EXHIBIT 10.1
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated as of January
31, 1997 (this "AGREEMENT"), by and among The National Registry Inc., a Delaware
corporation (the "COMPANY"), Clearwater Fund IV, LLC, a Delaware limited
liability company ("CLEARWATER"), and JNC Opportunity Fund Ltd., a corporation
organized and existing under the laws of the Cayman Islands ("JNC"). Clearwater
and JNC are each a "PURCHASER" and are collectively, the "PURCHASERS."
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers and the
Purchasers desire to acquire shares of the Company's Series C Convertible
Preferred Stock, $.01 par value per share (the "PREFERRED STOCK").
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 XII
CERTAIN DEFINITIONS
Section 1.1. CERTAIN DEFINITIONS. As used in this Agreement, 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.
"CERTIFICATE OF DESIGNATION" shall have the meaning set forth in
Section 2.1(a).
"CLEARWATER WARRANT" shall have the meaning set forth in Section
4.15.
"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.
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"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's common stock, $.01 par value per
share.
"DISCLOSURE MATERIALS" means, collectively, the SEC Documents, the
disclosure package delivered to the Purchasers in connection with the offering
by the Company of the Shares and the Schedules to this Agreement furnished by or
on behalf of the Company pursuant to Section 3.1.
"ESCROW AGENT" means Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP.
"ESCROW AGREEMENT" means the escrow agreement, dated as of the date
hereof, by and among the Company, the Purchasers and the Escrow Agent,
substantially in the form of EXHIBIT E, as the same may be amended, supplemented
or otherwise modified in accordance with its terms.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"JNC WARRANT" shall have the meaning set forth in Section 4.15.
"LEGAL OPINION" means the legal opinion letter of Xxxx, Scholer,
Fierman, Xxxx & Handler, LLP, counsel for the Company, substantially in the form
of EXHIBIT C, dated the Closing Date, addressed to the Purchasers and delivered
in accordance with Section 2.1(c).
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, right of first refusal, 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).
"ORIGINAL ISSUE DATE" shall mean the date of the first issuance of
any Shares, regardless of the number of transfers of any particular Share and
regardless of the number of certificates which may be issued to evidence any
particular Share.
"PER SHARE MARKET VALUE" shall have the meaning set forth in the
Certificate of Designation.
"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.
"PREFERRED STOCK" shall have the meaning set forth in the recitals
hereto.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.1(a).
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"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of the date hereof, by and among the Company and the
Purchasers, substantially in the form of EXHIBIT B, as the same may be amended,
supplemented or otherwise modified in accordance with its terms.
"REQUIRED APPROVALS" shall have the meaning set forth in Section
3.1(f).
"SEC DOCUMENTS" shall have the meaning set forth in Section 3.1(l).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Preferred Stock to be purchased by the
Purchasers pursuant to this Agreement.
"STATED VALUE" shall have the meaning set forth in Section 2.1(a).
"SUBSEQUENT FINANCING NOTICE" shall have the meaning set forth in
Section 4.7.
"SUBSEQUENT SALE" shall have the meaning set forth in Section 4.7.
"SUBSIDIARIES" shall have the meaning set forth in Section 3.1(a).
"TRADING DAY" shall have the meaning set forth in the Certificate of
Designation.
"TRANSACTION DOCUMENTS" shall have the meaning set forth in Section
3.1(b).
"UNDERLYING SHARES" means the shares of Common Stock issuable upon
conversion of Shares in accordance with the terms hereof and the Certificate of
Designation.
"UNDERLYING SHARES REGISTRATION STATEMENT" shall have the meaning set
forth in Section 3.1(f).
"WARRANTS" shall have the meaning set forth in Section 4.15.
"WARRANT SHARES" shall have the meaning set forth in Section 3.1(d).
ARTICLE XIII
PURCHASE OF SHARES
Section 2.1. PURCHASE OF SHARES; 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 an aggregate of 350,000 Shares, which shall
have the respective rights, preferences and privileges
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substantially as set forth in EXHIBIT A (the "CERTIFICATE OF DESIGNATION"), at a
price per Share of $20 (the "STATED VALUE"). The aggregate "PURCHASE PRICE" for
the Shares is $7,000,000.
(b) The closing of the purchase and sale of the Shares (the
"CLOSING") shall take place at the offices of the Escrow Agent, 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, immediately following the execution
hereof, or at such other time and/or place as the Purchasers and the Company may
agree. The date of the Closing is referred to herein as the "CLOSING DATE".
(c) At the Closing, the Escrow Agent, in accordance with and subject
to the terms and conditions of the Escrow Agreement, shall, pursuant to
instructions delivered with respect thereto by the Company and the Purchasers,
deliver (i) to Clearwater, (A) one or more stock certificates representing the
250,000 Shares purchased by it hereunder, registered in the name of Clearwater,
(B) the Clearwater Warrant and (C) a Legal Opinion; (ii) to JNC, (A) one or more
stock certificates representing the 100,000 Shares purchased by it hereunder
registered in the name of JNC, (B) the JNC Warrant and (C) a Legal Opinion;
(iii) to the Company the Purchase Price, less the legal fees and disbursements
contemplated in Section 5.1, 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 (iv) to the party entitled thereto, all documents,
instruments and writings required to have been delivered at or prior to Closing
by either the Company or the Purchasers pursuant to this Agreement.
ARTICLE XIV
REPRESENTATIONS AND WARRANTIES
Section 3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to each 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 as set forth
in or contemplated by the SEC Documents or 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, would not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the results of operations,
assets, prospects, or financial condition of the Company and the Subsidiaries,
taken as a whole (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 by the Regis-
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tration Rights Agreement, the Warrants, the Escrow Agreement and Certificate of
Designation (collectively with this Agreement, the "TRANSACTION DOCUMENTS") and
to otherwise carry out its obligations hereunder and thereunder. The execution
and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the Company. Each of
the Transaction Documents has been duly executed and delivered by the Company
and constitutes the legal, 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, fraudulent
conveyance, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other general principles of equity. Neither the Company nor any Subsidiary is in
material violation of any of the provisions of its respective certificate of
incorporation, bylaws or other charter documents.
(c) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company 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 SCHEDULE 3.1(C), there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or,
except as a result of the purchase and sale of the Shares 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. To
the knowledge of the Company, except as disclosed in or contemplated by the
Disclosure Materials, no Person beneficially owns (as determined pursuant to
Rule 13d-3 promulgated under the Exchange Act) or has the right to acquire by
agreement with the Company in excess of 5% of the Common Stock.
(d) ISSUANCE OF SHARES, WARRANTS, UNDERLYING SHARES AND WARRANT
SHARES. The Shares and Warrants have been duly authorized and, when paid for in
accordance with the terms hereof, the Shares and the Warrants shall be validly
issued, fully paid and nonassessable, free and clear of any Liens created by the
Company. The Company has and at all times while the Shares and any Warrants are
outstanding shall use its best efforts to maintain a reserve of shares of Common
Stock to enable it to perform its conversion and other obligations under this
Agreement, the Warrants and the Certificate of Designation, which reserve shall
be no less than the sum of (i) one and three-fourths times the number of shares
of Common Stock issuable hereunder and pursuant to the terms of the Certificate
of Designation, assuming a conversion of all of the Shares occurred on the
Original Issue Date, and (ii) the number of shares of Common Stock issuable upon
the exercise in full of the Warrants (the "WARRANT SHARES"). When issued in
accordance with the terms hereof, the Certificate of Designation and the
Warrants, the Underlying Shares and Warrant Shares will be duly authorized,
validly issued, fully paid and nonassessable, free and clear of all Liens
created by the Company.
(e) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions
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contemplated thereby do not and will not (i) conflict with or violate any
provision of its certificate of incorporation or bylaws (each as amended through
the date hereof) or (ii) subject to obtaining the consents specified 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 govern
mental 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, accelera tions,
cancellations and violations as would not reasonably be expected, individually
or in the aggregate, to (x) adversely affect the legality, validity or
enforceability of any of the Transaction Documents, (y) have a Material Adverse
Effect or (z) adversely and materially impair the Company's ability to perform
fully on a timely basis its obligations under the Transaction Documents. The
business of the Company is not being conducted in material violation of any
applicable law, ordinance or regulation of any governmental authority.
(f) CONSENTS AND APPROVALS. Except as specifically set forth in
SCHEDULE 3.1(F), the Company is not 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 the
Transaction Documents, except for (i) the filing of the Certificate of
Designation with respect to the Shares with the Secretary of State of Delaware,
which filing shall be effected prior to the Closing, (ii) the filing of the
registration statement covering the Underlying Shares and Warrant Shares (the
"UNDERLYING SHARES REGISTRATION STATEMENT") with the Commission and the making
of the applicable blue-sky or similar filings under state securities laws, each
as contemplated by the Registration Rights Agreement, and (iii) other than, in
all other cases, where the failure to obtain such consent, waiver, authorization
or order, or to give or make such notice or filing, would not reasonably be
expected, individually or in the aggregate, to (x) adversely affect the
legality, validity or enforceability of any of the Transaction Documents, (y)
have a Material Adverse Effect or (z) adversely and materially impair the
Company's ability to perform fully on a timely basis its obligations under the
Transaction Documents (collectively with the consents, waivers, authorizations,
orders, notices and filings referred to in SCHEDULE 3.1(F), the "REQUIRED
APPROVALS").
(g) LITIGATION; PROCEEDINGS. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the 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 the Transaction Documents, Shares, Warrants, Underlying Shares
or Warrant Shares, (ii) would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or (iii) would reasonably be
expected, individually or in the aggregate, to adversely and materially impair
the Company's ability to perform fully on a timely basis its obligations under
the Transaction Documents.
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(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, (ii) is in violation of any order of
any court, arbitrator or governmental body, or (iii) is in violation of any
statute, rule or regulation of any governmental authority, except as would not
reasonably be expected, individually or in the aggregate, to (x) adversely
affect the legality, validity or enforceability of any of the Transaction
Documents, (y) have a Material Adverse Effect or (z) adversely and materially
impair the Company's ability to perform fully on a timely basis its obligations
under the Transaction Documents.
(i) CERTAIN FEES. Except for fees payable by the Company to Xxxxxxx
Capital Partners, Ltd. and Corporate Communications Network, Inc., no fees or
commissions will be payable by the Company to any broker, finder, investment
banker or bank with respect to the consummation of the transactions contemplated
hereby. The Purchasers shall have no obligation with respect to such fees or
with respect to any claims made by other Persons for fees due in connection with
this transaction.
(j) DISCLOSURE MATERIALS. The Disclosure Materials (other than the
SEC 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
reasonably be expected to require the integration of such offering with the
offering of the Shares, the Warrants, the Underlying Shares or the Warrant
Shares under the Securities Act) which would reasonably be expected to subject
the offering, issuance or sale of the Shares, the Warrants, the Underlying
Shares or the Warrant Shares to the registration requirements of Section 5 of
the Securities Act.
(l) SEC DOCUMENTS. The Company has filed all reports required to be
filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the three years preceding the date hereof (or such shorter period
as the Company was required by law to file such material) (the foregoing
materials being collectively referred to herein as the "SEC DOCUMENTS") on a
timely basis, or has received a valid extension of such time of filing. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements, as applicable, of the Securities Act and the Exchange Act and
the published rules and regulations of the Commission promulgated thereunder,
and none of the SEC Documents, when filed, contained any untrue statement of a
material fact or omitted 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. As of their respective
dates, the financial statements and balance sheets of the Company included in
the SEC Documents complied in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto. Such financial statements and balance sheets have been prepared in
accordance with generally
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accepted accounting principles applied on a consistent basis during the periods
involved, except as may be otherwise indicated in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal year-end audit
adjustments. Since the date of the financial statements and balance sheets
included in the last filed Quarterly Report on Form 10-Q, there has been no
event, occurrence or development that would reasonably be expected to have had a
Material Adverse Effect which is not disclosed in or contemplated by the
Disclosure Materials.
(m) SENIORITY. No class of equity securities of the Company is senior
to the Shares in right of payment, whether upon liquidation, dissolution or
otherwise other than the Series A Convertible Preferred Stock, $.01 par value
per share (the "SERIES A PREFERRED"). The Series A Preferred and shares of
Common Stock beneficially owned by RMS Limited Partnership and J. Xxxxxxx
Xxxxxxxxx are subject to the volume restrictions on resale set forth in Rule
144(e) promulgated under the Securities Act.
(n) FORM S-3 ELIGIBILITY. The Company meets, and at the Closing Date
will meet, the registrant eligibility requirements set forth in General
Instruction I. A. to Form S-3 promulgated under the Securities Act.
(o) INVESTMENT COMPANY. The Company is not and is not an Affiliate of
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(p) EXCLUSIVITY. The Company shall not issue and sell the Preferred
Stock to any Person other than the Purchasers.
(q) NASDAQ. The Company has not received any notice (oral or written)
from the Nasdaq indicating a failure by the Company to be in compliance with
Nasdaq SmallCap Market maintenance requirements or otherwise threatening a
delisting of the Common Stock therefrom. The Company knows of no basis for such
action other than as disclosed in or contemplated by the Disclosure Material or
in connection with the new proposed Nasdaq rules.
(r) USE OF PROCEEDS. The proceeds from the placement of the Shares
and Warrants are to be used by the Company for working capital purposes only,
and not to repay, redeem or otherwise retire any equity or debt securities of
the Company or any other indebtedness not incurred in the ordinary course.
The Purchasers acknowledge and agree that the Company makes no
representation or warranty with respect to the transactions contemplated hereby
or otherwise other than those specifically set forth in this Section 3.1.
Section 3.2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
of the Purchasers, severally and not jointly, hereby represents and warrants to
the Company as follows:
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(a) ORGANIZATION; AUTHORITY. Such Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Such Purchaser has the requisite power and
authority to enter into and to consummate the transactions contemplated hereby
and by the Registration Rights Agreement and Escrow Agreement and otherwise to
carry out its obligations hereunder and thereunder. The purchase of the Shares
and the applicable Warrant by such Purchaser hereunder has been duly authorized
by all necessary action on the part of such Purchaser. Each of this Agreement,
the Registration Rights Agreement and the Escrow Agreement has been duly
executed and delivered by such Purchaser or on its behalf and constitutes the
valid and legally binding obligation of such Purchaser, enforceable against such
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. Such Purchaser is acquiring the Shares, the
Warrants to be issued to it hereunder and the Underlying Shares and the Warrant
Shares issuable in connection therewith for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Shares, Warrants, Underlying Shares or Warrant Shares or any part thereof or
interest therein, without prejudice, however, to such Purchaser's right, subject
to the provisions of the Agreement and the Registration Rights Agreement, at all
times to sell or otherwise dispose of all or any part of such Shares, Warrants,
Underlying Shares or Warrant Shares under an effective registration statement
under the Securities Act and in compliance with applicable State securities or
blue sky laws or under an exemption from such registration.
(c) PURCHASER STATUS. At the time such Purchaser was offered the
Shares and the Warrants to be purchased by it hereunder, 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; RELIANCE. Such 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 Shares and the
Warrants to be issued to it hereunder, and has so evaluated the merits and risks
of such investment. Such Purchaser has relied on the advise of, or has consulted
with, its own tax, investment, legal or other advisors and has not relied upon
the Company or any of its Affiliates, officers, directors, attorneys,
accountants or any representatives, agents or employees of any of the foregoing
for advice or other information, whether written or oral, other than reliance on
the Disclosure Material.
(e) ABILITY OF PURCHASER TO BEAR RISK OF INVESTMENT. Such Purchaser
is able to bear the economic risk of an investment in the Shares and the Warrant
to be issued to it hereunder and, at the present time, is able to afford a
complete loss of such investment.
(f) PROHIBITED TRANSACTIONS. Such Purchaser is not acquiring,
directly or indirectly, the Shares and the Warrant to be issued to it hereunder
with the assets of any "employee benefit plan",
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within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended.
(g) ACCESS TO INFORMATION. Such Purchaser acknowledges receipt of the
Disclosure Materials and further acknowledges that it or its representatives 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 Shares and the
Warrants and the merits and risks of investing in the Shares and the Warrants;
(ii) access to information about the Company and the Company's financial
condition, results of operations, business, properties and management sufficient
to enable it to evaluate its investment in the Shares and the Warrants; 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 Shares and
the Warrants and to verify the accuracy and completeness of the information
contained in the Disclosure Materials.
(h) RELIANCE ON REPRESENTATIONS OF PURCHASERS. Such Purchaser
understands and acknowledges with respect to the Shares and Warrants to be
acquired by it hereunder that (i) such Shares and Warrants are being offered and
sold, and the Underlying Shares and the Warrant 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
warranties and such Purchaser hereby consents to such reliance.
(i) CERTAIN FEES. No fees or commissions will be payable or has been
committed to be paid by or on behalf of the Purchasers (or any of them) to any
broker, finder, investment banker or bank with respect to the consummation of
the transactions contemplated hereby. Neither the Company nor any Affiliate
thereof shall have any obligation with respect to such fees or with respect to
any claims made by other Persons for fees due in connection with this
transaction due to, arising from or in connection with the Purchasers.
(j) NO GENERAL SOLICITATION. The Shares, the Warrants, the Underlying
Shares and the Warrant Shares were not offered and are not being offered to the
Purchaser through, and the Purchase is now aware of, any form of general
solicitation or general advertising, including, without limitation, (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
The Company acknowledges and agrees that the Purchasers make no
representation or warranty with respect to the transactions contemplated hereby
other than those specifically set forth in this Section 3.2.
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ARTICLE XV
OTHER AGREEMENTS OF THE PARTIES
Section 4.1. TRANSFER RESTRICTIONS. If any Purchaser should decide to
dispose of any of the Shares or any portion of the Warrant to be purchased by it
hereunder (and upon conversion or exercise thereof, any Underlying Shares or
Warrant Shares), such Purchaser understands and agrees that it may do so only
pursuant to an effective registration statement under the Securities Act and any
applicable state securities or blue sky laws, to the Company or pursuant to an
available exemption from the registration requirements thereof. In connection
with any transfer of any Shares, Warrants, Underlying Shares or Warrant Shares
other than pursuant to an effective registration statement or to the Company,
the Company may require that the transferor of such securities provide to the
Company an opinion of counsel experienced in the area of United States
securities laws selected by the transferor, the form and substance of which
opinion shall be reasonably satis factory to the Company, to the effect that
such transfer does not require registration of such Shares, Warrants, Underlying
Shares or Warrant Shares, as the case may be, under the Securities Act or any
state securities or blue sky laws.
The Purchasers agree to the imprinting, so long as required under
this Section 4.1, of the following legend on certificates representing the
Shares, Warrants, Underlying Shares and Warrant Shares:
[NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE HAVE BEEN]] [THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN] REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS THEREOF AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS.
The legend set forth above shall be removed upon the conversion of
Shares or exercise of Warrants at any time while the Underlying Shares
Registration Statement is effective under the Securities Act and any applicable
state securities or blue sky laws or at such earlier time as, in the opinion of
counsel to the Company experienced in the area of United States securities laws,
such legend is no longer required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission) or any applicable state securities or blue sky
laws. The certificates representing the Shares, the Warrants, the Underlying
Shares and Warrant Shares shall also bear any other legends required by
applicable state securities or blue sky laws, which legends shall be removed in
accordance with the immediately prior sentence. The Company agrees that it will
provide the Purchasers, upon request, with a certificate
Sequential Page 33 of 55
or certificates representing Underlying Shares or Warrant Shares, free from such
legend at such time as such legend is no longer required hereunder. The
Purchasers agree that, in connection with any transfer of Underlying Shares or
Warrant Shares by it pursuant to an effective registration statement under the
Securities Act, it will comply with all prospectus delivery requirements of the
Securities Act.
Section 4.2. STOP TRANSFER INSTRUCTION. The Company shall not be
entitled to make any notation on its records or give instructions to any
transfer agent of the Company to implement restrictions on transfer on the
Underlying Shares or Warrant Shares except in accordance with the limitation of
transfer contemplated by Section 4.1 above.
Section 4.3. FURNISHING OF INFORMATION. For so long as either
Purchaser owns Shares, Warrants, Underlying Shares or Warrant Shares, the
Company covenants to use its reasonable best efforts to timely file (or obtain
valid extensions in respect thereof) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act and to promptly furnish or make available to the Purchasers with true and
complete copies of all such filings. If the Company is not at the time required
to file reports pursuant to such sections, it will prepare and furnish to the
Purchasers annual and quarterly financial statements, together with a discussion
and analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act in the time period that
such filings would have been required to have been made under the Exchange Act.
Section 4.4. SECURITIES OR BLUE SKY LAWS. In accordance with the
Registration Rights Agreement, the Company shall qualify the Underlying Shares
and the Warrant Shares under the securities or Blue Sky laws of such United
States jurisdictions as the Purchasers may reasonably request and continue such
qualification at all times a registration statement is required to be maintained
effective in accordance with the Registration Rights Agreement; PROVIDED,
HOWEVER, that neither the Company nor its Subsidiaries shall be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such jurisdiction or subject
the Company to any material tax in any such jurisdiction.
Section 4.5. INTEGRATION. The Company shall not and shall use its
reasonable 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 of the Shares, the Warrants, the Underlying Shares or Warrant
Shares in a manner that would require the registration under the Securities Act
of the sale of the Shares, the Warrants, Underlying Shares or Warrant Shares to
the Purchasers.
Section 4.6. SOLICITATION MATERIALS. Neither the Company nor the
Purchasers shall (i) distribute any offering materials in connection with the
offering and sale of the Shares, the Warrants, Underlying Shares or Warrant
Shares other than the Disclosure Materials and any amendments and supplements
thereto prepared in compliance herewith or (ii) solicit any offer to
Sequential Page 34 of 55
buy or sell the Shares, the Warrants, Underlying Shares or Warrant Shares by
means of any form of general solicitation or advertising.
Section 4.7. RIGHT OF FIRST REFUSAL; SUBSEQUENT REGULATIONS; CERTAIN
CORPORATE ACTIONS. (a) The Company shall not, directly or indirectly, without
the prior written consent of the Purchasers (not to be unreasonably withheld),
offer, sell, grant any option to purchase, or otherwise dispose (or announce any
offer, sale, grant or any option to purchase or other disposition) of any of its
or its Affiliates equity or equity-equivalent securities at a price which is, or
the face thereof, or implied therein, less than the market price or fair market
value for such securities (a "SUBSEQUENT SALE") for a period of 180 days after
Closing Date, except (i) the granting of options to employees, officers and
directors, and the issuance of shares upon exercise of options granted, under
any stock option plan heretofore or hereinafter duly adopted by the Company,
(ii) shares issued upon exercise of any currently outstanding options, warrants
and upon conversion of any currently outstanding convertible preferred stock in
each case disclosed in SCHEDULE 3.1(C), (iii) shares of Common Stock issued upon
conversion of Shares in accordance herewith and the Certificate of Designation
and (iv) the sale of approximately 300,000 shares of Common Stock as disclosed
in SCHEDULE 3.1(C), unless (A) the Company delivers to the Purchasers a written
notice (the "SUBSEQUENT FINANCING NOTICE") of its intention to effect such
Subsequent Sale, which Subsequent Financing Notice shall describe in reasonable
detail the proposed terms of such Subsequent Sale, the Person to whom such
Subsequent Sale shall be made, the term sheet or similar document relating
thereto and the amount of proceeds intended to be raised thereunder and (B)
either Purchaser shall not have notified the Company by 5:00 p.m. (Eastern Time)
on the third Business Day after its receipt of the Subsequent Financing Notice
of its agreement to provide (or to cause its sole designee to provide) financing
to the Company, subject to the Purchasers' reasonable due diligence to be
completed as soon as practicably possible thereafter and in no event later than
ten (10) days after such notice, on the terms set forth in the Subsequent
Financing Notice. If neither Purchaser notifies the Company of its agreement to
provide such financing within such time period, the Company may effect the
Subsequent Sale upon the terms and to the Persons (or Affiliates of such
Persons) set forth in the Subsequent Financing Notice; PROVIDED, that the
Company shall provide each Purchaser with a second Subsequent Financing Notice,
and each Purchaser shall again have the right of first refusal set forth above
in this paragraph (a), if the Subsequent Sale subject to the initial Subsequent
Financing Notice shall not have been consummated for any reason on the terms set
forth in such Subsequent Financing Notice within 60 Business Days after the date
of the initial Subsequent Financing Notice with the Person (or an Affiliate of
such Person) identified in the Subsequent Financing Notice.
(b) Except Underlying Shares, Warrant Shares and other Registrable
Securities (as such term is defined in the Registration Rights Agreement) to be
registered in accordance with the Registration Rights Agreement, securities
included in the Company's Form S-3 Registration Statement (Registration No.
333-1510), approximately 300,000 additional shares of Common Stock, any shares
of Common Stock issuable pursuant to an existing stock option plan, agreement or
arrangement and Common Stock issuable upon the conversion of the Series A
Preferred or securities sold by the Company to redeem the Series A Preferred,
the Company shall not, without the prior written consent of the Purchaser (not
to be unreasonably withheld) register for resale any
Sequential Page 35 of 55
securities of the Company for a period of not less than 90 Trading Days after
the date that the Underlying Shares Registration Statement is declared effective
by the Commission. Any days that the Purchasers are unable to sell Underlying
Shares and Warrant Shares under the Underlying Shares Registration Statement
shall be added to such 90 Trading Day period, PROVIDED, HOWEVER holders of
securities issued to redeem the Series A Preferred shall not have the right to
sell such securities pursuant to an effective registration statement until 150
days after the date that the Underlying Shares Registration Statement is
declared effective by the Commission.
(c) As long as there are Preferred Shares and Warrants outstanding,
the Company shall not and shall cause the Subsidiaries not to, without the
consent of the Purchasers (not to be unreasonably withheld), (i) amend its
certificate of incorporation, bylaws or other charter documents so as to
adversely and materially affect any rights of the Purchasers; (ii) repay,
repurchase or offer to repay, repurchase or otherwise acquire shares of its
Common Stock, other than in connection with the Series A Preferred or the Common
Stock issuable upon the conversion thereof; or (iii) enter into any agreement
with respect to any of the foregoing.
Section 4.8. PURCHASER OWNERSHIP OF COMMON STOCK. Neither Purchaser
may use its ability to convert Shares hereunder or under the terms of the
Certificate of Designation or exercise Warrants to the extent that such
conversion or exercise would result in that Purchaser beneficially owning (for
purposes of Rule 13d-3 under the Exchange Act) more than 4.9% of the outstanding
shares of the Common Stock; PROVIDED, HOWEVER, that if ten days have elapsed
since a Purchaser has properly and reasonably declared an event of default under
any Transaction Document and such event of default shall not have been cured by
the Company prior to such ten day period, the provisions of this Section 4.8
shall be null and void AB INITIO.
Section 4.9. LISTING OF UNDERLYING SHARES. The Company shall, not
later than the tenth Business Day following the Closing Date, prepare and file
with the Nasdaq SmallCap Market (and each other national securities exchange or
market on which the Common Stock is then listed) an additional shares listing
application covering 5,157,895 Underlying Shares and 400,000 Warrant Shares, and
shall provide to the Purchasers reasonable evidence of such listing and shall
use its reasonable best efforts to maintain the listing of its Common Stock on
the Nasdaq SmallCap Market or such exchange. If the shares included in such
listing applications are not adequate to list all shares issuable upon exercise
of the Warrants and conversion of the Shares, the Company shall promptly file
additional listing applications covering such number of shares as the parties
may agree, but no less than 15% more than the number so issuable in connection
therewith at that time.
Section 4.10. PURCHASER'S RIGHTS IF TRADING IN COMMON STOCK IS
SUSPENDED. In the event that at any time after the date Shares are convertible
into Underlying Shares and within the three-year period after the Closing Date
trading in the shares of the Common Stock is suspended on the principal market
or exchange for such shares (other than as a result of the suspension of trading
in securities on such market or exchange generally or temporary suspensions
pending the release of material information) for more than three Business Days
at each Purchaser's option exercisable by five Business Days prior written
notice to the Company, the Company shall repurchase all Shares (which are then
convertible), Warrants (which are then exercisable), Underlying Shares and
Warrant
Sequential Page 36 of 55
Shares then held by such Purchaser and any applicable transferee, at an
aggregate purchase price equal to the sum of (I) the product of (1) the average
Per Share Market Value for the five (5) Trading Days immediately preceding (a)
the day of such notice or (b) the date of payment in full of the repurchase
price calculated under this Section 4.10, whichever is greater, multiplied by
(2) the Conversion Ratio (as defined in the Certificate of Designation) or the
number of Warrant Shares, as applicable, which would be exercisable on the date
of the repurchase notice with respect to Preferred Stock and Warrants then held
by such Purchaser and any applicable transferee, (II) the number of Underlying
Shares and Warrant Shares then held by each Purchaser multiplied by the average
Per Share Market Value for the five (5) Trading Days immediately preceding (A)
the date of the notice or (B) the date of payment in full by the Company of the
repurchase price calculated under this Section 4.10, whichever is greater, and
(III) interest on the amounts set forth in I - II above accruing from the 5th
day after such notice until the repurchase price under this Section 4.10 is paid
in full at the rate 10% per annum, PROVIDED, HOWEVER, that if prior to the
expiration of such five Business Day notice period set forth herein, such
suspension is terminated or the Common Stock is listed for trading on the Nasdaq
National Market System, the American Stock Exchange or the New York Stock
Exchange, such exercise by such Purchaser for the Company to repurchase such
Shares, Warrants, Underlying Shares and Warrant Shares shall be deemed null and
void.
Section 4.11. NO VIOLATION OF APPLICABLE LAW. Notwithstanding any
provision of this Agreement to the contrary, if any redemption of Shares,
Warrants, Underlying Shares or Warrant Shares otherwise required under the
Transaction Documents would be prohibited by the relevant provisions of the
Delaware General Corporation Law, such redemption shall be effected as soon as
it is permitted under such law; PROVIDED, however, that, interest payable by the
Company with respect to any such redemption shall continue to accrue in
accordance with Section 4.10 during any such period.
Section 4.12. REDEMPTION RESTRICTIONS. Notwithstanding any provision
of this Agreement to the contrary, if any redemption of Shares, Warrants
Underlying Shares or Warrant Shares otherwise required under this Agreement
would be prohibited in the absence of consent from any lender of the Company or
of any Subsidiary, or by the holders of any class of securities of the Company,
the Company shall use its best efforts to obtain such consent as promptly as
practicable after the redemption is required. Interest payable by the Company
with respect to any such redemption shall continue to accrue in accordance with
Section 4.10 until such consent is obtained. Nothing contained in this Section
shall be construed as a waiver by the Purchasers of any rights it may have by
virtue of any breach of any representation or warranty of the Company herein as
to the absence of any requirement to obtain any such consent.
Section 4.13. NOTICE OF BREACHES. Each of the Company and the
Purchasers shall give prompt written notice to the other of any breach of any
representation, warranty or other agreement contained in this Agreement or in
the Registration Rights Agreement, as well as any events or occurrences arising
after the date hereof and prior to the Closing Date, which could reasonably be
likely to cause any representation or warranty or other agreement of such party,
as the case may be, contained herein or therein to be incorrect or breached as
of such Closing Date. However, no disclosure by either party pursuant to this
Section shall be deemed to cure any breach of any
Sequential Page 37 of 55
representation, warranty or other agreement contained herein or in the
Registration Rights Agreement. The Company and the Purchasers will use their
respective reasonable best efforts to not take, or not agree to commit to take,
any action that is intended to make any representation or warranty of the
Company or the Purchasers, as the case may be, contained herein or in the
Registration Rights Agreement inaccurate in any respect at the Closing Date.
Notwithstanding the generality of the foregoing, the Company shall
promptly notify the Purchasers of any notice or claim (written or oral) that it
receives from any lender of the Company to the effect that the consummation of
the transactions contemplated by any of the Transaction Documents violates or
would violate any written agreement or understanding between such lender and the
Company, and the Company shall promptly furnish by facsimile to the holders of
the Shares and Warrants a copy of any written statement in support of or
relating to such claim or notice.
Section 4.14. CONVERSION PROCEDURES. The Company shall use its
reasonable best efforts to provide the Purchasers, within ten Business Days of
the date hereof, with the procedures with respect to the conversion of the
Shares, including the forms of conversion notice to be provided upon conversion,
instructions as to the procedures for conversion, the form of legal opinion, if
necessary, that shall be rendered to the Company's transfer agent and such other
information and instructions as may be reasonably necessary to enable the
Purchasers to exercise its right of conversion smoothly and expeditiously.
Section 4.15. THE WARRANTS. The Company shall issue (i) to Clearwater
or as otherwise directed by Clearwater, a Common Stock purchase Warrant,
substantially in the form of EXHIBIT D(1) (the "CLEARWATER WARRANT"), pursuant
to which Clearwater shall have the right at any time thereafter through the
fifth anniversary of the date of issuance thereof, to acquire 285,714 shares of
Common Stock at an exercise price per share equal to $2.6125, (ii) to JNC a
Common Stock purchase warrant, substantially in the form of EXHIBIT D(2) (the
"JNC WARRANT"), pursuant to which JNC shall have the right at any time
thereafter through the fifth anniversary of the date of issuance thereof, to
acquire 114,286 shares of Common Stock at an exercise price per share equal to
$2.6125. The Clearwater Warrant and the JNC Warrant are collectively known as
the "WARRANTS."
Section 4.16. PURCHASER'S RIGHTS IF COMMON STOCK IS DELISTED. In the
event that at any time after the date Shares are convertible into Underlying
Shares and within the three-year period after the Closing Date the shares of the
Common Stock are delisted from the Nasdaq SmallCap Market, unless immediately
therewith the Common Stock is listed for trading in the Nasdaq National Market,
the American Stock Exchange or the New York Stock Exchange, at each Purchaser's
option exercisable by five Business Days prior written notice to the Company,
the Company shall repurchase all Shares, Warrants, Underlying Shares and Warrant
Shares then held by such Purchaser and any applicable transferee, at an
aggregate purchase price equal to the sum of (I) the product of (1) the average
Per Share Market Value for the five (5) Trading Days immediately preceding (a)
the day of such notice or (b) the date of payment in full of the repurchase
price calculated under this Section 4.16, whichever is greater, multiplied by
(2) the Conversion Ratio or the number of Warrant Shares, as applicable, which
would be exercisable on the date of the repurchase notice with respect to
Preferred Stock and Warrants then held by such Purchaser and any
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applicable transferee, (II) the number of Underlying Shares and Warrant Shares
then held by each Purchaser multiplied by the average Per Share Market Value for
the five (5) Trading Days immediately preceding (A) the date of the notice or
(B) the date of payment in full by the Company of the repurchase price
calculated under this Section 4.16, whichever is greater, and (III) interest on
the amounts set forth in I - II above accruing from the 5th day after such
notice until the repurchase price under this Section 4.16 is paid in full at the
rate 10% per annum, PROVIDED, HOWEVER, that if prior to the expiration of such
five Business Day notice period set forth herein, the Common Stock is listed for
trading on the Nasdaq SmallCap Market, Nasdaq National Market System, the
American Stock Exchange or the New York Stock Exchange, such exercise by such
Purchaser for the Company to repurchase such Shares, Warrants, Underlying Shares
and Warrant Shares shall be deemed null and void.
ARTICLE XVI
MISCELLANEOUS
Section 5.1. 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, except as
set forth in the Registration Rights Agreement and except that the Company shall
reimburse the Purchasers up to $10,000 for its legal fees and disbursements
incurred in connection with the transactions contemplated hereby. The Company
shall pay all stamp and other taxes and duties levied in connection with the
original issuance of the Shares (and upon conversion thereof, the Underlying
Shares) pursuant hereto. The Purchasers shall be responsible for its own tax
liability that may arise as a result of the investment hereunder, the
transactions contemplated by this Agreement and any subsequent transfers of
Shares.
Section 5.2. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together
with the Exhibits and Schedules hereto, and each of the other Transaction
Documents 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 5.3. 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 notice or communications shall be:
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If to the Company: The National Registry Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: Xxxx, Scholer, Fierman, Xxxx
& Handler, LLP
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
If to JNC: JNC Opportunity Fund Ltd.
Olympia Capital (Cayman) Ltd.
c/o Olympia Capital (Bermuda) Ltd.
Xxxxxxxx Xxxxx
00 Xxxx Xxxxxx
Xxxxxxxx XX00
Xxxxxxx
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxx
with copies to: Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxx Xxxx
- and -
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
& Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
If to Clearwater: Clearwater Fund IV, LLC
000 Xxxxx Xxxx X. #000
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Hans Xxxxxxxx Xxxx
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with copies to: Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxx Xxxx
- and -
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
& Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
Section 5.4. 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 applicable Purchaser or Purchasers, 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 5.5. 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 5.6. 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 Purchasers may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other,
except that the Purchasers may assign its rights hereunder and under the
Registration Rights Agreement to an Affiliate thereof, provided, that such
assignee demonstrates to the reasonable satisfaction of the Company its
satisfaction of the representations and warranties set forth in Section 3.2
herein and agrees in writing to be bound by this Agreement and to make such
representations and warranties. The assignment by a party of this Agreement or
any rights hereunder shall not affect the obligations of such party under this
Agreement.
Section 5.7. 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.
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Section 5.8. 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 5.9. SURVIVAL. The representations and warranties of the
Company and the Purchasers contained in ARTICLE III and the agreements and
covenants of the parties contained in ARTICLE IV and this ARTICLE V shall
survive the Closing (or any earlier termination of this Agreement) and any
conversion of Shares and exercise of Warrants hereunder.
Section 5.10. COUNTERPART SIGNATURES. This Agreement may be 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 5.11. PUBLICITY. The Company and the Purchasers 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, except that no prior consent shall be
required if such disclosure is required by law (including the Securities Act,
the Exchange Act or the rules and regulations promulgated thereunder by the
Commission), in which such case the disclosing party shall use its best efforts
to provide the other party with prior notice of such public statement.
Section 5.12. SEVERABILITY. In case any one 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 5.13. REMEDIES. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchasers 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 Purchasers hereunder. Each of the Company
and the Purchasers 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first indicated above.
Company:
THE NATIONAL REGISTRY INC.
By:/s/ XXXX XXXXXXXXX
--------------------
Name: Xxxx Xxxxxxxxx
Title: President
Purchasers:
JNC OPPORTUNITY FUND LTD.
By:/s/ XXXXXX X. XXXXX
---------------------
Name: Xxxxxx X. Xxxxx
Title:
CLEARWATER FUND IV, LLC
By:/s/ XXXX X. XXXX
----------------------
Name: Xxxx X. Xxxx
Title: Managing Member
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