EXHIBIT 10.23
AMENDED AND SUPERCEDING
SECURITIES SUBSCRIPTION AGREEMENT
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THIS AMENDED AND SUPERCEDING SECURITIES SUBSCRIPTION AGREEMENT, dated as of
December 17, 2002 ("Amended Agreement"), is executed in reliance upon the
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exemption from registration afforded by Rule 506 promulgated under Regulation D
by the Securities and Exchange Commission ("SEC"), under the Securities Act of
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1933, as amended. Capitalized terms used herein and not defined shall have the
meanings given to them in Rule 506 and Regulation D.
This Amended Agreement has been executed and entered into by and between
Xxxxxxx Xxxxxx, Esq., 0000 Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000
("Buyer"), to purchase shares of the Class A preferred stock, par value $.001
per share ("Preferred Stock"), of Material Technologies, Inc., a corporation
organized under the laws of Delaware, with executive offices 00000 Xxx Xxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the "Seller@) at a
purchase price of $1.00 per share, with the aggregate purchase price equaling
$100,000. Buyer hereby represents and warrants to, and agrees with Seller:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY SECTION 3(B) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND RULE 506 OF
REGULATION D PROMULGATED THEREUNDER.
THE SECURITIES PURCHASED UNDER THIS AGREEMENT WILL BEAR A RESTRICTIVE
LEGEND REFLECTING THAT THE SHARES OF PREFERRED STOCK THAT ARE THE SUBJECT
OF THIS AGREEMENT ARE "RESTRICTED SECURITIES" WITHIN THE DEFINITION OF
REGULATION D OF THE 1933 ACT.
1. Agreement to Subscribe; Purchase Price.
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(a) Superceded Agreement. This Amended Agreement is entered into to
amend and supercede any and all Securities Subscription Agreements previously
entered into between the Buyer and the Seller with respect to the Buyer's
subscription for the Seller's Class A Preferred Stock, par value $.001 per
share. The terms and conditions of this Amended Agreement shall relate back to
and supercede the terms of conditions of all such previous Securities
Subscription Agreements.
(b) Subscription. The undersigned Buyer hereby subscribes for and agrees to
purchase the Seller's Class A Preferred Stock, par value $.001 per share, in the
amount of 100,000 shares at a price of $1.00 per share for a total aggregate
purchase price of $100,000 ("Purchase Price"). The Class A Preferred Stock shall
have the rights, preferences and limitations set forth in Section 3(b) of this
Amendment Agreement.
(b) Payment. The Purchase Price for the Preferred Stock shall be
delivered to the Seller at the date of this Agreement, against the delivery to
the Buyer of duly authorized shares of the Seller's Preferred Stock, in the
amount set forth above in Section 1(a) of this Agreement.
(c) Closing. Subject to the satisfaction of the conditions set forth
in Sections 7, 8 and 11 below, the Closing of the transactions contemplated by
this Agreement shall take place (AClosing Date@) when (i) Seller delivers the
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Preferred Stock to the Buyer, (ii) Seller executes this Agreement and any
transaction documents, including appropriate resolutions of its Board of
Directors, and (iii) Buyer pays the Purchase Price for the Preferred Stock as
shown in Section 1(a) of this Agreement.
2. Buyer Representations and Covenants;
Access to Information.
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In connection with the purchase and sale of the Preferred Stock, Buyer
represents and warrants to, and covenants and agrees with Seller as follows:
(a) Buyer is not, and on the closing date will not be, an affiliate of
Seller;
(b) Buyer is an Aaccredited investor@ as defined in Rule 501 of Regulation
D promulgated under the 1933 Act, and is purchasing the Preferred Stock for his
own account and Buyer is qualified to purchase the Preferred Stock Shares under
the laws of the State of California
(c) All offers and sales of any of the Preferred Stock by Buyer shall be
made
in compliance with any applicable securities laws of any applicable jurisdiction
and in accordance with Rule 506, as applicable, of Regulation D or pursuant to
registration of securities under the 1933 Act or pursuant to an exemption from
registration;
(d) Buyer understand that the Preferred Stock is not registered under
the 1933 Act and is being offered and sold to in reliance on specific exemptions
from the registration requirements of Federal and State securities laws, and
that Seller is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of Buyer set forth
herein in order to determine the applicability of such exemptions and the
suitability of Buyer to acquire the Preferred Stock;
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(e) Buyer shall comply with Rule 506 promulgated under Regulation D;
(f) Buyer has the full right, power and authority to enter into this
Agreement and to consummate the transaction contemplated herein. This Agreement
has been duly authorized, validly executed and delivered on behalf of Buyer and
is a valid and binding agreement in accordance with its terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(g) As to any Buyer that is a corporations, the execution and delivery
of this Agreement and the consummation of the purchase of the Preferred Stock
and the transactions contemplated by this Agreement do not and will not conflict
with or result in a breach by Buyer of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or by-laws (or similar
constitutive documents) of Buyer or any indenture, mortgage, deed of trust, or
other material agreement or instrument to which Buyer is a party or by which it
or any of its properties or assets are bound, or any existing applicable law,
rule or regulation of the United States or any State thereof or any applicable
decree, judgment or order of any Federal or State court, Federal or State
regulatory body, administrative agency or other United States governmental body
having jurisdiction over Buyer or any of its properties or assets;
(h) All invitations, offers and sales of or in respect of, any of the
Preferred Stock, by Buyer and any distribution by Buyer of any documents
relating to any invitation, offer or sale by them of any of the Preferred Stock
will be in compliance with applicable laws and regulations, will be made in such
a manner that no prospectus need be filed and no other filing need be made by
Seller with any regulatory authority or stock exchange in any country or any
political sub-division of any country, and Buyer will make no misrepresentations
nor omissions of material fact in the invitation, offer or resale of the
Preferred Stock;
(i) The Buyer (or others for whom it is contracting hereunder) has been
advised to consult his own legal and tax advisors with respect to applicable
resale restrictions and applicable tax considerations and he (or others for whom
it is contracting hereunder) is solely responsible (and the Seller is not in any
way responsible) for compliance with applicable resale restrictions and
applicable tax legislation;
(j) Buyer understands that no Federal or State or foreign government
agency has
passed on or made any recommendation or endorsement of the Preferred Stock;
(k) Buyer has had an opportunity to receive and review all material
information and financial data and to discuss with the officers of Seller, all
matters relating to the securities, financial condition, operations and
prospects of Seller and any questions raised by Buyer has been answered to
Buyer's satisfaction.
(l) Buyer acknowledges that the purchase of the Preferred Stock
involves a high
degree of risk. Buyer has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of
purchasing the Preferred Stock. Buyer understands that the Preferred Stock is
not being registered under the 1933 Act, or under any state securities laws, and
therefore Buyer must bear the economic risk of this investment for an indefinite
period of time;
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(m) The Buyer is not a "10-percent Shareholder" (as defined in Section
871(h)(3)(B) of the U.S. Internal Revenue Code) of Seller; and
(n) Buyer acknowledges and agrees that the transactions contemplated by
this Agreement have taken place solely and exclusively within the State of
California.
3. Seller Representations and Covenants.
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(a) Seller is a corporation duly organized and validly existing under
the laws of the State of Delaware and is in good standing under such laws with
its principal executive office located in the State of California. The Seller
has all requisite corporate power and authority to own, lease and operate its
properties and assets, and to carry on its business as presently conducted. The
Seller is qualified to do business as a foreign corporation in each jurisdiction
in which the ownership of its property or the nature of its business requires
such qualification, except where failure to so qualify would not have a material
adverse effect on the Seller.
(b) There are 200,000,000 shares of Seller's Common Stock, $.001 par
value per share ("Common Stock") authorized and approximately 97,719,335
outstanding as of December 17, 2002 and there are 50,000,000 shares of Seller's
Preferred Stock, $.001 par value per share ("Preferred Stock") authorized and
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approximately 387,471 outstanding as of that same date. All issued and
outstanding shares of our Common and Preferred Stock have been authorized and
validly issued and are fully paid and non-assessable. The Class A Preferred
Stock shall be convertible, at the Buyer's election, into a predetermined number
of shares of Common Stock, calculated by multiplying the number of Shares of
Class A Preferred Stock purchased by the Buyer by 2. After conversion, the
Seller shall deliver replacement Common Stock certificates to the Buyer within
10 business days after written notice of conversion is sent to the Seller's
address by the Buyer. Upon receipt of the Common Stock certificates after
conversion, the Class A Preferred Stock shall be canceled on the stock transfer
records maintained by the Seller's stock transfer agent. The Class A Preferred
Stock subscribed hereby also shall carry cash dividend rights equal to a 10%
cumulative dividend per annum, subordinated to any other dividend rights held by
the Seller's outstanding shares of Class A Preferred Stock (the "Dividends"),
with such Dividends being payable only out of the Seller's earnings before
interest, taxes, depreciation and administrative expenses of the Seller
("EBIDTA").
(c) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or acceleration
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of any obligation or to a loss of a material benefit, under, any provision of
the Articles of Incorporation, and any amendments thereto, By-Laws, Stockholders
Agreements and any amendments thereto of the Seller or any material mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law ordinance, rule or
regulation applicable to the Seller, its properties or assets. There is no
action, suit or proceeding pending, or to the knowledge of the Seller,
threatened against the Seller, before any court or arbitrator or any government
body, agency or official, which would have a material adverse affect on Seller=s
operations or financial condition.
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(d) The Seller is subject to the reporting requirements of Sections 13
or 15(d) of the Securities and Exchange Act. The Preferred Stock when issued,
will be issued in compliance with all applicable U.S. federal and state
securities laws. The execution and delivery by the Seller of this Agreement and
the issuance of the Preferred Stock will not contravene or constitute a default
under any provision of applicable law or regulation. The Seller is in
compliance with and conforms with, and will continue to comply with and conform
with, all securities laws, state and federal, ordinances, rules, regulations,
orders, restrictions and all other legal requirements of any domestic or foreign
government or any instrumentality thereof having jurisdiction over the conduct
of its businesses or the ownership of its properties, including but not limited
to all laws concerning investor relations, public relations, disclosures under
the securities laws and broker-dealers statutes and laws.
(e) There is no material fact known to the Seller that has not been
publicly disclosed by the Seller or disclosed in writing to the Buyer which
could reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or on the earnings, business affairs, properties or
assets of the Seller, or could reasonably be expected to materially and
adversely affect the ability of the Seller to perform its obligations pursuant
to this Agreement. The information furnished by the Seller to Buyer for
purposes of or in connection with this Agreement or any transaction contemplated
hereby does not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they are made, not misleading.
(f) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Seller
is required in connection with the valid execution and delivery of this
Agreement, or the offer, sale or issuance of the Preferred Stock or Preferred
Stock, or the consummation of any other transaction contemplated hereby, except
the filing with the SEC and certain other states of a Form D Notice of Sale of
Securities.
(g) There is no action, proceeding or investigation pending, or to the
Seller's knowledge, threatened, against the Seller which might result, either
individually or in the aggregate, in any material adverse change in the
business, prospects, conditions, affairs or operations of the Seller. The
Seller is not a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit proceeding or investigation by the
Seller currently pending or which the Seller intends to initiate. The SEC has
not issued any order suspending trading in the Seller's Preferred Stock and the
Seller is not under investigation by the SEC or the National Association of
Securities Dealers, and there are no proceedings pending or threatened before
either regulatory body.
(h) There are no other material outstanding debt or equity securities
presently convertible into Preferred Stock.
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(j) The issuance, sale and delivery of the Preferred Stock has been
duly authorized by all required corporate action on the part of the Seller, and
when issued, sold and delivered in accordance with the terms hereof and thereof
for the consideration expressed herein and therein, will be duly and validly
issued, fully paid and non-assessable. There are no pre-emptive rights of any
shareholder of Seller.
(k) This Agreement has been duly authorized, validly executed and
delivered on behalf of Seller and is a valid and binding agreement in accordance
with its terms, subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally. The Seller
has all requisite right, power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All corporate
action on the part of the Seller, its directors and shareholders necessary for
the authorization, execution, delivery and performance of this Agreement and the
Preferred Stock has been taken. Upon their issuance to the Buyer, the Preferred
Stock will be validly issued and non-assessable, and will be free of any liens
or encumbrances.
(l) Seller acknowledges and agrees that the transactions contemplated by
this the Agreement have taken place solely and exclusively within the State of
California.
4. Exemption; Reliance on Representations. Buyer understands that the
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offer and sale of the Securities are not being registered under the 1933 Act.
Seller and Buyer are relying on the rules governing offers and sales made
pursuant to Rule 506 promulgated under Regulation D. The offer and sale of the
Shares are made solely within the State and jurisdiction of California.
5. Delivery Instructions. The Preferred Stock being purchased
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hereunder shall be delivered to the Buyer, and the Purchase Price, shall be
delivered to the Seller.
6. Conditions To Seller's Obligation To Sell. Seller's obligation to
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sell the Preferred Stock is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as executed
by Buyer.
(b) All of the representations and warranties of the Buyer contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date. The Buyer shall have
performed or complied with all agreements and satisfied all conditions on its
part to be performed, complied with or satisfied at or prior to the Closing
Date.
(c) No order asserting that the transactions contemplated by this Agreement
are subject to the registration requirements of the Act shall have been issued,
and no proceedings for that purpose shall have been commenced or shall be
pending or, to the knowledge of the Seller, be contemplated. No stop order
suspending the sale of the Preferred Stock or Preferred Stock shall have been
issued, and no proceedings for that purpose shall have been commenced or shall
be pending or, to the knowledge of the Seller, be contemplated.
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7. Conditions To Buyer' Obligation To Purchase. Buyer' obligation to
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purchase the Preferred Stock is conditioned upon:
(a) The confirmation of receipt and acceptance by Seller of this
Agreement as evidenced by execution of this Agreement by a duly authorized
officer of Seller.
(b) Delivery of the Preferred Stock to the Buyer.
8. Miscellaneous.
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(a) Entire Agreement. This Agreement, constitutes the entire agreement
between the parties, and neither party shall be liable or bound to the other in
any manner by any warranties, representations or covenants except as
specifically set forth herein. Any previous agreement among the parties related
to the transactions described herein is superseded hereby. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the restrictive successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
(b) Survival. All representations and warranties contained in this
Agreement by Seller and Buyer shall survive the closing of the transactions
contemplated by this Agreement.
(c) Governing Law. This Agreement shall be construed in accordance
with the laws of California applicable to contracts made and wholly to be
performed within the State of California and shall be binding upon the
successors and assigns of each party hereto. Buyer and Seller hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of California. At the Buyer's sole election, any dispute
between the parties may be arbitrated rather than litigated in the courts,
before the arbitration board of the American Arbitration Association in Los
Angeles, California and pursuant to its rules. Upon demand made by the Buyer to
the Seller, such Seller agrees to submit to and participate in such arbitration.
This Agreement may be executed in counterparts, and the facsimile transmission
of an executed counterpart to this Agreement shall be effective as an original.
(d) Seller Indemnification. Seller agrees to indemnify and hold Buyer
harmless from any and all claims, damages and liabilities arising from Seller's
breach of its representations and/or covenants set forth herein.
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(e) Buyer' Indemnification. Buyer agrees to indemnify and hold Seller
harmless from any and all claims, damages and liabilities arising from Buyer'
breach of their representations and warranties set forth in this Agreement.
(f) Form D. If required, Seller shall filed a Form D with the
Commission and all filings required by the applicable securities regulatory
agencies upon the Closing of this transaction.
(g) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be delivered by hand or sent
by Fedex for next day delivery. Each such notice or other communication shall
for all purposes of Agreement be treated as effective or having been given when
delivered, if delivered personally, or, if sent by overnight express mail
service, 1 day after the same has been depos-ited with the Fedex. All such
notices must also be sent by facsimile on the same day to the parties as
follows:
If to Seller: Material Technologies,Inc.
00000 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, CEO and President
Fax: 000-000-0000
If to Buyer: See Page 1 of this Agreement
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed this Amended Agreement as
of the date first set forth above.
Official Signatory of Seller:
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MATERIAL TECHNOLOGIES, INC.
/s/ Xxxxxx X. Xxxxxxxxx
By: __________________________________
Title: President
and Chief Executive Officer
Signatory of Buyer:
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/s/ Xxxxxxx Xxxxxx
By: ___________________________________
Xxxxxxx Xxxxxx, Esq.
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