SECURITIES PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of December 31,
2006,
is by and between LaPolla Industries Inc., a Delaware corporation, with its
principal place of business at 00000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000 (the "COMPANY"), and Xxxxxxx X. Xxxxx, with a residence at Nine
Xxxx
Xxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000 (the "BUYER").
WHEREAS,
the Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "ACT");
WHEREAS,
the Company has authorized the following new series of its preferred stock,
$1.00 par value per share: the Series D Preferred Stock (the "SERIES D PREFERRED
STOCK"), with a stated value per share of Series D Preferred Stock of $1,000,
which includes a $1.00 par value per share (The Series D Preferred Stock
is
referred to in this Agreement as the "SECURITIES"); and
WHEREAS,
the Buyer wishes to purchase and the Company desires to sell an aggregate
of
1,076 shares of Series D Preferred Stock for a total of $1,076,000, upon
the
terms and conditions stated in this Agreement.
NOW,
THEREFORE, in consideration of the premises and covenants herein contained,
the
Company and the Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF SERIES D PREFERRED STOCK.
a. PURCHASE
OF SERIES D PREFERRED STOCK. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7(a) below, the Company shall issue
and
sell to the Buyer and the Buyer shall purchase from the Company, for an
aggregate of $1,076,000 an aggregate of 1,076 shares of Series D Preferred
Stock
(the "CLOSING"). On the Closing Date, subject to receipt of the
agreed upon consideration, the Company shall cause to be delivered to Buyer
a
stock certificate representing the number of shares of Series D Preferred
Stock
that Buyer is then purchasing, duly executed on behalf of the Company and
registered in the name of the Buyer or his designee (the "STOCK
CERTIFICATE").
b. CLOSING
DATE. The Closing (the "CLOSING DATE") shall be on December 31, 2006, subject
to
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7(a) below (or such later date as is mutually agreed to by the Company
and
the Buyer).
c. FORM
OF PAYMENT. On the Closing Date, Buyer shall cancel indebtedness in the form
of
loans bearing interest owed by Company to Buyer as payment of the applicable
purchase price for the Series D Preferred Stock to be issued and sold to
Buyer
at the Closing.
2. BUYER'S
REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants with
respect to only himself that:
a. INVESTMENT
PURPOSE. Such Buyer is acquiring the Series D Preferred Stock for his own
account for investment only and not with a view towards, or for resale in
connection with, the unlawful public sale or distribution thereof, except
pursuant to sales of such shares which are the subject of an effective
registration statement duly filed under the Act or otherwise exempted under
the
Act and all applicable state blue sky laws; provided, however, that by making
the representations herein, such Buyer does not agree to hold any Securities
for
any minimum period 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 Act and all applicable state blue sky
laws.
b. ACCREDITED
INVESTOR STATUS. Buyer is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Act ("REGULATION
D").
c. RELIANCE ON
EXEMPTIONS. Buyer understands that the Series D Preferred Stock is
being offered and sold to him 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 Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of Buyer to acquire the
Series D Preferred Stock.
d. INFORMATION. Buyer
acknowledges that he is the Chairman of the Board of Directors of the Company
and as such 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 Series D Preferred Stock that have been requested by Buyer. No
independent due diligence investigations conducted by Buyer shall modify,
amend
or affect Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below.
e. NO
GOVERNMENTAL REVIEW. 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 Series D Preferred Stock and
the
Warrants 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
Series D Preferred Stock.
f. TRANSFER OR
RESALE. Buyer understands that the: (i) Securities have not been and
are not being registered under the Act or any state securities laws, and
may not
be offered for sale, sold, assigned or transferred unless (A) (i) they have
been
subsequently registered thereunder and (ii) they are offered for sale, sold,
assigned and transferred in compliance with the prospectus delivery requirements
of the Act; or (B) 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.
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g. LEGENDS.
(i) Buyer
understands that the certificates or other instruments representing the Series
D
Preferred Stock shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such stock
certificates):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED 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 COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
(ii) Each
certificate for Series D Preferred Stock shall also bear the following
legend:
ANY
TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE
COMPANY'S CERTIFICATE OF DESIGNATIONS RELATING TO THE SERIES D PREFERRED
SHARES
REPRESENTED BY THIS CERTIFICATE. THE NUMBER OF SERIES D PREFERRED SHARES
REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SUCH SHARES
STATED ON THE FACE HEREOF.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and warrants to
Buyer as set forth in this Section 3.
a. ORGANIZATION
AND QUALIFICATION. The Company is duly organized and validly existing
in good standing under the laws of the jurisdiction in which it is organized,
and has the requisite corporate power to own its properties and to carry
on its
business as now being conducted. The Company is duly qualified to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not
have
a Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any material adverse
effect on (i) the business, properties, operations, condition (financial
or
otherwise), results of operations or objective prospects of the Company taken
as
a whole, (ii) on the ability of the Company to perform its obligations
hereunder, under the Certificate of Designation or under the agreements or
instruments to be entered into or filed in connection herewith or therewith,
or
(iii) the Securities.
b. AUTHORIZATION;
ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS. (i) The Company has
the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, to issue, sell and perform its obligations
with respect to the Series D Preferred Stock in accordance with the terms
hereof
and the Certificate of Designation, (ii) the execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including without limitation the issuance
of
the Series D Preferred Stock, 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 and the
certificates for the Series D Preferred Stock have been duly executed and
delivered by the Company, (iv) this Agreement and the certificates for the
Series D Preferred Stock 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) the Certificate of Designation will have been
filed
with the Secretary of State of the State of Delaware within sixty (60) days
after the Closing date hereof and will be in full force and effect, enforceable
against the Company in accordance with its terms.
c. CAPITALIZATION. As
of December 31, 2006, the authorized capital stock of the Company consists
of
sixty seven million (67,000,000) shares, of which sixty five million
(65,000,000) are for common stock and two million (2,000,000) for preferred
stock. No shares of common stock or preferred stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered
or
permitted by the Company. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance
of
any of the Securities as described in this Agreement. The Company has
furnished to the Buyer copies of the Company's Restated Certificate of
Incorporation, as amended, and as in effect on the date hereof (the "RESTATED
CERTIFICATE OF INCORPORATION"), and the Company's Bylaws, as in effect on
the
date hereof (the "BYLAWS"), and the terms of all securities including the
material rights of the holders thereof in respect thereto.
d. 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, (ii) free from all taxes, liens and charges with respect
to the
issue thereof and (iii) entitled to the rights and preferences set forth
in the
Certificate of Designation.
e. NO
CONFLICTS. Except as otherwise expressly stated herein, the
execution, delivery and performance of this Agreement, the performance by
the
Company of its obligations under the Certificate of Designation and the
consummation by the Company of the transactions contemplated hereby will
not (i)
result in a violation of the Restated Certificate of Incorporation, as amended,
any Certificate of Designation, Preferences and Rights of any outstanding
series
of preferred stock of the Company or Bylaws 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 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 or exchange on which the common stock is traded or
listed) 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 Restated Certificate of Incorporation or Bylaws, as
applicable, any Certificate of Designation, Preferences and Rights of any
outstanding series of preferred stock of the Company, or any material contract,
agreement, indebtedness, indenture, instrument, judgment, decree or order
(collectively referred to as the "MATERIAL CONTRACTS") or any statute, rule
or
regulation applicable to the Company. The business of the Company is not
being
conducted, and shall not be conducted, in violation of any material law,
ordinance or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Act and applicable
blue
sky 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
or
regulatory or self-regulatory agency in order for it to execute, deliver
or
perform any of its obligations under or contemplated by this Agreement or
perform its obligations under the Certificate of Designation in accordance
with
the terms hereof or thereof.
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f. SEC
DOCUMENTS; FINANCIAL STATEMENTS. 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 "EXCHANGE ACT") (all of the foregoing filed prior to the
date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC DOCUMENTS"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form
in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the
case
of unaudited interim statements, to the extent they may exclude footnotes
or may
be condensed or summary statements) and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results
of
its operations and cash flows for the periods then ended (subject, in the
case
of unaudited statements, to normal year-end audit adjustments).
g. ACKNOWLEDGMENT
REGARDING BUYERS' PURCHASE OF THE SERIES D PREFERRED
STOCK. Purchaser's status as Chairman of the Board of Directors and
holder of more than ten percent (10%) of the Company's outstanding shares,
the
Company acknowledges and agrees that for purposes hereof, Buyer is acting
in the
capacity of an arm's length purchaser with respect to this Agreement and
the
Certificate of Designation and the transactions contemplated hereby and thereby.
The Company further acknowledges that for the purposes hereof, Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the Certificate of Designation
and
the transactions contemplated hereby and thereby and any advice given by
Buyer
or any of his representatives or agents in connection with this Agreement
and
the Certificate of Designation and the transactions contemplated hereby and
thereby is merely incidental to Buyer's purchase of the Series D Preferred
Stock. The Company further represents to Buyer that the Company's decision
to
enter into this Agreement has been based solely on the independent evaluation
by
the Company and its representatives.
h. 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 Act) in connection with the offer or sale of any of the Securities offered
hereby.
i. 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 Act or cause the offering of any of the Securities to be integrated
with prior offerings by the Company for purposes of the 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
take any action or steps that would require registration of the issuance
by the
Company of any of the Securities under the Act or cause the offering of the
Securities to be integrated with other offerings.
j. INTELLECTUAL
PROPERTY RIGHTS. The Company owns or possesses adequate rights or
licenses to use all trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and rights
(collectively "INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their
respective businesses as now conducted and as presently contemplated to be
operated in the future except for Intellectual Property Rights that,
individually or in the aggregate, would not be reasonably likely to have
a
Material Adverse Effect.
k. LEASES. Any
real property and facilities held under lease by the Company are held under
valid, subsisting and enforceable leases.
l. INSURANCE. The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as is prudent and customary in
the
businesses in which the Company is engaged. The Company does not have
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 individually or in the aggregate have a Material Adverse
Effect.
m. INTERNAL
ACCOUNTING CONTROLS. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate action is taken
with
respect to any differences.
n. TAX STATUS.
The Company has made all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company 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. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and
the
officers of the Company know of no basis for any such claim. The
Company has not been notified that any of its tax returns is currently being
audited by any taxing authority.
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4. COVENANTS
AND AGREEMENTS.
a. BEST
EFFORTS. Each party shall use its best efforts timely to satisfy each
of the conditions to be satisfied by it as provided in Sections 6 and 7 of
this
Agreement.
b. BLUE
SKY. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or
to
qualify the Securities for, or obtain exemption for the Securities for, sale
to
Buyer pursuant to this Agreement under applicable securities or "Blue Sky"
laws
of the State of New Jersey. The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or "Blue Sky" laws of the State of New Jersey wherein
the
Buyer resides.
c. FINANCIAL
INFORMATION. The Company agrees to file all reports, schedules,
forms, statements and other documents required to be filed by it with the
SEC
pursuant to the reporting requirements of the Exchange Act so long as the
Series
D Preferred Stock shall be outstanding. The financial statements of the Company
will be prepared in accordance with generally accepted accounting principles,
consistently applied, and will fairly present in all material respects the
consolidated financial position of the Company and 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).
d. CORPORATE
EXISTENCE. So long as any Buyer beneficially owns any Securities
pursuant to this Agreement, the Company shall maintain its corporate existence
in good standing under the laws of the jurisdiction in which it is incorporated
and shall not sell all or substantially all of the Company's assets, except
in
the event of a merger or consolidation or sale of all or substantially all
of
the Company's assets for cash, or, if for securities, where the surviving
or
successor entity in such transaction either (i) redeems all of the then
outstanding Series D Preferred Stock in accordance with and subject to the
terms
of the Certificate of Designation applicable to such transactions, or (ii)
assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith.
e. INSURANCE. The
Company shall maintain liability, casualty and other insurance (subject to
customary deductions and retentions) with responsible insurance companies
against such risk of the types and in the amounts customarily maintained
by
companies of comparable size to the Company.
6. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company hereunder
to
issue and sell the Series D Preferred Stock to Buyer at the Closing is subject
to the satisfaction 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:
a. Buyer
shall have executed this Agreement and delivered the same to the
Company.
b. Buyer shall
have delivered to the Company the applicable purchase price for the Series
D
Preferred Stock being purchased by Buyer at Closing.
c. The
representations and warranties of Buyer shall be true and correct in all
material respects as of the Closing Date as though made at that time (except
for
representations and warranties that speak as of a specific date), and 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 Buyer at or prior to the Closing
Date.
7. CONDITIONS
TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. CLOSING
DATE. The obligation of Buyer hereunder to purchase the Series D
Preferred Stock 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 Buyer's sole benefit and may be waived by such Buyer at
any
time in his sole discretion:
i. The Company
shall have executed this Agreement and delivered the same to such
Buyer.
ii. The
Certificate of Designation shall have been executed by the Company and filed
with the Secretary of the State of Delaware, and a copy marked as filed shall
have been delivered to such Buyer.
iii. 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 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 in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or
prior
to the Closing Date. Buyer shall have received a certificate,
executed by an authorized officer of the Company, dated as of the Closing
Date,
to the foregoing effect and as to such other matters as may be reasonably
requested by Buyer.
iv. The Company
shall have executed and delivered to Buyer the Stock Certificates (in such
denominations as such Buyer shall request) for the Series D Preferred Stock
being purchased by Buyer being given at the Closing.
v. The Company
shall have delivered to Buyer such other documents relating to the transactions
contemplated by this Agreement as Buyer may reasonably request.
vi. The
transactions contemplated hereby shall not violate any law, regulation or
order
then in effect and applicable to Buyer or the Company.
4
8. INDEMNIFICATION.
In consideration of each Buyer's execution and delivery of this Agreement
and
acquiring the Securities hereunder and in addition to all of the Company's
other
obligations under this Agreement, the Company shall defend, protect, indemnify
and hold harmless Buyer and each other holder of Securities 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 Buyer is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys'
fees
and disbursements (the "BUYER INDEMNIFIED LIABILITIES"), incurred by Buyer
(and
shall advance the same) 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 this Agreement, the Certificate of Designation
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 this Agreement, the Certificate of Designation or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against Buyer and arising out of or
resulting from the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by the Buyer. Promptly after receipt by Buyer of notice of the
commencement of any action or proceeding (including any governmental action
or
proceeding) involving the Buyer Indemnified Liabilities, Buyer 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 it so desires, jointly
with
any other indemnifying party similarly noticed, to assume control of the
defense
thereof with counsel selected by the Company and reasonably satisfactory
to
Buyer; provided, however, that Buyer shall have the right to retain its own
counsel with the fees and expenses to be paid by the Company, if, in the
reasonable opinion of counsel retained by the Company, the representation
by
such counsel of the Buyer and the Company would be inappropriate due to actual
differing interests between Buyer and any other party represented by such
counsel in such proceeding. The Buyer shall cooperate fully with the Company
in
connection with any negotiation or defense of any such action or claim by
the
Company and shall furnish to the Company all information reasonably available
to
the Buyer which relates to such action or claim. The Company shall
keep the Buyer 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 affected without
its written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall not, without
the
consent of the Buyer, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional
term
thereof the giving by the claimant or plaintiff to such Buyer of a release
from
all liability in respect to such claim or litigation. Following indemnification
as provided for hereunder, the Company shall be subrogated to all rights
of the
Buyer 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 it of any liability to the Buyer, except to the
extent
that the Company is prejudiced in its ability to defend such action. 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 Buyer Indemnified Liabilities which is permissible
under applicable law.
9. MISCELLANEOUS.
a. 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.
b. HEADINGS. The
headings of this Agreement are for convenience of reference and shall not
form
part of, or affect the interpretation of, this Agreement.
c. 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.
d. ENTIRE
AGREEMENT; AMENDMENTS. This Agreement and the documents referred to
herein, supersede all other prior or contemporaneous oral or written agreements
between or among the Buyer, 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 Buyer makes
any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the Company and the holders
of
at least 2/3 of the then outstanding Series D Preferred Stock, but any such
waiver or amendment shall bind all Buyers and holders.
e. 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 a copy is mailed by U.S. certified
mail, return receipt requested; (iii) three (3) business days after being
sent
by U.S. certified mail, return receipt requested, or (iv) one (1) 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:
|
LaPolla
Industries, Inc.
|
00000
Xxxxxxx Xxxxxxx Xxxx
Xxxxx
000
Xxxxxxx,
Xxxxx 00000
Telephone: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxx, Corporate Secretary
5
with
a
copy to:
Xxxxxxxx
Xxxxx & Xxxxx, LLP
000
Xxxxx
Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone: (000)
000-0000
Attention: Xxxxxx
X. Xxxxx, Esquire
|
|
if
to the Buyer:
|
Xxxxxxx
X. Xxxxx
Nine
Xxxx
Xxxx Xxxx
Xxxxxx,
Xxx Xxxxxx 00000
Telephone: (000)
000-0000
f. 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 Securities. The Company shall not assign this Agreement
or
any rights or obligations hereunder without the prior written consent of
the
holders of two thirds (2/3) of the Series D Preferred Stock then outstanding.
A
Buyer may assign some or all of its rights hereunder without the consent
of the
Company, PROVIDED, HOWEVER, that (i) 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,
which
consent shall not be unreasonably withheld; (ii) Buyer may not assign his
purchase or other rights hereunder in a manner that would cause the offering
of
Securities hereunder to be required to be registered under the Act; (iii)
Buyer
may not assign his purchase or other rights with respect to the Series D
Preferred Stock; and (iv) Buyer may not assign his rights hereunder to an
entity
that in the good faith judgment of the Board of Directors of the Company
is
competitive with a core business of the Company.
g. 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.
h. SURVIVAL. The
representations and warranties of the Company and the Buyer contained in
Sections 3 and 2, respectively, shall survive the Closing until three years
after the Closing Date, including, without limitation, all financial statements
thereto. The agreements and covenants set forth in Sections 4, 5 and 9, and
the
indemnification provisions set forth in Section 8, shall survive the
Closing. Buyer shall be responsible only for his own representations,
warranties, agreements and covenants hereunder.
i. 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.
j. 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.
k. GOVERNING
LAW; JURISDICTION; JURY TRIAL. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by
the internal laws of the State of New York, without giving effect to any
choice
of law or conflict of law provision or rule that would cause the application
of
the laws of any jurisdiction other than the State of New York. Each party
hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in The City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith 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.
l. REMEDIES. Buyer
and each holder of the Securities shall have all rights and remedies set
forth
in this Agreement and the Certificate of Designation 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.
IN
WITNESS WHEREOF, the Buyer and the Company have caused this Securities Purchase
Agreement to be duly executed as of the date first written above.
|
LAPOLLA
INDUSTRIES, INC.
|
XXXXXXX
X. XXXXX
|
||||
|
By:
|
/s/ Xxxxxxx
X. Xxxxx, EVP
|
By:
|
/s/ Xxxxxxx
X. Xxxxx
|
||
|
Name:
|
Xxxxxxx
X. Xxxxx
|
Name: |
Xxxxxxx
X. Xxxxx
|
||
|
Title:
|
Executive
Vice President
|
||||
6
