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CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
By and Among
Successways Holdings Ltd.
Turbo International, Inc.
GEM Management Ltd.,
(the "Purchasers")
and
ACCORD ADVANCED TECHNOLOGIES, INC.
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Dated as of November 22, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I CERTAIN DEFINITIONS .................................1
ARTICLE 11 PURCHASE OF DEBENTURES ..............................3
ARTICLE III REPRESENTATIONS AND WARRANTIES ......................4
ARTICLE IV OTHER AGREEMENTS OF THE PARTIES .....................8
ARTICLE V CONDITIONS PRECEDENT TO CLOSING ....................12
ARTICLE VI TERMINATION ........................................14
ARTICLE VII MISCELLANEOUS ......................................15
Exhibit A Convertible Debenture
Exhibit B Conversion Procedures
Exhibit C Warrant
Exhibit D Opinion Letter
Exhibit E Escrow Agreement
Exhibit F Power of Attorney
Schedule 1 List of Purchasers and Warrant Holders
Schedule 3. 1 (a) Subsidiaries
Schedule 3. 1 (c) Capitalization
Schedule 3. 1 (f) Required Consents and Approvals
Schedule 3. 1 (g) Litigation
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT, dated as of November
___________ 1998 (this "Agreement"), by and among Accord Advanced Technologies,
Inc., a Nevada corporation (the "Company"), and the purchasers listed on
Schedule I attached hereto (each individually, the "Purchaser" and collectively,
the "Purchasers").
WHEREAS, the Company desires to issue and sell to the
Purchaser and the Purchaser desire to acquire certain of the Company's 2%
Convertible Debentures, due November ___, 2003 (the "Convertible Debentures").
IN CONSIDERATION of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1. 1. Certain Definitions. As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated:
"Affiliate" means, with respect to any Person, any Person
that, directly or 'indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state of New York are authorized or required by law or other government actions
to close.
"Closing" shall have the meaning set forth in Section 2. 1(b).
"Closing Date" shall have the meaning set forth in Section 2.
1 (b).
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder as in effect on the date hereof
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value
$.001 per share.
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"Debentures" means the 2% Convertible Debentures of the
Company, due November 2003, an example of which is attached hereto as Exhibit A.
"Disclosure Documents" means the disclosure package, including
but not limited to the Company's audited financial statements for the years
ended December 31, 1996 and 1997, the Company's unaudited financial statements
for the 10 months ended October 31, 1998, the Company's business plan and press
releases, delivered to the Purchaser in connection with the offering by the
Company of the Debentures and the Schedules to this Agreement furnished by or on
behalf of the Company pursuant to Section 3. 1.
"Escrow Agent" means the firm which holds the common shares in
escrow, herein the firm of Xxxxxx, Xxxxxxxxxx & Xxxxxxxx, LLP, 000 Xxxxx Xxxxxx,
0' Xxxxx, Xxx Xxxx, XX 00000; Tel: 000-000-0000; Fax: 000-000-0000.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GEM" means GEM Advisors, Inc., with its registered address at
000 00 Xxxxxx, 0' Xxxxx, Xxx Xxxx, XX 00000; Phone: 000-000-0000; Fax:
000-000-0000.
"GEM Ltd." means GEM Management Limited, with its registered
address at X.X. Xxx 000, 00 Xxxx Xxxxxx, Xx. Xxxxxx, Xxxxxx, Xxxxxxx Xxxxxxx XX0
OYZ.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, encumbrance, charge or security 'interest of any kind in or on such
asset or the revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in
Section 3. 1 (a).
"NASD" means the National Association of Securities Dealers,
Inc.
"Per Share Consideration" shall have the meaning set forth in
Section 2. 1(a)
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Purchase Price" shall have the meaning set forth in Section
2. 1 (a).
"Required Approvals" shall have the meaning set forth in
Section 3.
"Securities Act" means the Securities Act of 1933, as amended.
11126/112.14
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"Subsidiaries" shall have the meaning set forth in Section
3.1(a).
"Underlying Shares" means the shares of Common Stock into
which the Debentures are convertible in accordance with the terms hereof and the
Debenture, and the shares of Common Stock for which the Warrants can be
exercised in accordance with the terms hereof and the Warrant.
"Warrants" means the common stock purchase warrants issued to
GEM Ltd. and/or its assigns as part of its compensation, an example of which is
attached hereto as Exhibit C.
ARTICLE II
PURCHASE OF DEBENTURES
Section 2.1. Purchase of Debentures; Closing
(a) Subject to the terms and conditions herein set forth, the Company
shall issue and sell to the Purchasers, and the Purchasers shall purchase from
the Company on the Closing Date the number of Debentures listed opposite the
Purchaser's name on Schedule 1, which shall have the respective rights,
preferences and privileges set forth in Exhibit A (the "Debenture"), at a price
per Debenture of US$1,000.00 (the "Per Debenture Consideration"). The Per
Debenture Consideration multiplied by the number of Debentures to be purchased
by the Purchaser hereunder is hereinafter referred to as the "Purchase Price."
The Total principal amount of Debentures to be purchased by the Purchasers and
the total Purchase Price shall be $530,000.
(b) The closing of the purchase and sale of the Debentures (the
"Closing") shall take place at the offices of the Escrow agent, Xxxxxx,
Xxxxxxxxxx & Xxxxxxxx, LLP, immediately following the execution hereof, or at
such other time and/or place as the Purchaser and the Company may agree,
provided, however, in no case shall the Closing take place later than the fifth
day after the last of the conditions listed in Article V is satisfied or waived
by the appropriate party. The date of the Closing is hereinafter referred to as
the "Closing Date".
(c) At the Closing (i) the Company shall deliver to the Purchaser (A)
one or more Debentures purchased hereunder, registered in the name of the
Purchaser, (B) all documents, instruments and writings required to have been
delivered at or prior to Closing by the Company pursuant to this Agreement, and
(ii) the Purchaser shall deliver to the Company (A) the Purchase Price as
determined pursuant to this Article I in United States dollars in immediately
available funds by wire transfer to an account designated in writing by the
Company prior to the Closing and (B) all documents, instruments and writings
required to have been delivered at or prior to Closing by the Purchaser pursuant
to this Agreement. At this time, the Company shall also deliver to: (i) GEM
Ltd., or is assigns, the Warrants pursuant to the term sheet (the "Term Sheet")
dated November 4, 1998
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between GEM and the Company; and (ii) GEM, six percent (6%) of the gross
proceeds from the sale of the Debentures held by the Escrow Agent, representing
the management fee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3. 1. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
(a) Organization and Qualification. The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. The Company has no subsidiaries other than
asset forth in Schedule 3.1(a) (collectively, the "Subsidiaries"). Each of the
Subsidiaries is a corporation, duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, with the full
corporate power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on (a) the results of operations, assets, prospects, or
financial condition of the Company and the Subsidiaries, or (b) the Purchaser's
rights under this Agreement, the Debenture and the Warrants (a "Material Adverse
Effect").
(b) Authorization, Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of the Company. Each of this
Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized, issued and outstanding
capital stock of the Company and each of the Subsidiaries is set forth in
Schedule 3. 1 (c). No shares of Common Stock are entitled to preemptive or
similar rights. Except as specifically disclosed in the Disclosure Documents,
there are no outstanding options, warrants, script rights to subscribe to, calls
or
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commitments of any character whatsoever relating to, or, except as a result of
the purchase and sale of the Debentures hereunder, securities, rights or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate of incorporation, bylaws or other charter
documents.
(d) Issuance of Debentures. The Debentures have been duly and
validly authorized for issuance, offer and sale pursuant to this Agreement and,
when issued and delivered as provided hereunder against payment in accordance
with the terms hereof, shall be valid and binding obligations of the Company
enforceable in accordance with their terms. The Company has and at all times
while the Debentures are outstanding will maintain an adequate reserve of shares
of Common Stock to enable it to perform its obligations under this Agreement and
the Debentures. When issued in accordance with the terms hereof and the
Debentures, the Underlying Shares will be duly authorized, validly issued, fully
paid and nonassessable.
(e) No Conflicts The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (1) conflict
with or violate any provision of its certificate of incorporation or bylaws or
(11) subject to obtaining the consents referred to *in Section 3. 1 (f),
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 Company is a party, or (iii) to the
knowledge of the Company result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including Federal and
state securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except in the case of each of clauses (ii) and
(iii), such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect. The business of the Company is not being
conducted 'in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, do not
have a Material Adverse Effect.
(f) Consents and Approvals. Except as specifically set forth
in the Schedule 3.1(f), neither the Company nor any Subsidiary is required to
obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement, other than the making
of the applicable blue-sky filings under state securities laws, and other than,
in all cases, where the failure to obtain such consent waiver, authorization or
order, or to give or make such notice or filing, would not materially
5
impair or delay the ability of the Company to effect the Closing and deliver to
the Purchaser the Debentures free and clear of all Liens (collectively, the
"Required Approvals").
(g) Litigation, Proceedings. Except as specifically disclosed
in the Schedule 3. 1 (g), there is no action, suit, notice of violation,
proceeding or investigation pending or, to the best knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective properties before or by any court, governmental or
administrative agency or regulatory authority (Federal, State, county, local or
foreign) which (i) relates to or challenges the legality, validity or
enforceability of this Agreement or the Debentures (ii) could, individually or
in the aggregate, have a Material Adverse Effect or (111) could, individually or
in the aggregate, materially impair the ability of the Company to perform fully
on a timely basis its obligations under this Agreement.
(h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such conflicts or defaults
as do not have a Material Adverse Effect, (ii) is in violation of any order of
any court, arbitrator or governmental body, except for such violations as do not
have a Material Adverse Effect, or (iii) is in violation of any statute, rule or
regulation of any governmental authority which could (individually or in the
aggregate) (x) adversely affect the legality, validity or enforceability of this
Agreement, (y) have a Material Adverse Effect or (z) adversely impair the
Company's ability or obligation to perform fully on a timely basis its
obligations under this Agreement.
(i) Certain Fees. No fees or commission will be payable by the
Company to any investment banker or bank with respect to the consummation of the
transactions contemplated hereby except for six percent (6%) of the gross
proceeds from the sale of the Debentures held in escrow to GEM for the
management fee. GEM will indemnify the Company against all third party claims
for management and brokerage fees;
(j) Disclosure Documents. The Disclosure Documents do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(k) Private Offering. Neither the Company nor any Person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of the Company under circumstances
which would require the integration of such offering with the offering of the
Debentures under the Securities Act) which might subject the offering, issuance
or sale of the Debentures to the registration requirements of Section 5 of the
Securities Act.
(1) Not a Reporting Company, Eligibility to use Exemption
under 504(b). The Company is not subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act. The Company has not sold any
securities under 504(b) in the last twelve months, except for
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$425,000 raised pursuant to Rule 504 in October 1998. The Company is eligible to
issue securities exempt from registration pursuant to Rule 504 of Regulation D
promulgated under the Securities Act.
Section 3.2. Representations and Warranties of the Purchaser The
Purchaser hereby represents and warrants to the Company as follows:
(a) Organization; Authority. The Purchaser is a corporation
duly and validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Purchaser has the requisite power and
authority to enter into and to consummate the transactions contemplated hereby
and otherwise to carry out its obligations hereunder and thereunder. The
purchase of the Debentures by the Purchaser hereunder has been duly authorized
by all necessary action on the part of the Purchaser. Each of this Agreement has
been duly executed and delivered by the Purchaser or on its behalf and
constitutes the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity.
(b) Investment Intent. The Purchaser is acquiring the
Debentures and the Underlying Shares for its own account for investment purposes
only and not with a view to or for distributing or reselling such Debentures or
Underlying Shares or any part thereof or interest therein, without prejudice,
however, to the Purchaser's right, subject to the provisions of this Agreement,
at all times to sell or otherwise dispose of all or any part of such Debentures
or Underlying Shares in compliance with applicable State securities laws and
under an exemption from registration under Rule 504 of the Securities Act.
(c) Purchaser Status. At the time the Purchaser was offered
the Debentures, it was, and at the date hereof, it is, and at the Closing Date,
it will be, an "accredited investor" as defined in Rule 501(a) under the
Securities Act.
(d) Experience of Purchaser. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Debentures, and has so
evaluated the merits and risks of such investment.
(e) Ability of Purchaser to Bear Risk of Investment. The
Purchaser is able to bear the economic risk of an investment in the Debentures
and, at the present time, is able to afford a complete loss of such investment.
(f) Prohibited Transactions. The Debentures to be purchased by
the Purchaser are not being acquired, directly or indirectly, with the assets of
any "employee benefit plan", within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
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(g) Access to Information. The Purchaser acknowledges receipt
of the Disclosure Documents and further acknowledges that it has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Debentures and the merits and risks of
investing in the Debentures; (ii) access to information about the Company and
the Company's financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment in
the Common Stock; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the Debentures and to verify the accuracy and completeness of the
information contained in the Disclosure Documents.
(h) Reliance. The Purchaser understands and acknowledges that
(i) the Debentures are being offered and sold, and the Underlying Shares are
being offered, to it without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the Securities Act
and (ii) the availability of such exemption, depends in part on, and that the
Company will rely upon the accuracy and truthfulness of, the foregoing
representations and the Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchaser makes
no representation or warranty with respect to the transactgions contemplated
hereby other than those specifically set forth in Article III herein.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
Section 4.1. Manner of Offering The Debentures and Warrants are being
issued pursuant to Rule 504(b) of Regulation D of the Securities Act of 1933.
The Debentures, Warrants and the Underlying Shares will be exempt from
restrictions on transfer, and will carry no restrictive legend. The Company will
use its best efforts to insure that no actions are taken that would jeopardize
the availability of the exemption from registration under Rule 504(b) for the
Debentures, the Warrants and the Underlying Shares.
Section 4.2. Furnishing of Information. As long as the Purchaser owns
Debentures, the Warrants or Underlying Shares, the Company will promptly furnish
to it all annual and quarterly reports comparable to those required by Section
13(a) or 15(d) of the Exchange Act.
Section 4.3. Notice of Certain Events. The Company shall (i) advise the
Purchaser promptly after obtaining knowledge thereof, and, if requested by the
Purchaser, confirm such advice in writing, of (A) the issuance by any state
securities commission of any stop order suspending the
8
qualification or exemption from qualification of the Debentures or the Common
Stock for offering or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, or (B) any event that makes any statement of a material
fact made in the Disclosure Documents untrue or that requires the making of any
additions to or changes in the Disclosure Documents in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading, (11) use its best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption from qualification of
the Debentures or the Common Stock under any state securities or Blue Sky laws,
and (iii) if at any time any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Debentures or the Common Stock under any such laws, use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
Section 4.4. Copies and Use of Disclosure Documents. The Company shall
furnish the Purchaser, without charge, as many copies of the Disclosure
Documents, and any amendments or supplements thereto, as the Purchaser may
reasonably request. The Company consents to the use of the Disclosure Documents,
and any amendments and supplements thereto, by the Purchaser in connection with
resales of the Debentures or the Underlying Shares other than pursuant to an
effective registration statement.
Section 4.5. Modification to Disclosure Documents. If any event shall
occur as a result of which, in the reasonable judgment of the Company or the
Purchaser, it becomes necessary or advisable to amend or supplement the
Disclosure Documents in order to make the statements therein, in the light of
the circumstances at the time the Disclosure Documents were delivered to the
Purchaser, not misleading, or if it is necessary to amend or supplement the
Disclosure Documents to comply with applicable law, the Company shall promptly
prepare an appropriate amendment or supplement to the Disclosure Documents ('in
form and substance reasonably satisfactory to both the Purchaser and Company) so
that (i) as so amended or supplemented the Disclosure Documents will not include
an untrue statement of material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to Purchaser, not misleading and (11) the
Disclosure Documents will comply with applicable law.
Section 4.6. Blue Sky Laws. The Company shall cooperate with the
Purchaser in connection with the qualification of the Debentures, the Warrants
and the Underlying Shares under the securities or Blue Sky laws of such
jurisdictions as the Purchaser may request and to continue such qualification at
all times through the fifth anniversary of the Closing Date; provided, however,
that neither the Company nor its Subsidiaries shall be required in connection
therewith to qualify as a foreign corporation where they are not now so
qualified.
Section 4.7 Integration. The Company shall not and shall use its best
efforts to ensure that no Affiliate shall sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined. in Section
2 of the Securities Act) that would be integrated with the offer or sale
9
of the Debentures, the Warrants or the Underlying Shares in a manner that would
require the registration under the Securities Act of the sale of the Debentures,
the Warrants or Underlying Shares to the Purchaser.
Section 4.8 Furnishing of Rule 144A Materials. The Company shall, for
so long as any of the Debentures, the Warrants or Underlying Shares remain
outstanding and during any period in which it is not subject to Section 13 or
15(d) of the Exchange Act, make available to any registered holder of
Debentures, the Warrants or Underlying Shares in connection with any sale
thereof and any prospective purchaser of such Debentures, Warrants or Underlying
Shares from such Person, the following information in accordance with Rule
144A(d)(4) under the Securities Act: a brief statement of the nature of the
business of the Company and the products and services it offers and the
Company's most recent audited balance sheet and profit and loss and retained
earnings statements, and similar audited financial statements for such part of
the two preceding fiscal years as the Company has been in operation.
Section 4.9 Solicitation Materials. The Company shall not (1)
distribute any offering materials in connection with the offering and sale of
the Debentures, the Warrants or Underlying Shares other than the Disclosure
Documents and any amendments and supplements thereto prepared in compliance
herewith or (it) solicit any offer to buy or sell the Debentures, the Warrants
or Underlying Shares by means of any form of general solicitation or
advertising.
Section 4.10 Subsequent Financial Statements. The Company shall furnish
to the Purchaser, promptly after they are filed with the Commission, a copy of
all financial statements for any period subsequent to the period covered by the
financial statements included in the Disclosure Documents.
Section 4.11. Prohibition on Certain Actions. From the date hereof
through the Closing Date, the Company shall not and shall cause the Subsidiaries
not to, without the consent of the Purchaser, (1) amend its Certificate of
Incorporation, bylaws or other character documents so as to adversely affect any
rights of the Purchaser; (ii) split, combine or reclassify its outstanding
capital stock; (ill) declare, authorize, set aside or pay any dividend or other
distribution with respect to the Common Stock; (iv) redeem, repurchase or offer
to repurchase or otherwise acquire shares of its Common Stock; or (v) enter into
any agreement with respect to any of the foregoing.
Section 4.12. Listing of Underlying Shares The Company shall use its
best efforts to maintain the listing for its common stock on the NASD Electronic
Bulletin Board (or other national securities exchange or market on which the
Common Stock is listed) during the period that the Debentures may be converted
hereunder by the Purchaser or the Warrants may be exercised, and shall provide
to the Purchaser evidence of such listing.
Section 4.13. Conversion Procedures:- Exhibit B attached hereto sets
forth the procedures with respect to the conversion of the Debentures, including
the forms of conversion notice to be provided upon conversion, instructions as
to the procedures for conversion, the form of legal
10
opinion, if necessary, that shall be rendered to the Company and such other
information and instructions as may be reasonably necessary to enable the
Purchaser to exercise its right of conversion smoothly and expeditiously.
Section 4.14 Registration of Underlying Shares. So long as any
War-rants remain unexercised or Debentures remain outstanding, the Company
agrees not to file a registration statement with the Commission, without first
having registered the Underlying Shares for resale with the SEC and for resale
in such states of the United States as the Holders thereof (or the Holders of
the Debentures) shall reasonably request. If the Company shall propose to file
with the SEC any registration statement other than a Form 10 which would cause,
or have the effect of causing, the Company to become subject to the reporting
requirements of Section 13 or 15 (d) of the Exchange Act (a "Reporting Issuer")
or to take any other action the effect of which would be to cause the Underlying
Shares to be issued upon conversion of any then outstanding Debentures to be
restricted securities or cause the Underlying Shares to be issued upon exercise
of any then outstanding Warrants to be restricted securities (as such term
defined in Rule 144 promulgated under the Securities Act), the Company agrees to
give written notification of such to the Holders of the Debentures or the
Warrants then outstanding at least two weeks prior to such filing or taking of
the proposed action. If any Debentures or Warrants are outstanding at the end of
such notice period, the Company agrees to file a registration statement on Form
S-1 or SB-2, or such other form of registration statement in which the
Underlying Shares may be included, and to include in such registration statement
the Underlying Shares issuable upon conversion of any then outstanding
Debentures or the exercise of any then outstanding Warrants so as to pen-nit the
public resale thereof. All costs and expenses of registration shall be borne by
the Company.
Notwithstanding the foregoing, if the Company for any reason shall
become a Reporting Issuer, or shall have taken any action the effect of which
would be to cause the Underlying Shares to be issued upon conversion of any then
outstanding Debentures or the exercise of any then outstanding Warrants to be
restricted securities (as such term is defined in Rule 144 promulgated under the
Securities Act), the Company agrees to immediately file with the SEC and cause
to become effective a registration statement which would permit the public
resale of such Underlying Shares in such states of the United States as the
Holders thereof shall reasonably request. All costs and expenses of such
registration and related Blue Sky filings shall be borne by the Company.
Section 4.15 Escrow. The Company agrees to enter into the escrow
agreement attached hereto as Exhibit E (the "Escrow Agreement"), and to issue
into said Escrow certificates to be held by the Escrow Agent (as defined in the
Escrow Agreement), registered in the names of the Purchasers and without any
restrictive legend of any kind, pursuant to the terms of such Escrow Agreement,
rounded up to the nearest even 25,000 shares. Such certificates shall be in
denominations of 25,000 shares.
Section 4.16 Attorney-in-Fact. To effectuate the terms and provisions
of this Agreement, the Escrow Agreement, the Debenture and the Warrants, the
Company hereby designates and
11
appoints the Escrow Agent and each of its designees or agents as
attorney-in-fact of the Company, irrevocably and with power of substitution,
with authority to carry out any acts and things necessary or advisable in the
sole discretion of the Escrow Agent to carry out and enforce this Agreement, the
Escrow Agreement, the Debenture and the Warrants, pursuant to Exhibit F attached
hereto. All acts done under the foregoing authorization are hereby ratified and
approved and neither the Escrow Agent nor any designee or agent thereof shall be
liable for any acts of commission or omission, for any error of judgment or for
any mistake of fact or law. This power of attorney being coupled with an
interest is irrevocable while any amount of the Debenture remains unpaid, any
amount of the Warrants remain unexercised or any portion of this Agreement or
the Escrow Agreement remains unsatisfied.
Section 4.17 Short Selling. Purchasers and their Affiliates agree not
to engage in any short sales, swaps, purchase of puts, or other hedging
activities involving the Common STOCK OR other securities of the Company.
Section 4.18 Changes to Rule 504. If any shares of Common Stock
required to be reserved for purposes of conversion of the Debenture or exercise
of the War-rants hereunder require registration with or approval of any
governmental authority under any federal (including but not limited to the Act
or similar federal statute than in force) or state law, or listing on any
national securities exchange, before such shares may be issued upon conversion
or exercise, for reasons including but not limited to a material change in Rule
504 of Regulation D promulgated under the Act, the Company will, at its expense,
as expeditiously as possible cause such shares to be duly registered or approved
or listed on the relevant national securities exchange, as the case may be.
Shares of Common Stock issued upon conversion of the Debenture or exercise of
the Wan-ants shall be registered by the Company under the Act if required by
Section 4.14 and subject to the conditions stated therein.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5. 1. Conditions Precedent to Obligations of the Purchaser. The
obligation of the Purchaser to purchase the Debentures is subject to the
satisfaction or waiver by the Purchaser, at or prior to the Closing, of each of
the following conditions:
(a) Legal Opinion Exhibit D. The Purchaser shall have received
the legal opinion, addressed to it and dated the Closing Date of the Counsel for
the Company. Such legal opinion shall address the Company's authority to enter
into this Agreement and the applicability of Rule 504 to the offer and sale of
the Debentures, the Warrants and the Underlying Shares;
(b) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company contained herein shall be.
true and correct in all
12
material respects as of the date when made and as of the Closing Date as though
made at that time (except that representations and warranties that are made as
of a specific date need be true in all material respects only as of such date);
(c) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing;
(d) No Material Adverse Effect. Since the date of the
financial statements included in the Company's Disclosure Documents, no event
which had a Material Adverse Effect shall have occurred which is not disclosed
in the Disclosure Documents;
(e) No Prohibitions. The purchase of and payment for the
Debentures (and upon conversion thereof, the Underlying Shares) hereunder (i)
shall not be prohibited or enjoined (temporarily or permanently) by any
applicable law or governmental regulation and (ii) shall not subject the
Purchaser to any penalty, or in its reasonable judgment, other onerous condition
under or pursuant to any applicable law or governmental regulation that would
materially reduce the benefits to the Purchaser of the purchase of the
Debentures or the Underlying Shares (provided, however, that such regulation,
law or onerous condition was not in effect in such form at the date of this
Agreement);
(f) Company Certificates. The Purchaser shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company and certifying (i) that attached thereto is a true,
correct and complete copy of (A) the Company's Certificate of Incorporation, as
amended to the date thereof, (B) the Company's By-Laws, as amended to the date
thereof, (C) resolutions duly adopted by the Board of Directors of the Company
authorizing the execution and delivery of this Agreement, the issuance and sale
of the Debentures, Warrants and the Underlying Shares and the appointment of the
Attorney-in-Fact pursuant to Section 4.16, and (D) a certificate of good
standing from the Secretary of State of Nevada and (ii) the incumbency of
officers executing this Agreement;
(g) No Suspensions of Trading in Common Stock Trading in the
Common Stock shall not have been suspended by the Commission or the NASD or
other exchange or market on which the Common Stock is listed or quoted (except
for any suspension of trading of limited duration solely to permit dissemination
of material information regarding the Company);
(h) Required Approvals All Required Approvals shall have been
obtained;
(i) Delivery of Debentures The Company shall have delivered to
the Escrow Agent the certificate(s) representing the Debentures, registered in
the name of the Purchaser, each in form satisfactory to the Purchaser.
13
(j) Power of Attorney Exhibit F The Escrow Agent shall have
received a power of attorney executed on behalf of the Company pursuant to
Section 4.16.
Section 5.2. Conditions Precedent to Obligations of the Company The
obligation of the Company to issue and sell the Debentures hereunder is subject
to the satisfaction or waiver by the Company, at or to the Closing, of each of
the following conditions:
(a) Accuracy- of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except that representations and
warranties that are made as of a specific date need be true in all material
respects only as of such date);
(b) Performance by the Purchaser. The Purchaser shall have
performed satisfied and complied in all material respects with all covenants,
agreements and CONDITIONS required by this Agreement to be performed, satisfied
or complied with by it at or prior to the Closing; and
(c) No Prohibitions. The sale of the Debentures (and upon
conversion thereof, the Underlying Shares) hereunder (1) shall not be prohibited
or enjoined (temporarily or permanently) by any applicable law or governmental
regulation and (ii) shall not subject the Company to any penalty, or in its
reasonable judgment, any other onerous condition under or pursuant to any
applicable law or governmental regulation that would materially reduce the
benefits to the Company of the sale of Debentures or the Underlying Shares to
the Purchaser (provided, however, that such regulation, law or onerous condition
was not in effect in such form at the date of this Agreement).
ARTICLE VI
TERMINATION
Section 6. 1. Termination by Mutual Consent. This Agreement may be
terminated at any time prior to Closing by the mutual consent of the Company and
the Purchaser.
Section 6.2. Termination by the Company or the Purchaser. This
Agreement may be terminated prior to Closing by either the Company or the
Purchaser, by giving written notice of such termination to the other party, if-.
(a) the Closing shall not have occurred by November 20, 1998;
provided that the terminating party is not then in material breach of its
obligations under this Agreement in any manner that shall have caused the
failure referred to in this paragraph (a);
14
(b) there shall be in effect any statute, rule, law or
regulation that prohibits the consummation of the Closing or if the consummation
of the Closing would violate any nonappealable final judgment, order, decree,
ruling or injunction of any court of or governmental authority having competent
jurisdiction; or
(c) there shall have been an amendment to Regulation D or an
interpretive release promulgated or issued thereunder, which, in the reasonable
judgment of the terminating party, would materially adversely affect the
transactions contemplated hereby.
Section 6.3. Termination by the Company. This Agreement may be
terminated prior to Closing by the Company, by giving written notice of such
termination to the Purchaser, if the Purchaser has materially breached any
representation, warranty, covenant or agreement contained in this Agreement and
such breach is not cured within five business days following receipt by the
Purchaser of notice of such breach.
Section 6.4. Termination by the Purchaser. This Agreement may be
terminated prior to Closing by the Purchaser, by giving written notice of such
termination to the Company., if
(a) the Company has breached any representation, warranty,
covenant or agreement contained in this Agreement and such breach is not cured
within five business days following receipt by the Company of notice of such
breach;
(b) there has occurred an event since the date of the
financial statements included in the Company's disclosure documents which could
reasonably be expected to have a Material Adverse Effect and which is not
disclosed in the Disclosure Documents; or
(c) trading in the Common Stock has been suspended by the
Commission or the NASD or other exchange or market on which the Common Stock is
listed or quoted (except for any suspension of trading of limited duration
solely to permit dissemination of material information regarding the Company).
ARTICLE VII
MISCELLANEOUS
Section 7. 1. Fees and Expenses Each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay the fees of the Escrow Agent and all stamp and other taxes and duties
levied in connection with the issuance of the Debentures (and upon conversion
thereof, the Underlying Shares) pursuant hereto. The Purchaser shall be
responsible for its own tax liability that may arise
15
as a result of the investment hereunder or the transactions contemplated by this
Agreement. Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company shall pay (1) all
costs, expenses, fees and all taxes incident to and in connection with: (A) the
preparation, printing and distribution of the Disclosure Documents and all
amendments and supplements thereto (including, without limitation, financial
statements and exhibits), and all preliminary and final Blue Sky memoranda and
all other agreements, memoranda, correspondence and other documents prepared and
delivered in connection herewith (B) the issuance and delivery of the Debentures
and, upon conversion thereof, the Underlying Shares, (C) the qualification of
the Debentures and, upon conversion thereof, the Underlying Shares for offer and
sale under the securities or Blue Sky laws of the several states (including,
without limitation, the fees and disbursements of the Purchasers' counsel
relating to such registration or qualification), (D) furnishing such copies of
the Disclosure Documents and all amendments and supplements thereto, as may
reasonably be requested for use in connection, with resales of the Debentures
and, upon conversion thereof, the Underlying Shares, and (E) the preparation of
certificates for the Debentures and, upon conversion thereof, the Underlying
Shares (including, without limitation, printing and engraving thereof, (11) all
fees and expenses of the counsel and accountants of the Company and (iii) all
expenses and listing fees on Securities Exchanges, if any.
Section 7.2. Entire Agreement; Amendments. This Agreement, together
with the Exhibits, Annexes and Schedules hereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
Section 7.3. Notices Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: Mr. Xxxxxx Xxxxxx
President
Accord Advanced Technologies, Inc.
0000 Xxxxx Xxx Xxxxxx
Xxxxx, XX 00000
Tel.- (000) 000-0000
Fax: (000) 000-0000
16
With copies to: Xxxxxxx Xxxxx, Esq.
Tanner, Propp, Esq.
00 Xxxx Xxxxxx, 00" Xxxxx
Xxx Xxxx, XX 100 16
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Purchaser:
See Schedule I - Schedule of Purchaser (attached hereto)
With copies to: Xxxx X. Xxxxxxxxxx
Xxxxxx Gottbetter & Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 100 17
Tel: 000-000-0000
Fax: 000-000-0000
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
Section 7.4 Amendments, Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser, or, 'in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
Section 7.5. Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.6. Successors and Assigns This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns. Neither the Company nor the Purchaser may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other.
The assignment by a party of this Agreement or any rights hereunder shall not
affect the obligations of such party under this Agreement.
Section 7.7. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
17
Section 7.8. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof.
Section 7.9. Survival. The representations and warranties of the
Company and the Purchaser contained in Article 11 and the agreements and
covenants of the parties contained in Article IV and this Article VII shall
survive the Closing (or any earlier termination of this Agreement) and any
conversion of Debentures hereunder for a period of five (5) years.
Section 7.10. Counterpart Signatures. This Agreement maybe executed in
two or more counterparts, all-of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof
Section 7.11. Publicity. The Company and the Purchaser shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and neither
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed.
Section 7.12. Severability In case anyone or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
Section 7.13. Remedies In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchaser will be entitled to specific performance of the obligations of the
Company under this Agreement and the Company will be entitled to specific
performance of the obligations of the Purchaser hereunder with respect to the
subsequent transfer of Debentures and the Underlying Shares. Each of the Company
and the Purchaser agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of any breach of its obligations
described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
[SIGNATURE PAGE FOLLOWS]
18
IN WITNESS WHEREOF, the par-ties hereto have caused this
Agreement to be duly executed as of the date first indicated above.
Company:
ACCORD ADVANCED TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title:President
Purchaser:
By:
---------------------------------
Name:
Title:
19
Exhibit B
---------
CONVERSION PROCEDURES
1. Holder shall execute Holder Conversion Notice in the form attached to
the Debenture as Exhibit A.
2. Holder shall send by fax the Holder Conversion Notice to the Company
and to the Escrow Agent.
3. Holder shall send the original Debenture and Holder Conversion Notice
to the Escrow Agent, along with a fee of $350, with instructions
regarding names and amount of certificates for the issuance of the
Underlying Shares, and instructions as to the reissuance of the balance
of the Debentures, if conversion is not in full.
4. Company will issue the new Debentures (if any) and will send such new
Debentures by overnight courier within five (5) business days to the
Escrow Agent. The Escrow Agent shall send the new Debenture (if any)
and the Common Shares to the Holder per his instructions. If the Escrow
Agent has not received the new Debenture (if any) and the Common Shares
from the Company within two business days of his receipt of the
Conversion Notice, he shall issue the Common Shares to the Holder from
the Escrow Shares.
20
SCHEDULE 1
----------
PURCHASER FULL AMOUNT OF NUMBER OF SHARES
Name & Address Debenture In Escrow
-------------- --------- ----------
Gem Management Limited $380,000 1,220,000
X.X. Xxx 000
11 Bath Street
St. Helier
Jersey
JE4 OYZ
Phone: 00-0000-000-000
Fax: 00-0000-000-000
--------------------------------------------------------------------------------
Turbo International, Inc. $50,000 160,000
00 Xxxxxxx Xxxxxx
X.X. Xxx X000
Nassau, Bahamas
Phone: 000-000-0000
Fax: 000-000-0000
--------------------------------------------------------------------------------
Successways Holding Limited $100,000 320,000
39 F Shun Tak Centre Xxxx Xxxxx
000 Xxxxxxxxx Xxxx Xxxxxxx
Xxxx Xxxx
Phone: 000-0000-0000
================================================================================
WARRANT HOLDER FULL NUMBER NUMBER OF SHARES
Name & Address of Warrants in Escrow
-------------- ----------- ---------
Gem Management Limited 200,000 200,000
X.X. Xxx 000
11 Bath Street
St. Helier
Jersey
JE4 OYZ
Phone: 00-0000-000-000
Fax: 00-0000-000-000
21
CERTIFICATE
Pursuant to Article V Section 5.1(f)
Convertible Debenture Purchase Agreement
1, Xxxx X. Ran no, Secretary of Accord Advanced Technologies, Inc.,
hereby certifies that as of November 22, 1998 the attached is a true, correct
and complete copy of (A) the Company's Certificate of Incorporation, as amended
to the date thereof, (B) the Company's By-Laws, as amended to the date hereof,
and (C) resolutions duly adopted by the Board of Directors of the Company
authorizing the execution and delivery of this Agreement, the issuance and sale
of the Debentures, Warrants and the Underlying Shares and the appointment of the
Attorney-in-Fact pursuant to Section 4.16.
I further certify that Xxxxxx Xxxxxx is the duly elected President of
Accord Advanced Technologies, Inc. and in said capacity has been authorized to
execute this Agreement.
Date: 11/22/98
-----------
/s/ Xxxx X. Xxxxx
------------------
Xxxx X. Xxxxx
Secretary
SCHEDULE 3.1(a)
Subsidiaries
Accord Semiconductor Equipment Group, Inc. an Arizona Corporation located in
Tempe AZ is a wholly owned subsidiary of the Company.
SCHEDULE 3.1(c)
CAPITALIZATION
Authorized Shares
Common 47,000,000
Preferred 3,000,000
---------
Total 50,000,000
Issued and Outstanding
Common 37,648,000
(which includes 30,618,000 restricted shares held by Officers,
Directors, employees and others)
Preferred 0
Options Employees 190,000
SCHEDULE 3.1 (f)
Required Consents and Approvals
None
SCHEDULE 3.1(G)
LITIGATION
NAME CLAIM Status
Nismic Sales Release of Stock Co-Defendant to settle
v. Accord et al their responsibility
Control Systems Past due amount Settlement in effect
v. Accord SEG
Xxxxx Xxxxx/EASE Broker fees past due Amount is being
v. Accord SEG. negotiated
Xxxxxx/ Sun West Commissions Due Amount is in dispute
v. Accord SEG
Accord SEG is the subsidiary of Accord Advanced Technologies, Inc. There is one
case pending against the parent company as indicated above. None of the above
matters, individually or in the aggregate, will have a Materially Adverse Effect
or could materially impair the ability of the Company to perform fully on a
timely basis its obligations under this Agreement.
