Securities) which would subject the offering or issuance or sale
of the Securities to the registration requirements of Section 5 of the Act.
2.11 COMMISSIONS. Except for the payment to Cruttenden Xxxx
Incorporated of (i) a cash fee equal to ten percent (10%) of the aggregate
principal amount of Senior Bridge Notes (5% in the case of Purchasers introduced
by the Company) and (ii) warrants to purchase shares of Common Stock equal to
ten percent (10%) (5% in the case of Purchasers introduced by the Company) of
the Shares sold in this offering, with an exercise price equal to the closing
bid price of the Common Stock as of the Closing. No person, firm or corporation
will be entitled to receive any brokerage fee, commission or other similar
payment from the Company in connection with the consummation of the transactions
contemplated hereby and the Company shall not make any such payment to any
person, firm or corporation.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASERS; ACCESS TO INFORMATION;
INDEPENDENT INFORMATION; INDEPENDENT INVESTIGATION
Each Purchaser represents and warrants to the Company as follows:
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3.1 INDEPENDENT INVESTIGATION. Each Purchaser, in offering to
purchase the Securities hereunder, has, prior to the date hereof, been given
access to and the opportunity to examine all books, records and material
contracts and documents of the Company and to meet with and ask questions of the
Company's management. In making its investment decision to purchase the
Securities, no Purchaser is relying on any oral or written representations or
assurances from the Company or any other person or any representation of the
Company or any other person other than as set forth in this Agreement, the SEC
Reports or in a document executed by a duly authorized representative of the
Company making reference to this Agreement. Each Purchaser has such experience
in business and financial matters that it is capable of evaluating the risk of
its investment and determining the suitability of its investment. Each Purchaser
is a sophisticated investor, as defined in Rule 506(b)(2)(ii) of Regulation D
under the Act, and an "accredited investor" as defined in Rule 501 of Regulation
D under the Act.
3.2 ECONOMIC RISK. Each Purchaser understands and acknowledges
that an investment in the Securities involves a high degree of risk, including a
possible total loss of investment. Each Purchaser represents that it is able to
bear the economic risk of an investment in the Securities.
3.3 NO GOVERNMENT RECOMMENDATION OR APPROVAL. Each Purchaser
understands that no federal or state agency or similar agency of any other
country has passed upon or made any recommendation or endorsement of the
Company, this transaction or the subscription of the Securities.
3.4 NO REGISTRATION. Each Purchaser understands that the
Securities have not been registered under the Act and are being offered and sold
pursuant to an exemption from registration contained in the Act based in part
upon the representations of the Purchasers contained herein. The Shares and
Convertible Shares do, however, carry certain registration rights as set forth
in the Registration Rights Agreement in the form of Exhibit B annexed hereto,
dated the date hereof and executed by the parties hereto in connection herewith
(the "Registration Rights Agreement").
3.5 NO PUBLIC SOLICITATION. Without conducting any independent
investigation, no Purchaser knows of any public solicitation or advertisement of
an offer in connection with the proposed issuance and sale of the Securities.
3.6 INVESTMENT INTENT. Each Purchaser is acquiring the Securities for
its own account, for investment and not with a view to the distribution thereof.
Each Purchaser understands that except as set forth in the Registration Rights
Agreement, the Company has no present intention of registering any such sale of
the Securities. Each Purchaser represents and warrants to the Company that it
has made no predetermined arrangements to sell the Securities (other than the
registration provisions contained in the Registration Rights Agreement, which
pertain only to a potential method of disposing of the Shares and Convertible
Shares).
3.7 INCORPORATION AND AUTHORITY. Each Purchaser has the full power
and authority to execute, deliver and perform this Agreement and to perform its
obligations hereunder. The Agreement has been duly approved by all necessary
action of each Purchaser, including any
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necessary shareholder approval, has been executed by persons duly authorized by
each Purchaser, and constitutes a valid and legally binding obligation of each
Purchaser, enforceable in accordance with its terms.
3.8 NO RELIANCE ON TAX ADVICE. Each Purchaser has reviewed
with its own tax advisors the foreign, federal, state and local tax consequences
of this investment, where applicable, and the transactions contemplated by this
Agreement. Each Purchaser is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents and
understands that each Purchaser (and not the Company) shall be responsible for
its own income tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement.
3.9 INDEPENDENT LEGAL ADVICE. Each Purchaser acknowledges that
it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with its own legal counsel. The Purchaser is
relying solely on such counsel and not on any statements or representations of
the Company or any of its agents for legal advice with respect to this
investment or the transactions contemplated by this Agreement, except for the
representations, warranties and covenants set forth herein.
4. LEGENDS; SUBSEQUENT TRANSFER OF SECURITIES
4.1 LEGENDS. The certificate(s) representing the Securities
shall bear a legend substantially as set forth on the cover page of this
Agreement and any other legend, if such legend or legends are reasonably
required to comply with state, federal or foreign law.
5. COVENANTS OF THE COMPANY
5.1 USE OF PROCEEDS. The Company shall use the net proceeds
from the sale of the Shares for general corporate purposes, including
acquisition or merger consideration with respect to any acquisition that may be
consummated by the Company.
5.2 REGISTRATION RIGHTS. The Company will comply in all
respects with its covenants and agreements concerning the registration rights
and other matters covering the Shares, the Additional Shares and Convertible
Shares as set forth in the Registration Rights Agreement.
5.3 VALID ISSUANCE OF CONVERTIBLE SHARES. When issued and
delivered in accordance with the Senior Bridge Notes, the Convertible Shares
will be duly and validly issued, fully paid and non-assessable, free and clear
of any claims or pre-emptive rights and will have been issued in compliance with
all applicable federal and state securities laws.
5.4 METHOD OF CALCULATING NUMBER OF SHARES ISSUED AS OF CLOSING;
INCREASE IN NUMBER OF SHARES.
(a) The Shares issued to each of the Purchasers have
been calculated by dividing (i) 100% of the principal amount of Senior
Bridge Notes purchased by such
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Purchaser(s) hereunder by (ii) the average of the closing prices of
the Company's Common Stock, as traded on the Nasdaq Small Cap Market,
the Nasdaq National Market or any other national securities exchange
(or, if not so traded on the Nasdaq Stock Market or national
securities exchange, as traded on the OTC Electronic Bulletin Board or
on the over-the-counter market) for the twenty one (21) consecutive
Trading Days (the "Average Closing Price") immediately preceding the
Closing. As used herein, the term "Trading Days" shall mean the days
on which the New York Stock Exchange, Inc. and the Nasdaq Stock
Market, Inc. shall be open for trading.
(b) In the event that the Average Closing Price of
the Company's Common Stock immediately preceding the Maturity Date of
the Senior Bridge Notes shall be less than the Average Closing Price
of such Common Stock immediately preceding the Closing, the Company
shall, not later than five (5) Trading Days following the Maturity
Date, issue to the Purchasers additional shares of Company Common
Stock (the "Additional Shares") in an amount equal to:
(i) (x) 100% of the original principal
amount of the Senior Bridge Notes issued to each of the
Purchasers divided by (y) the Average Closing Price immediately
preceding the Maturity Date minus (z) the number of Shares issued
to each of the Purchasers as of the Closing and set forth on
Schedule 1.1 hereof.
(ii) The result of the calculation in clause (i) above shall
be the "Additional Shares" to be issued to each of the
Purchasers, as aforesaid.
(c) As used in this Agreement, the "Maturity Date" of the Senior
Bridge Notes shall be July 7, 2000, subject to extension by the
Company to not later than November 3, 2000, as provided herein and in
the Senior Bridge Notes.
6. COVENANTS OF THE PURCHASERS
6.1 NO SALE IN VIOLATION OF THE ACT. Each Purchaser further
covenants that it will not make any sale, transfer or other disposition of the
Securities in violation of the Act or the rules and regulations of the
Commission promulgated thereunder. Each Purchaser acknowledges and agrees that
the Securities may and will only be resold (i) pursuant to a Registration
Statement under the Act; or (ii) pursuant to an exemption from registration
under the Act.
7. CONDITIONS TO CLOSING; DELIVERIES AT CLOSING
7.1 CONDITIONS TO PURCHASERS' OBLIGATIONS TO CLOSE. The obligations
of the Purchasers to purchase the Shares and the Senior Bridge Notes offered
hereunder are conditioned on the fulfillment or waiver of the following:
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(a) the execution and delivery of this Agreement, the Senior
Bridge Notes, certificates for the Common Stock and the Registration
Rights Agreement by the Company; and
(b) all the representations and warranties of the
Company in this Agreement as of the date hereof shall be true and
correct at the Closing as if made on such date, and the Company shall
have performed all actions required hereunder.
7.2 CONDITIONS TO THE COMPANY'S OBLIGATION TO CLOSE. The
obligation of the Company to sell the Shares and the Senior Bridge Notes offered
hereunder are conditioned on the fulfillment or waiver of the following:
(a) the execution and delivery of this Agreement and the
Registration Rights Agreement by the Purchasers; and
(b) all the representations and warranties of the Purchasers
made in this Agreement as of the date hereof shall be true and correct
at the Closing as if made on such date, and the Purchasers shall have
performed all actions required hereunder.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, applicable to agreements made in and wholly
to be performed in that jurisdiction without regards to the choice of law rules
of such state, except for matters arising under the Securities Act of 1933, as
amended (the "1933 Act") or the 1934 Act which matters shall be construed and
interpreted in accordance with such laws. Any action brought to enforce, or
otherwise arising out of, this Agreement shall be heard and determined in either
a federal or state court sitting in the County of Xxxx, State of Illinois.
9. ENTIRE AGREEMENT; AMENDMENT
This Agreement, the Registration Rights Agreement, and any other
document delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof, and no party shall be liable or bound to any other party in any manner
by any warranties, representations or covenants except as specifically set forth
herein or therein. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
10. NOTICES, ETC.
Any notice, demand or request required or permitted to be given by
either the Company or any Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or by
facsimile, with a hard copy to follow by two day courier addressed
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to the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other in
writing.
11. CONFIDENTIALITY
Each Purchaser will keep confidential all non-public information
regarding the Company that each receives from the Company unless disclosure of
such information is compelled by a court or other administrative body or
otherwise necessary, in the opinion of Purchasers' counsel, to comply with
applicable law. Neither party shall disclose any information regarding any of
the transactions contemplated hereby without the prior consent of the other
party, unless such disclosure is required in filings made with the Commission.
The Company and its officers and directors have not provided the Purchasers with
any material non-public information.
12. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument. A
facsimile transmission of a signature hereto shall be valid as if an original
and binding on all parties.
13. SEVERABILITY
In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
14. TITLES AND SUBTITLES
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
15. PARTIES IN INTEREST CITED
This Agreement may not be transferred, assigned, pledged or
hypothecated by any party hereto, other than by operation of law. This Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective heirs, executors, administrators, successors and permitted
assigns. All representations and warranties of each party hereto shall survive
the Closing contemplated herein for a period of two (2) years. The covenants and
agreements of the parties contained herein, in the Securities and in the
Registration Rights Agreement shall survive the Closing indefinitely.
The undersigned Purchasers acknowledge that this subscription shall not
be effective unless executed by the Company as indicated below.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
COMPANY: PURCHASERS:
NUCLEUS, INC.
By:_____________________________ _____________________________
Xxxx X. Xxxxxxx, President
_____________________________
_____________________________
Address:
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
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SCHEDULE 1.1
PURCHASERS
Principal
Amount No. of Shares
of Senior of Common
Name and Address Bridge Note Stock Purchased Purchase Price
---------------- ----------- --------------- --------------
--------
1 Subject to increase as of the Maturity Date pursuant to Section 5.4 above.
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