NOTE PURCHASE AGREEMENT
BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
AND
CERTAIN INVESTORS
(AS LISTED ON SCHEDULE A)
DATED SEPTEMBER 30th, 2004
NOTE PURCHASE AGREEMENT
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This NOTE PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as
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of 30th day of September, 2004 by and among ENTECH ENVIRONMENTAL TECHNOLOGIES,
INC. INC., a corporation organized and existing under the laws of the State of
Florida ("ENTECH ENVIRONMENTAL TECHNOLOGIES, INC." or the "COMPANY"), and
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certain investors, (hereinafter referred to collectively as "INVESTOR" OR
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"INVESTORS") as listed on Schedule A herein (each agreement with an Investor
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being deemed a separate and independent agreement between the Company and such
Investor).
PRELIMINARY STATEMENT:
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WHEREAS, the Investors wish to advance to the Company, upon the terms and
subject to the conditions of this Agreement, a minimum of One Hundred Thousand
Dollars ($100,000) and a maximum of One Million Five Hundred Thousand Dollars
($1,500,000) pursuant to a secured note (the "NOTE"). The Note shall be
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convertible into shares of common stock in the Company at two and one half cents
($0.025) per share (the "CONVERSION PRICE"). In addition, the Company will issue
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Common Stock Purchase Warrants to purchase fifteen (15) shares of common stock
for every dollar ($1.00) of principal of the Note, at an exercise price of
fifteen cents ($0.15) per share. (The Note and corresponding fifteen (15) stock
purchase warrants are referred to herein as a "Unit"). The Note shall have a
term of two (2) years bearing interest at a rate of eight percent (8%) per
annum. The Note shall have first lien and security interest on all assets of the
Company and its subsidiaries. The Company shall have no right to prepay the
Note. Investor may convert the Note at any time.
WHEREAS, the parties intend to memorialize the purchase and sale of such
Units;
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby conclusively acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
INCORPORATION BY REFERENCE, SUPERSEDER AND DEFINITIONS
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1.1 Incorporation by Reference. The foregoing recitals, Schedule A and the
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Exhibits attached hereto and referred to herein, are hereby acknowledged to be
true and accurate, and are incorporated herein by this reference.
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 1 OF 24
1.2 Superseder. This Agreement, to the extent that it is inconsistent with
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any other instrument or understanding among the parties governing the affairs of
the Company, shall supersede such instrument or understanding to the fullest
extent permitted by law. A copy of this Agreement shall be filed at the
Company's principal office.
1.3 Certain Definitions. For purposes of this Agreement, the following
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capitalized terms shall have the following meanings (all capitalized terms used
in this Agreement that are not defined in this Article 1 shall have the meanings
set forth elsewhere in this Agreement):
1.3.1 "1933 ACT" means the Securities Act of 1933, as amended.
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1.3.2 "1934 ACT" means the Securities Exchange Act of 1934, as
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amended.
1.3.3 "AFFILIATE" means a Person or Persons directly or
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indirectly, through one or more intermediaries, controlling, controlled by or
under common control with the Person(s) in question. The term "control," as used
in the immediately preceding sentence, means, with respect to a Person that is a
corporation, the right to the exercise, directly or indirectly, of more than 50
percent of the voting rights attributable to the shares of such controlled
corporation and, with respect to a Person that is not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such controlled Person.
1.3.4 "ARTICLES". The Articles of Organization of the Company,
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as the same may be amended from time to time.
1.3.5 "CLOSING DATE" means the initial advance under the Note
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which shall occur on September 30th, 2004.
1.3.6 "COMMON STOCK" means the shares of common stock of ENTECH
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ENVIRONMENTAL TECHNOLOGIES, INC par value $0.001 per share
1.3.7 "EFFECTIVE DATE" shall mean the date the Registration
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Statement of the Company covering the Shares being subscribed for hereby is
declared effective.
1.3.8 "MATERIAL ADVERSE EFFECT" shall mean any adverse effect on
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the business, operations, properties or financial condition of the Company that
is material and adverse to the Company and its subsidiaries and affiliates,
taken as a whole and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to
perform any of its material obligations under this Agreement or the Registration
Rights Agreement or to perform its obligations under any other material
agreement.
(1) 1.3.9 "FLORIDA ACT" means the Florida revised Statutes, as
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amended.
1.3.10 "PERSON" means an individual, partnership, firm, limited
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liability company, trust, joint venture, association, corporation, or any other
legal entity.
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 2 OF 24
1.3.11 "PURCHASE PRICE" means the advances made for the Units.
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1.3.12 REGISTRATION RIGHTS AGREEMENT" shall mean the registration
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rights agreement between the Investors and the Company attached hereto as
Exhibit B.
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1.3.13 "REGISTRATION STATEMENT" shall mean the registration
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statement under the 1933 Act to be filed with the Securities and Exchange
Commission for the registration of the Shares pursuant to the Registration
Rights Agreement attached hereto as Exhibit B.
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1.3.14 "SEC" means the Securities and Exchange Commission.
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1.3.15 "SEC DOCUMENTS" shall mean the Company's latest Form
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10-K or 10-KSB as of the time in question, all Forms 10-Q or 10-QSB and 8-K
filed thereafter, and the Proxy Statement for its latest fiscal year as of the
time in question until such time as the Company no longer has an obligation to
maintain the effectiveness of a Registration Statement as set forth in the
Registration Rights Agreement.
1.3.16 "SHARES" shall mean, collectively, the shares of Common
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Stock of the Company issued upon conversion of the Note subscribed for hereunder
and those shares of Common Stock issuable to the Investor upon exercise of the
Warrants.
1.3.17 "UNITS" shall mean the Note and the Warrants collectively.
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1.3.18 "WARRANTS" shall mean the Common Stock Purchase Warrants
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in the form attached hereto Exhibit C.
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1.3.19 "INSIDERS" shall mean officers and directors of the Company.
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ARTICLE II
SALE AND PURCHASE OF ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
UNITS AND PURCHASE PRICE
2.1 SALE OF ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. UNITS Upon the terms
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and subject to the conditions set forth herein, and in accordance with
applicable law, the Company agrees to sell, and the Investors, severally and not
jointly, agree to purchase the following Units with an aggregate principal
amount of a minimum One Hundred Thousand Dollars ($100,000) and a maximum of One
Million Five Hundred Thousand Dollars ($1,500,000) in accordance with the
commitments set forth on Schedule A attached hereto, at the Purchase Price on
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the Closing Date, each Unit consisting of:
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 3 OF 24
2.1.1 NOTE Upon execution and delivery of this Agreement and the
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Company's receipt of the Purchase Price (as described herein), each Investor
shall receive Notes of the Company. The Company shall register the shares of
Common Stock underlying conversion of the Notes pursuant to the terms and
conditions of a Registration Rights Agreement attached hereto as Exhibit B.
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2.1.1.1 MAXIMUM EXERCISE The Holder shall not be entitled to convert
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a Note on a conversion date to acquire a number of shares of Common Stock
that would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise
date, and (ii) the number of shares of Common Stock issuable upon the
conversion of the Note with respect to which the determination of this
limitation is being made on a conversion date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of
the outstanding shares of Common Stock on such date. For the purposes of
the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act
of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the
foregoing, the Holder shall not be limited to aggregate conversions which
would result in the issuance of more than 4.99%. The restriction described
in this paragraph may be revoked upon sixty-one (61) days prior notice from
the Holder to the Company. The Holder may allocate which of the equity of
the Company deemed beneficially owned by the Subscriber shall be included
in the 4.99% amount described above and which shall be allocated to the
excess above 4.99%.
2.1.2 WARRANTS Upon execution and delivery of this Agreement and the Company's
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receipt of the Purchase Price (as described herein), each Investor shall receive
Warrants to purchase fifteen (15) shares of common stock for every one dollar
($1.00) of Notes purchased pursuant to the terms and conditions of a Warrant, a
form of which is attached hereto as Exhibit C.
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2.1.2.1 MAXIMUM EXERCISE The Holder shall not be entitled to exercise
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this Warrant on an exercise date in connection with that number of shares
of Common Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates
on an exercise date, and (ii) the number of shares of Common Stock issuable
upon the exercise of this Warrant with respect to which the determination
of this limitation is being made on an exercise date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of
the outstanding shares of Common Stock on such date. For the purposes of
the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act
of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the
foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 4.99%. The restriction described
in this paragraph may be revoked upon sixty-one (61) days prior notice from
the Holder to the Company. The Holder may allocate which of the equity of
the Company deemed beneficially owned by the Subscriber shall be included
in the 4.99% amount described above and which shall be allocated to the
excess above 4.99%.
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 4 OF 30
2.2 PURCHASE PRICE. The purchase price to be paid by each Investor on the
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Closing Date shall be as defined section 1.3.5, as the case may be, in
accordance with on SCHEDULE A attached hereto, and shall be payable in United
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States Dollars. Payment to the Company of the Purchase Price shall be made at
the Closing Date by wire transfer of funds to the account specified by the
Company and provided to the Investor.
Payment by check shall be as follows:
Entech Environmental Technologies, Inc.
c/o X.X. Xxxxx, Incorporated
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Tel: 000-000-0000
Payment by wire shall be as follows:
ARTICLE III
CLOSING DATE AND DELIVERIES AT CLOSING
3.1 CLOSING DATE The closing of the transactions contemplated by this
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Agreement (the "CLOSING"), unless expressly determined herein, shall be held at
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the offices of the Company, at at 5:00 P.M. local time, on the Closing Date or
on such other date and at such other place as may be mutually agreed by the
parties, including closing by facsimile with originals to follow.
3.2 DELIVERIES BY THE COMPANY. In addition to and without limiting any other
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provision of this Agreement, the Company agrees to deliver, or cause to be
delivered, to the Investors, the following:
(a) Within five (5) business days after Closing, ENTECH ENVIRONMENTAL
TECHNOLOGIES, INC. will issue a Note duly endorsed to Investor,
security agreement and UCC Financing Statements;
(b) At or prior to Closing, an executed Agreement;
(c) At or prior to Closing, an executed Warrant in the name of the
Investor in the form attached hereto as Exhibit C;
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(d) At or prior to Closing, an executed Registration Rights Agreement
between the Investor and the Company in the form attached hereto
as Exhibit B;
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NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 5 OF 30
(e) At or prior to Closing, confirmation that the provisions of
Paragraphs 6.6, 6.7, and 6.8 herein have been satisfied or
commenced, as appropriate;
(f) At or prior to Closing, creation of an employee stock ownership
plan and employee stock option plan of a total of fifteen million
(15,000,000) shares and options for shares of common stock in the
Company to vest to management and directors over two (2) years.
Not more than 50% will be vested immediately with the balance
deferred for at least two years from the Closing Date;
(g) Such other documents or certificates as shall be reasonably
requested by the each Investor or its counsel.
3.3 DELIVERIES BY INVESTOR. In addition to and without limiting any other
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provision of this Agreement, each Investor agrees to deliver, or cause to be
delivered, to the Company, as appropriate, the following:
(a) At or prior to Closing, the Purchase Price;
(b) At or prior to Closing, an executed Agreement;
(c) At or prior to Closing, an executed Registration Rights
Agreement between the Investor and the Company in the form
attached hereto as Exhibit B; and
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(d) Such other documents or certificates as shall be reasonably
requested by the Company or his counsel.
In the event any document provided to the other party in Paragraphs 3.2 and 3.2
herein are provided by facsimile, the party shall forward an original document
to the other party within seven (7) business days.
3.4 FURTHER ASSURANCES. The Company and each Investor shall, upon request, on
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or after the Closing Date, cooperate with each other (specifically, the
Company shall cooperate with each Investor, and each Investor shall
cooperate with the Company, and no Investor is required to cooperate with
any other Investor) by furnishing any additional information, executing and
delivering any additional documents and/or other instruments and doing any
and all such things as may be reasonably required by the parties or their
counsel to consummate or otherwise implement the transactions contemplated
by this Agreement.
3.5 THE INVESTORS BY MAJORITY OF DOLLAR AMOUNT INVESTED MAY WAIVE ANY OF THE
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COMPANY'S CONDITIONS OF CLOSING.
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ARTICLE IV
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 6 OF 30
REPRESENTATIONS AND WARRANTIES OF
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. represents and warrants to the
Investors (which warranties and representations shall survive the Closing
regardless of what examinations, inspections, audits and other investigations
the Purchaser has heretofore made or may hereinafter make with respect to such
warranties and representations) as follows:
4.1 ORGANIZATION AND QUALIFICATION. ENTECH ENVIRONMENTAL TECHNOLOGIES,
--------------------------------
INC. is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, and has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and is duly qualified to do business in
any other jurisdiction by virtue of the nature of the businesses conducted by it
or the ownership or leasing of its properties, except where the failure to be so
qualified will not, when taken together with all other such failures, have a
Material Adverse Effect on the business, operations, properties, assets,
financial condition or results of operation of ENTECH ENVIRONMENTAL
TECHNOLOGIES, INC. and its subsidiaries taken as a whole.
4.2 ARTICLES OF INCORPORATION AND BY-LAWS. The complete and correct copies
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of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.'s Articles of Incorporation and
By-Laws, as amended or restated to date which have been filed with the
Securities and Exchange Commission are a complete and correct copy of such
document as in effect on the date hereof and as of the Closing Date.
4.3 CAPITALIZATION.
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4.3.1 The authorized and outstanding capital stock of ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC. is set forth in ENTECH ENVIRONMENTAL
TECHNOLOGIES, INC.'s Annual Report on Form 10-KSB, filed on with the
Securities and Exchange Commission and updated on all subsequent SEC Documents.
All shares of capital stock have been duly authorized and are validly issued,
and are fully paid and no assessable, and free of preemptive rights.
4.3.2 Except pursuant to this Agreement, and as set forth in
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.'s Annual Report on Form 10-KSB, filed on
May 24th, 2004 with the SEC, as of the date hereof and as of the Closing Date,
there are not now outstanding options, warrants, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any class of capital stock of
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., or agreements, understandings or
arrangements to which ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. is a party, or by
which ENTECH ENVIRONMENTAL
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 7 OF 30
TECHNOLOGIES, INC. is or may be bound, to issue additional shares of its capital
stock or options, warrants, scrip or rights to subscribe for, calls or
commitment of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of any class of its capital
stock. The Company agrees to inform the Investors in writing of any additional
warrants granted prior to the Closing Date.
4.3.3 The Company on the Closing Date (i) will have full
right, power, and authority to sell, assign, transfer, and deliver, by reason of
record and beneficial ownership, to each Investor, ENTECH ENVIRONMENTAL
TECHNOLOGIES, INC. Shares hereunder, free and clear of all liens, charges,
claims, options, pledges, restrictions, and encumbrances whatsoever; and (ii)
upon delivery of and payment by each Investor of the Purchase Price to the
Company, such Investor will acquire good and marketable title to such Company
Stock, free and clear of all liens, charges, claims, options, pledges,
restrictions, and encumbrances whatsoever.
4.4 AUTHORITY. ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. has all requisite
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corporate power and authority to execute and deliver this Agreement, the Notes,
Security Agreement and UCC Financing Statements, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC. and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
and no other corporate proceedings on the part of ENTECH ENVIRONMENTAL
TECHNOLOGIES, INC. is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby except as disclosed in this Agreement. This
Agreement has been duly executed and delivered by ENTECH ENVIRONMENTAL
TECHNOLOGIES, INC. and constitutes the legal, valid and binding obligation of
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., enforceable against ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC. in accordance with its terms.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
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delivery of this Agreement by ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. does not,
and the performance by ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. of their
respective obligations hereunder will not: (i) conflict with or violate the
Articles or By-Laws of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.; (ii) conflict
with, breach or violate any federal, state, foreign or local law, statute,
ordinance, rule, regulation, order, judgment or decree (collectively, "LAWS") in
effect as of the date of this Agreement and applicable to ENTECH ENVIRONMENTAL
TECHNOLOGIES, INC.; or (iii) result in any breach of, constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, give to any other entity any right of termination, amendment,
acceleration or cancellation of, require payment under, or result in the
creation of a lien or encumbrance on any of the properties or assets of ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC. pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 8 OF 30
obligation to which ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. is a party or by
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. or any of its properties or assets is
bound. Excluding from the foregoing are such violations, conflicts, breaches,
defaults, terminations, accelerations, creations of liens, or incumbency that
would not, in the aggregate, have a Material Adverse Effect.
4.6 REPORT AND FINANCIAL STATEMENTS. ENTECH ENVIRONMENTAL TECHNOLOGIES,
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INC.'s Annual Report on Form 10-KSB, filed on May 24th, 2004 with the Securities
and Exchange Commission contains the audited financial statements of ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC. as of May 24th, 2004 (the "FINANCIAL
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STATEMENTS"). Each of the balance sheets contained in or incorporated by
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reference into any such Financial Statements (including the related notes and
schedules thereto) fairly presented the financial position of ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC. as of its date, and each of the statements of
income and changes in stockholders' equity and cash flows or equivalent
statements in such Financial Statements (including any related notes and
schedules thereto) fairly presents and will fairly present the results of
operations, changes in stockholders' equity and changes in cash flows, as the
case may be, of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. for the periods to which
they relate, in each case in accordance with United States generally accepted
accounting principles ("U.S. GAAP") consistently applied during the periods
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involved, except in each case as may be noted therein, subject to normal year-
end audit adjustments in the case of unaudited statements. The books and records
of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. have been, and are being, maintained
in all material respects in accordance with U.S. GAAP and any other applicable
legal and accounting requirements and reflect only actual transaction.
4.7 COMPLIANCE WITH APPLICABLE LAWS. ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
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is not in violation of, or, to the knowledge of ENTECH ENVIRONMENTAL
TECHNOLOGIES, INC. is under investigation with respect to or has been given
notice or has been charged with the violation of any Law of a governmental
agency, except for violations which individually or in the aggregate do not have
a Material Adverse Effect.
4.8 BROKERS. No broker, finder or investment banker is entitled to any
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brokerage, finder's or other fee or Commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
4.9 SEC DOCUMENTS. ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. acknowledges that
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ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. is a publicly held company and has made
available to the Investors after demand true and complete copies of any
requested SEC Documents. The Company has registered its Common Stock pursuant to
Section 12 of the 1934 Act, and the Common Stock is listed and traded on the OTC
Bulletin Board Market of the National Association of Securities Dealers, Inc.
The Company has received no
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 9 OF 30
notice, either oral or written, with respect to the continued eligibility of the
Common Stock for such listing, and the Company has maintained all requirements
for the continuation of such listing. The Company has not provided to the
Investors any information that, according to applicable law, rule or regulation,
should have been disclosed publicly prior to the date hereof by the Company, but
which has not been so disclosed. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act, and
rules and regulations of the SEC promulgated thereunder and the SEC Documents
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading that the Investor has received from the Company reports with the
Securities and Exchange Commission and with the NASD.
4.10 LITIGATION. To the knowledge of ENTECH ENVIRONMENTAL TECHNOLOGIES,
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INC., no litigation, claim, or other proceeding before any court or governmental
agency is pending or threatened against ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
that materially effects this Agreement.
4.11 EXEMPTION FROM REGISTRATION. Subject to the accuracy of the Investors'
-----------------------------
representations in Article V, except as required pursuant to the Registration
Rights Agreement, the sale of the Units will not require registration under the
1933 Act and/or any applicable state securities law. When validly converted in
accordance with the terms of the Note, and Warrants, as exercised in accordance
with their terms, the Shares underlying the Note and the Warrants will be duly
and validly issued, fully paid, and non-assessable. The Company is issuing the
Units in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D as promulgated
by the SEC under the 1933, and/or Section 4(2) of the 1933 Act.
4.12 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS TRANSACTION.
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Neither the Company nor any of its Affiliates nor, to the knowledge of the
Company, any Person acting on its or their behalf (i) has conducted or will
conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D as promulgated by the SEC under the 0000 Xxx) or general
advertising with respect to the sale of the Units, or (ii) made any offers or
sales of any security or solicited any offers to buy any security under any
circumstances that would require registration of the Units, under the 1933 Act,
except as required herein.
4.13 NO MATERIAL ADVERSE CHANGE. Since March 31st, 2004, no Material Adverse
--------------------------
Effect has occurred or exists with respect to the Company that has not been
disclosed in the SEC Documents. No material supplier has given notice, oral or
written, that it intends to cease or reduce the volume of its business with the
Company from historical levels. Since March 31st 2004, no event or circumstance
has occurred or exists with respect to the Company or its businesses,
properties, prospects, operations or financial condition, that, under any
applicable
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 10 OF 30
law, rule or regulation, requires public disclosure or announcement prior to the
date hereof by the Company but which has not been so publicly announced or
disclosed in writing to the Investors.
4.14 MATERIAL NON-PUBLIC INFORMATION. The Company has not disclosed to the
--------------------------------
Investors any material non-public information that (i) if disclosed, would
reasonably be expected to have a material effect on the price of the Common
Stock or (ii) according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but which has not
been so disclosed.
4.15 INTERNAL CONTROLS AND PROCEDURES. The Company maintains books and
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records and internal accounting controls which provide reasonable assurance that
(i) all transactions to which the Company or any subsidiary is a party or by
which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to the Company's
consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.
4.16 FULL DISCLOSURE. No representation or warranty made by ENTECH
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ENVIRONMENTAL TECHNOLOGIES, INC. in this Agreement and no certificate or
document furnished or to be furnished to the Purchaser pursuant to this
Agreement contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor, severally and not jointly, as to himself or itself and not as to
any other Investor, represents and warrants to the Company with the Company
that:
5.1 ORGANIZATION AND STANDING OF THE INVESTOR. Where the Investor is a
-----------------------------------------------
corporation, such Investor is duly incorporated, validly existing and in good
standing under the laws of the state in which it was formed. The state in which
any offer to purchase shares hereunder was made or accepted by such Investor is
the state shown as such Investor's address. If an entity, the Investor was not
formed for the purpose of investing solely in the Units the subject of this
Agreement.
5.2 AUTHORIZATION AND POWER. The Investor has the requisite power and
-------------------------
authority to enter into and perform this Agreement and to purchase the Units
being sold to it hereunder. The execution, delivery and performance of this
Agreement by the Investor and the consummation by the Investor of the
transactions contemplated hereby have been duly authorized by all
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 11 OF 30
necessary corporate action where appropriate. This Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Investor and at the Closing shall constitute valid and binding obligations of
the Investor enforceable against the Investor in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
5.3 NO CONFLICTS. The execution, delivery and performance of this Agreement
------------
and the consummation by the Investor of the transactions contemplated hereby or
relating hereto do not and will not (i) result in a violation of such Investor's
charter documents or bylaws where appropriate or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument to which the Investor is a party, or result in a violation of any
law, rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Investor or its properties (except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, have a Material Adverse Effect on such Investor). The Investor is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of such Investor's obligations under this Agreement or to
purchase the Units in accordance with the terms hereof, provided that for
purposes of the representation made in this sentence, the Investor is assuming
and relying upon the accuracy of the relevant representations and agreements of
the Company herein.
5.4 FINANCIAL RISKS. The Investor acknowledges that such Investor is able to
---------------
bear the financial risks associated with an investment in the Units and that it
has been given full access to such records of the Company and the subsidiaries
and to the officers of the Company and the subsidiaries as it has deemed
necessary or appropriate to conduct its due diligence investigation. The
Investor is capable of evaluating the risks and merits of an investment in the
Units by virtue of its experience as an investor and its knowledge, experience,
and sophistication in financial and business matters and the Investor is capable
of bearing the entire loss of its investment in the Units.
5.5 ACCREDITED INVESTOR. The Investor is (i) an "accredited investor" as
--------------------
that term is defined in Rule 501 of Regulation D promulgated under the 1933 Act
by reason of Rule 501(a)(3) and (6), (ii) experienced in making investments of
the kind described in this Agreement and the related documents, (iii) able, by
reason of the business and financial experience of its officers (if an entity)
and professional advisors (who are not affiliated with or compensated in any way
by the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its investment
in the Units.
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5.6 BROKERS. No broker, finder or investment banker is entitled to any
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brokerage, finder's or other fee or Commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Investors.
5.7 KNOWLEDGE OF COMPANY. Each Investor and such Investor's advisors, if
-----------------------
any, have been, upon request, furnished with all materials relating to the
business, finances and operations of the Company and materials relating to the
offer and sale of the Units. Each Investor and such Investor's advisors, if any,
have been afforded the opportunity to ask questions of the Company and have
received complete and satisfactory answers to any such inquiries.
5.8 RISK FACTORS Each Investor understands that such Investor's investment
-------------
in the Units involves a high degree of risk. Each Investor 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 Units.
Each Investors warrants that such Investor is able to bear the complete loss of
such Buyer's investment in the Units.
5.9 FULL DISCLOSURE. No representation or warranty made by the Investor in
----------------
this Agreement and no certificate or document furnished or to be furnished to
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. pursuant to this Agreement contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading. Except as set forth or referred to in this Agreement,
Investor does not have any agreement or understanding with any person relating
to acquiring, holding, voting or disposing of any equity securities of the
Company.
5.10 REIMBURSEMENT OF DUE DILIGENCE EXPENSES. Upon closing, the Company
-----------------------------------------
shall reimburse Investors for reasonable expenses incurred in conducting due
diligence. Such reimbursement shall be allocated to Investors that provide proof
of payment of such expenses in a proportional manner. If the transaction is not
closed there shall be no reimbursement of any due diligence expenses.
5.11 REIMBURSEMENT OF LEGAL EXPENSES. Upon closing, the Company shall
----------------------------------
reimburse Investors for all reasonable legal expenses incurred relating to this
transaction including any retainer for current services and fees paid for past
legal services on behalf of the Company. Such reimbursement shall be allocated
to Investors that provide proof of payment of such expenses in a proportional
manner. If the transaction is not closed there shall be no reimbursement of any
legal expenses.
5.12 REIMBURSEMENT OR CONVERSION OF ALL PAYMENTS BY INVESTOR ON BEHALF OF
-----------------------------------------------------------------------
COMPANY. Upon closing, the Company shall reimburse Investors for all advanced
-------
funds and for any and all payments (direct and indirect), for any purpose
whatsoever, made to any and all vendors, creditors and for liability settlements
of the Company and its subsidiaries. Such advanced funds and payments include
but are not limited to settlements paid and payments made for working
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capital purposes as well as items paid in Sections 5.10 and 5.11 above. The
Investor in its sole discretion may convert such advanced funds and payments
into additional subscription of the Note.
ARTICLE VI
COVENANTS OF THE COMPANY
6.1. REGISTRATION RIGHTS. The Company shall cause the Registration Rights
--------------------
Agreement to remain in full force and effect and the Company shall comply in all
material respects with the terms thereof.
6.2. RESERVATION OF COMMON STOCK. As of the date hereof, the Company has
------------------------------
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the shares of Common Stock underlying the Notes
and Warrants.
6.3. LISTING OF COMMON STOCK. The Company hereby agrees to maintain the
--------------------------
listing of the Common Stock on a publicly trading market. The Company will take
all action to continue the listing and trading of its Common Stock on a publicly
traded market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of a publicly traded
market.
6.4. EXCHANGE ACT REGISTRATION. The Company will cause its Common Stock to
---------------------------
continue to be registered under Section 12(b) or (g) of the 1934 Act, will use
its best efforts to comply in all respects with its reporting and filing
obligations under the 1934 Act, and will not take any action or file any
document (whether or not permitted by the 1934 Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the 1934 until the Investors have disposed of all
of their Shares or the shares of Common Stock underlying the Warrants.
6.5. CORPORATE EXISTENCE; CONFLICTING AGREEMENTS. The Company will take all
--------------------------------------------
steps necessary to preserve and continue the corporate existence of the Company.
The Company shall not enter into any agreement, the terms of which agreement
would restrict or impair the right or ability of the Company to perform any of
its obligations under this Agreement or any of the other agreements attached as
exhibits hereto.
6.6 PREFERRED STOCK. On or prior to the Closing Date, the Company will
-----------------
cause to be cancelled all authorized shares of Preferred Stock of the
Company. For a period of three years from the closing the Company will not
issue any preferred stock.
6.7 CONVERTIBLE DEBT. On or prior to the Closing Date, the Company will
------------------
cause to be cancelled all convertible debt in the Company other than the
Notes. For a period of three
NOTE PURCHASE AGREEMENT BETWEEN
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PAGE 14 OF 30
years from the closing the Company will not issue any convertible debt
other than the Notes.
6.8 RESET EQUITY DEALS. On or prior to the Closing Date, the Company will
-------------------
cause to be cancelled any and all reset features related to any shares
outstanding that could result in additional shares being issued. For a
period of three years from the closing the Company will not enter into any
transactions that have any reset features that could result in additional
shares being issued.
6.9 INDEPENDENT DIRECTORS. The Company will cause the appointment of at
----------------------
least two independent directors within one hundred (100) days. If no such
Directors are appointed, the Company shall pay to the Investors, pro rata,
as liquidated damages and not as a penalty, an amount equal to twenty four
percent (24%) of the Purchase Price per annum, payable monthly. The parties
agree that the only damages payable for a violation of the terms of this
Agreement with respect to which liquidated damages are expressly provided
shall be such liquidated damages. Nothing shall preclude the Investor from
pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement. The parties hereto agree that the liquidated
damages provided for in this Section 6.9 constitute a reasonable estimate
of the damages that may be incurred by the Investor by reason of the
failure of the Company to appoint at least two independent directors in
accordance with the provision hereof.
6.10 INDEPENDENT DIRECTORS BECOME MAJORITY OF AUDIT AND COMPENSATION
----------------------------------------------------------------------
COMMITTEES. The Company will cause the appointment of a majority of outside
----------
directors to the audit and compensation committees of the board of
directors within one hundred and twenty (120) days. If no such Directors
are appointed, the Company shall pay to the Investors, pro rata, as
liquidated damages and not as a penalty, an amount equal to twenty four
percent (24%) of the Purchase Price per annum, payable monthly. The parties
agree that the only damages payable for a violation of the terms of this
Agreement with respect to which liquidated damages are expressly provided
shall be such liquidated damages. Nothing shall preclude the Investor from
pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement. The parties hereto agree that the liquidated
damages provided for in this Section 6.10 constitute a reasonable estimate
of the damages that may be incurred by the Investor by reason of the
failure of the Company to appoint at least two independent directors in
accordance with the provision hereof.
6.11 USE OF PROCEEDS. The Company will use the proceeds from the sale of the
-----------------
Units (excluding amounts paid by the Company for legal and administrative
fees in connection with the sale of the Units) for working capital.
6.12 RIGHT OF FIRST REFUSAL. Each Investor shall have the right to participate
----------------------
in any financing by the company on a pro rata basis at eighty percent (80%) of
the offering price.
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PAGE 15 OF 30
6.13 PRICE ADJUSTMENT. If, within the 24 months following the Closing Date,
----------------
the Company closes on the sale of a note or notes, shares of Common Stock, or
shares of any class of Preferred Stock at a price per share of Common Stock, or
with a conversion right to acquire Common Stock at a price per share of Common
Stock, that is less than the Conversion Price (as adjusted to the capitalization
per share as of the Closing Date, following any stock splits, stock dividends,
or the like) (collectively, the "Subsequent Conversion Price"), the Company
shall make a post-Closing adjustment in the Conversion Price so that the
effective price per share paid by the Investors is reduced to the Subsequent
Conversion Price as applied to the Investors' then current holdings.
6.14 INSIDER SELLING. The earliest any "insiders" can start selling their
-----------------
shares shall be two years from Closing. Investors and Xxxxxxx Xxxxx shall
not be considered "Insiders".
6.15 EMPLOYMENT AND CONSULTING CONTRACTS. Employment and consulting contracts
-------------------------------------
with officers and directors shall at time of Closing and for three years
thereafter shall not contain: any bonuses not related directly to increases
in earnings per share; any car allowances not approved by the unanimous
vote of the board of directors; any anti-dilution or reverse split
protection provisions for shares, options or warrants; any deferred
compensation; any unreasonable compensation or benefit clauses; or any
termination clauses of over one year of salary.
6.16 NOTICE OF INTENT TO SELL OR MERGE COMPANY. The Company will give Investor
-------------------------------------------
90 days notice before entering into a transaction to merge or sell a
controlling interest in the Company.
6.17 SALE OR MERGER OF COMPANY. In the event of a sale or merger of
------------------------------
substantially all of the Company the 4.99% restriction in the Notes and in
the Warrants will immediately be released and the Buyer will have the right
to exercise the options concurrent with the sale.
ARTICLE VII
COVENANTS OF THE INVESTORS
7.1 COMPLIANCE WITH LAW. The Investor's trading activities with respect to
---------------------
shares of the Company's Common Stock will be in compliance with all applicable
state and federal securities laws, rules and regulations and rules and
regulations of any public market on which the Company's Common Stock is listed.
NOTE PURCHASE AGREEMENT BETWEEN
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PAGE 16 OF 30
7.2 TRANSFER RESTRICTIONS. The Investor's acknowledge that (1) the Notes,
---------------------
Warrants and shares underlying the Notes and Warrants have not been registered
under the provisions of the 1933 Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) the Investor's shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Notes, Warrants and shares
underlying the Notes and Warrants to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; and (2) any sale of
the Notes, Warrants and shares underlying the Notes and Warrants made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such 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 used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder.
7.3 RESTRICTIVE LEGEND. The Investors acknowledge and agree that the Notes,
------------------
the Warrants and the Shares underlying the Notes and Warrants, and, until such
time as the Shares underlying the Notes and Warrants have been registered under
the 1933 Act and sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Shares, shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH
SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT."
ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to consummate the transactions contemplated
hereby shall be subject to the fulfillment, on or prior to Closing Date, of the
following conditions:
8.1 NO TERMINATION. This Agreement shall not have been terminated pursuant
--------------
to Article X hereof.
8.2 REPRESENTATIONS TRUE AND CORRECT. The representations and warranties of
--------------------------------
the Investors contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if made on as of the Closing Date.
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PAGE 17 OF 30
8.3 COMPLIANCE WITH COVENANTS. The Investors shall have performed and
-------------------------
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied by it prior to or at the
Closing Date.
8.4 NO ADVERSE PROCEEDINGS. On the Closing Date, no action or proceeding
----------------------
shall be pending by any public authority or individual or entity before any
court or administrative body to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the transactions contemplated hereby or to
recover any damages or obtain other relief as a result of the transactions
proposed hereby.
ARTICLE IX
CONDITIONS PRECEDENT TO INVESTOR'S OBLIGATIONS
The obligation of the Investors to consummate the transactions contemplated
hereby shall be subject to the fulfillment, on or prior to Closing Date unless
specified otherwise, of the following conditions:
9.1 NO TERMINATION. This Agreement shall not have been terminated pursuant
--------------
to Article X hereof.
9.2 REPRESENTATIONS TRUE AND CORRECT. The representations and warranties
----------------------------------
of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if made on as of the Closing Date.
9.1 COMPLIANCE WITH COVENANTS . ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
----------------------------
shall have performed and complied in all material respects with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied by it prior to or at the Closing Date.
9.4 NO ADVERSE PROCEEDINGS. On the Closing Date, no action or proceeding
----------------------
shall be pending by any public authority or individual or entity before any
court or administrative body to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the transactions contemplated hereby or to
recover any damages or obtain other relief as a result of the transactions
proposed hereby.
ARTICLE X
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ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 18 OF 30
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated at any time prior to
-----------
the Effective Time:
10.1.1 by mutual written consent of the Investors and the Company;
10.1.2 by the Company upon a material breach of any
representation, warranty, covenant or agreement on the part of the Investor set
forth in this Agreement, or the Investor upon a material breach of any
representation, warranty, covenant or agreement on the part of ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC. set forth in this Agreement, or if any
representation or warranty of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. or the
Investor, respectively, shall have become untrue, in either case such that any
of the conditions set forth in Article VIII or Article IX hereof would not be
satisfied (a "TERMINATING BREACH"), and such breach shall, if capable of cure,
not have been cured within five (5) days after receipt by the party in breach of
a notice from the non-breaching party setting forth in detail the nature of such
breach.
10.2 EFFECT OF TERMINATION. In the event of the termination of this
-----------------------
Agreement pursuant to Paragraph 10.1 hereof, there shall be no liability on the
party of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC. or the Investors or any of
their respective officers, directors, agents or other representatives and all
rights and obligations of any party hereto shall cease, except as expressed
herein, except that the Company retains the obligations pursuant to Paragraph
6.7.
10.3 AMENDMENT. This Agreement may be amended by the parties hereto any
---------
time prior to the Closing Date by an instrument in writing signed by the parties
hereto.
10.3 WAIVER. At any time prior to the Closing Date, ENTECH ENVIRONMENTAL
------
TECHNOLOGIES, INC. or the Investors, as appropriate, may: (a) extend the time
for the performance of any of the obligations or other acts of other party or;
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto which have been made to it
or them; or (c) waive compliance with any of the agreements or conditions
contained herein for its or their benefit. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound hereby.
ARTICLE XI
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 19 OF 30
GENERAL PROVISIONS
11.1 TRANSACTION COSTS. Except as otherwise provided herein, each of the
------------------
parties shall pay all of his or its costs and expenses (including attorney fees
and other legal costs and expenses and accountants' fees and other accounting
costs and expenses) incurred by that party in connection with this Agreement.
11.2 INDEMNIFICATION. The Investor agrees to indemnify, defend and hold
---------------
the Company (following the Closing Date) and its officers and directors harmless
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities or damages, including interest, penalties and
reasonable attorney's fees, that it shall incur or suffer, which arise out of or
result from any breach of this Agreement by such Investor or failure by such
Investor to perform with respect to any of its representations, warranties or
covenants contained in this Agreement or in any exhibit or other instrument
furnished or to be furnished under this Agreement. The Company agrees to
indemnify, defend and hold the Investor harmless against and in respect of any
and all claims, demands, losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties and reasonable attorney's fees, that it
shall incur or suffer, which arise out of, result from or relate to any breach
of this Agreement or failure by the Company to perform with respect to any of
its representations, warranties or covenants contained in this Agreement or in
any exhibit or other instrument furnished or to be furnished under this
Agreement. In no event shall the Company be entitled to recover consequential or
punitive damages resulting from a breach or violation of this Agreement nor
shall any party have any liability hereunder in the event of gross negligence or
willful misconduct of the indemnified party. In the event of a breach of this
Agreement by the Company, the Investor shall be entitled to pursue a remedy of
specific performance upon tender into the Court an amount equal to the Purchase
Price of the Units hereunder. The indemnification by the Investors shall be
limited to the amount they have invested on the Closing Date.
11.3 HEADINGS. The table of contents and headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.4 ENTIRE AGREEMENT. This Agreement (together with the Schedule, Exhibits,
----------------
Warrants and documents referred to herein) constitute the entire agreement of
the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof.
11.5 NOTICES. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 20 OF 30
mail confirmation; (iii) on the date delivered by an overnight courier service;
or (iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
If to ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.:
---------------------------------------------
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
With a copy to:
--------------
If to the Investors:
-------------------
To the address listed on Schedule A herein or to the address provided
----------
to the Company by an Investor.
11.6 SEVERABILITY. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any such term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
11.7 BINDING EFFECT. All the terms and provisions of this Agreement whether
---------------
so expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors, legal
representatives, heirs, successors and assignees.
11.8 PREPARATION OF AGREEMENT. This Agreement shall not be construed more
------------------------
strongly against any party regardless of who is responsible for its preparation.
The parties acknowledge each contributed and is equally responsible for its
preparation.
11.9 GOVERNING LAW. This Agreement shall be governed by, and construed in
--------------
accordance with, the laws of the State of New York, without giving effect to
applicable principles of conflicts of law.
NOTE PURCHASE AGREEMENT BETWEEN
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11.10 JURISDICTION. This Agreement shall be exclusively governed by and
-------------
construed in accordance with the laws of the State of New York. If any action is
brought among the parties with respect to this Agreement or otherwise, by way of
a claim or counterclaim, the parties agree that in any such action, and on all
issues, the parties irrevocably waive their right to a trial by jury. Exclusive
jurisdiction and venue for any such action shall be the State Courts of Ohio. In
the event suit or action is brought by any party under this Agreement to enforce
any of its terms, or in any appeal therefrom, it is agreed that the prevailing
party shall be entitled to reasonable attorneys fees to be fixed by the
arbitrator, trial court, and/or appellate court.
11.11 PREPARATION AND FILING OF SECURITIES AND EXCHANGE COMMISSION FILINGS.
----------------------------------------------------------------------
Each Investor shall reasonably assist and cooperate with the Company in the
preparation of all filings with the SEC after the Closing Date due after the
Closing Date.
11.12 FURTHER ASSURANCES, COOPERATION. Each party shall, upon reasonable
---------------------------------
request by the other party, execute and deliver any additional documents
necessary or desirable to complete the transactions herein pursuant to and in
the manner contemplated by this Agreement. The parties hereto agree to cooperate
and use their respective best efforts to consummate the transactions
contemplated by this Agreement.
11.13 SURVIVAL The representations, warranties, covenants and agreements made
--------
herein shall survive the Closing of the transaction contemplated hereby.
11.14 THIRD PARTIES Except as disclosed in this Agreement, nothing in this
-------------
Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
parties hereto and their respective administrators, executors, legal
representatives, heirs, successors and assignees. Nothing in this Agreement is
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over or against any party to this
Agreement.
11.15 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
-------------------------------------------------------
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty, covenant or agreement herein, nor
shall nay single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
11.16 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 22 OF 30
[SIGNATURES ON FOLLOWING PAGE]
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 23 OF 30
IN WITNESS WHEREOF, the Investors and the Company have as of the date first
written above executed this Agreement.
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC.
Xxxx Xxxxxxxx
--------------------------
By: /s/ Xxxx Xxxxxxxx
-----------------------
Title: President
--------------------
INVESTORS
/s/ Xxxxxx Xxxxxx Xxxxxx
-----------------------------
Xxxxxx Xxxxxx Xxxxxx
President, General Partner of
Xxxxxx Partners LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
------------------------------- -------------------------------
Print Name: Print Name:
Entity (if appropriate): Entity (if appropriate):
------- -------
------------------------------- -------------------------------
Title: (if appropriate): Title: (if appropriate):
------- -------
------------------------------- -------------------------------
Print Name: Print Name:
Entity (if appropriate): Entity (if appropriate):
------- -------
------------------------------- -------------------------------
Title: (if appropriate): Title: (if appropriate):
------- -------
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 24 OF 30
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 25 OF 30
SCHEDULE A
NAME AND ADDRESS AMOUNT OF NUMBER OF NUMBER OF WARRANTS
INVESTMENT SHARES OF
COMMON STOCK
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 26 OF 30
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 27 OF 30
EXHIBIT A
---------
FORM OF WARRANT
---------------
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 28 OF 30
EXHIBIT B
---------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
NOTE PURCHASE AGREEMENT BETWEEN
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., INC. AND CERTAIN INVESTORS
PAGE 29 OF 30
