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SECURITIES PURCHASE AGREEMENT
Among
IAT MULTIMEDIA, INC.,
JNC OPPORTUNITY FUND LTD.
And
JNC STRATEGIC FUND LTD.
Dated as of June 19, 1998
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SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 19,
1998, among IAT Multimedia, Inc., a Delaware corporation (the "Company"), JNC
Opportunity Fund Ltd., a Cayman Islands corporation ("Opportunity"), and JNC
Strategic Fund Ltd., a Cayman Islands corporation ("Strategic"). Each of
Opportunity and Strategic are sometimes referred to herein as a "Purchaser" and
collectively as 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
severally and not jointly desire to purchase an aggregate of (a) 198,255 shares
(the "Common Shares") of the Company's common stock, $.01 par value per share
(the "Common Stock"),(b) an aggregate principal amount of $3,000,000 of the
Company's Series A 5% Convertible Debentures, due June 19, 2001 (the "Series A
Debentures"), which are convertible into shares of Common Stock, and (c) up to
an aggregate principal amount of $12,000,000 of the Company's Series B 5%
Convertible Debentures, due three years from the Series B Closing (as defined
below) (the "Series B Debentures"). The Series A Debentures and the Series B
Debentures are sometimes collectively referred to in this Agreement as the
"Debentures."
IN CONSIDERATION of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1
I The Closings.
(a) The Series A Closing. (i) The closing of the purchase and sale of
the Series A Debentures and the Common Shares (the "Series A Closing") shall
take place at the offices of Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
(the "Escrow Agent"), 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
immediately following the execution hereof or such later date as the parties
shall agree. The date of the Series A Closing is hereinafter referred to as the
"Series A Closing Date."
(ii) Prior to the Series A Closing, the parties shall deliver or
shall cause to be delivered to the Escrow Agent such items as are required to
be delivered by them in accordance with and subject to the terms and conditions
of 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
(the "Series A Escrow Agreement"), including the following: (A) the Company
shall deliver to (1) the Series A Debentures, registered in the name of
Opportunity, and (2) a Common Stock purchase warrant in the form of Exhibit B,
registered in the name of Opportunity, to purchase an aggregate of 35,300
shares of Common Stock at an exercise price (subject to adjustment as set forth
therein)
equal to 120% of the Average Price (as defined below) on the Series A Closing
Date (the "Series A Opportunity Warrant"); (3) the Common Shares, registered in
the name of Strategic, (4) a Common Stock purchase warrant in the form of
Exhibit B, registered in the name of Strategic, to purchase an aggregate of
23,529 shares of Common Stock at an exercise price (subject to adjustment as
set forth therein) equal to 120% of the Average Price on the Series A Closing
Date (the "Series A Strategic Warrant" and, together with the Series A
Opportunity Warrant, the "Series A Warrants"), (5) the legal opinion of Xxxxx &
XxXxxxxx, outside counsel to the Company, addressed to each Purchaser,
substantially in the form of Exhibit D, and (6) all other documents,
instruments and writings required to have been delivered at or prior to the
Series A Closing by the Company pursuant to this Agreement, including, without
limitation, executed originals of each of the Series A Escrow Agreement, the
Registration Rights Agreement, dated the date hereof, by and among the Company
and the Purchasers, in the form of Exhibit C (the "Registration Rights
Agreement"), and the Irrevocable Transfer Agent Instructions, dated the Series
A Closing date, in the form of Exhibit E, delivered to and acknowledged by the
Company's transfer agent (the "Transfer Agent Instructions"); (B) Opportunity
shall deliver (1) $3,000,000 in United States dollars in immediately available
funds by wire transfer to the account designated in the Series A Escrow
Agreement, and (2) all documents, instruments and writings required to have
been delivered by Opportunity at or prior to the Series A Closing pursuant to
this Agreement, including without limitation, executed originals of the Series
A Escrow Agreement and the Registration Rights Agreement; and (C) Strategic
shall deliver (1) $2,000,000 in United States dollars in immediately available
funds by wire transfer to the account designated in the Series A Escrow
Agreement and (2) all documents, instruments and writings required to have been
delivered by Strategic at or prior to the Series A Closing pursuant to this
Agreement, including without limitation, executed originals of the Series A
Escrow Agreement and the Registration Rights Agreement.
(b) The Series B Closing. (i) Subject to the terms and conditions set
forth in this Agreement, the Company shall have the right to deliver a written
notice to the Purchasers (a "Subsequent Financing Notice") requiring the
Purchasers to purchase, severally and not jointly, (subject to adjustment as
provided herein) an aggregate of no less than $7,500,000 and no more than
$12,000,000 principal amount of Series B Debentures. A Subsequent Financing
Notice may be delivered no later than 90 days after the Series A Closing Date.
The closing of the purchase and sale of the Series B Debentures (the "Series B
Closing") shall take place at the offices of the Escrow Agent on the date
indicated in the Series B Subsequent Financing Notice (which may not be prior
to the 3rd Trading Day or subsequent to the 5th Trading Day after receipt by
the Purchasers of the Subsequent Financing Notice, or as otherwise agreed to by
the parties); provided that in no case shall the Series B Closing take place
unless and until the conditions listed in Section 4.1 have been satisfied or
waived by the appropriate party. The date of the Series B Closing is
hereinafter referred to as the "Series B Closing Date."
(ii) Prior to the Series B Closing, the parties shall deliver or
shall cause to be delivered to the Escrow Agent such items as are required to
be delivered by them in accordance with and subject to the terms and conditions
of an Escrow Agreement, in the form of Exhibit E, to be executed by and among
the Company, each Purchaser who is acquiring Series B Debentures and the Escrow
Agent prior to the Series B Closing Date (the "Series B Escrow Agreement" and,
together
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with the Series A Escrow Agreement, the "Escrow Agreements"), including the
following: (A) the Company shall deliver (1) Series B Debentures, registered in
the name of each Purchaser acquiring Series B Debentures, representing the
principal amount of the Series B Debentures to be issued and sold at the Series
B Closing to such Purchaser (which, in the aggregate shall, subject to the
satisfaction or waiver of the conditions set forth in this Agreement and
subject to adjustment as provided herein, equal the principal amount of Series
B Debentures set forth in the Series B Subsequent Financing Notice), (2) a
Common Stock purchase warrant in the form of Exhibit B, registered in the name
of each Purchaser acquiring Series B Debentures, to purchase an aggregate
number of shares of Common Stock as equals each Purchaser's pro rata portion of
the Series B Warrants (as defined below in this paragraph), determined by
reference to the percentage of the principal amount of Series B Debentures to
be acquired by such Purchaser, at an exercise price (subject to adjustment as
set forth therein) equal to 120% of the Average Price on the Series B Closing
Date, and (3) all documents, instruments and writings required to have been
delivered by the Company at or prior to the Series B Closing pursuant to this
Agreement, including without limitation, those described in Section 4.1; and
(B) each Purchaser acquiring Series B Debentures and Series B Warrants shall
deliver (1) the immediately available funds, in United States dollars in
immediately available funds by wire transfer to an account designated in the
Series B Escrow Agreement, an amount equal to the principal amount of Series B
Debentures to be acquired by it at the Series B Closing and (2) all documents,
instruments and writings required to have been delivered by such Purchaser at
or prior to the Series B Closing pursuant to this Agreement, including without
limitation, executed originals of the Series B Escrow Agreement. Subject to the
terms and conditions set forth herein, each Purchaser shall purchase at the
Series B Closing such percentage of the aggregate principal amount of Series B
Debentures to be issued and sold thereat as determined by Encore Capital
Management, L.L.C. ("Encore"). The Common Stock purchase warrants to be issued
and sold at the Series B Closing (the "Series B Warrants") shall entitle the
holders thereof to acquire an aggregate of 141,171 shares of Common Stock.
1.1 Form of Debentures. The Debentures shall be in the form of Exhibit A.
1.2 Certain Defined Terms. For purposes of this Agreement, "Original Issue
Date," "Trading Day," "Per Share Market Value" and "Average Price" shall have
the meanings set forth in Exhibit A. "Business Day" shall mean any day except
Saturday, Sunday and any day which shall be a federal legal holiday or a day on
which banking institutions in the State of New York are authorized or required
by law or other governmental action to close. "Warrants" shall mean,
collectively, the Series A Warrants and the Series B Warrants.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. The Company hereby makes
the following representations and warranties to the Purchasers:
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(a) Organization and Qualification. The Company is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, 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 Schedule 2.1(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 or organization (as applicable), with the
full power and authority (corporate and otherwise) 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, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of the Securities (as defined
below) or any of the Transaction Documents (as defined below) in any material
respect, (y) have or result in a material adverse effect on the results of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of this Agreement, the Debentures, the Warrants, the Escrow Agreements or the
Registration Rights Agreement (collectively, the "Transaction Documents") (any
of (x), (y) or (z), being 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 by each of the Transaction Documents, and otherwise to carry out
its obligations 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
action on the part of the Company and no further action is required by the
Company. Each of the Transaction Documents has been duly executed by the
Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, by-laws or other charter documents.
(c) Capitalization. The authorized, issued and outstanding capital
stock of the Company is set forth in Schedule 2.1(c). No shares of Common Stock
are entitled to preemptive or similar rights, nor is any holder of the Common
Stock entitled to preemptive or similar rights arising out of any agreement or
understanding with the Company by virtue of any of the Transaction Documents.
Except as disclosed in Schedule 2.1(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
Debentures and the Warrants, 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 specifically disclosed in the SEC Documents (as
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defined below) or Schedule 2.1(c), no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) or has the
right to acquire by agreement with or by obligation binding upon the Company
beneficial ownership of in excess of 5% of the Common Stock. A "Person" means
an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
(d) Issuance of the Debentures, Common Shares and the Warrants. The
Debentures, the Common Shares and the Warrants are duly authorized, and, when
issued and paid for in accordance with the terms hereof, shall have been
validly issued, fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of first refusal of any kind (collectively, "Liens").
The Company has on the date hereof and at all times while the Debentures and
any Warrants are outstanding will maintain an adequate reserve of duly
authorized shares of Common Stock, to enable it to perform its conversion,
exercise and other obligations under this Agreement, the Warrants and the
Debentures, and in no circumstances shall such reserved and available shares of
Common Stock be less than the sum of (i) (subject to the operation of the
conversion limitation set forth in Section 4(a)(iv)(C) of the Debentures) 130%
of the maximum number of shares of Common Stock which would be issuable upon
conversion in full of the Debentures issued pursuant to the terms hereof
assuming such conversion were effected on the Original Issue Date for such
Debentures, (ii) the number of shares of Common Stock issuable upon exercise in
full of the Warrants, and (iii) the number of shares Common Stock which would
be issuable upon payment of interest on the Debentures, assuming each Debenture
is outstanding for the full term stated therein and all interest is paid in
shares of Common Stock. All such authorized shares of Common Stock shall be
duly reserved for such issuance to the holders of such Debentures and Warrants.
The shares of Common Stock issuable upon conversion of the Debentures, as
payment of interest thereon and upon exercise of the Warrants are collectively
referred to herein as the "Underlying Shares." The Debentures, Warrants, Common
Shares and Underlying Shares are, collectively, the "Securities". When issued
in accordance with the Debentures, and upon exercise of the Warrants, the
Underlying Shares shall have been duly authorized, validly issued, fully paid
and nonassessable, free and clear of all Liens.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate of incorporation, bylaws or other
charter documents (each as amended through the date hereof), or (ii) subject to
obtaining the Required Approvals (as defined below), 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 (evidencing a Company debt or otherwise) to which the Company is a
party or by which any property or asset of the Company is bound or affected, or
(iii) 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 material 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,
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accelerations, cancellations and violations as could not, individually or in
the aggregate, have or result in 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, could not have or result in a Material Adverse Effect.
(f) Consents and Approvals. Neither the Company nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other Federal,
state, local, foreign or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing of a registration statement
with the Securities and Exchange Commission (the "Commission") meeting the
requirements set forth in the Registration Rights Agreement covering the resale
of the Underlying Shares by the Purchasers (the "Underlying Securities
Registration Statement"), (ii) the filings required by Section 3.12 herein,
(iii) the application(s) to the Nasdaq National Market (the "NASDAQ") for the
listing of the Underlying Shares with the NASDAQ (and with any other national
securities exchange or market on which the Common Stock is then listed), (iv)
applicable Blue Sky filings and (v) in all other cases where the failure to
obtain such consent, waiver, authorization or order, or to give such notice or
make such filing or registration could not have or result in, individually or
in the aggregate, a Material Adverse Effect (the "Required Approvals").
(g) Litigation; Proceedings. Except as specifically disclosed in the
SEC Documents, 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)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, individually or
in the aggregate, have or result in a Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any Subsidiary
(i) is in default under or in violation of (and no event has occurred which has
not been waived which, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
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 could not individually or in the
aggregate, have or result in, a Material Adverse Effect.
(i) Schedules. The Schedules to this Agreement furnished by or on
behalf of the Company 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.
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(j) Private Offering. Neither the Company nor any Person acting on its
behalf has taken or will take any action which might subject the offering,
issuance or sale of the Securities to the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"). Assuming the
accuracy of the representations and warranties of the Purchasers set forth in
Sections 2.2(b)-(g), the offer, issue and sale of the Securities to the
Purchasers is exempt from the registration requirements of the Securities Act.
(k) SEC Documents; Financial Statements; No Adverse Change. 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" and, together with the Schedules to
this Agreement the "Disclosure Materials") on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC Documents
prior to the expiration of any such extension. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of
the Securities Act and the Exchange Act and the 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. All material agreements to which the Company is a party or to
which the property or assets of the Company are subject have been filed as
exhibits to the SEC Documents as required. The financial statements of the
Company included in the SEC Documents comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States
generally accepted accounting ("GAAP") principles applied on a consistent basis
during the periods involved, except as may be otherwise specified 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, immaterial, year-end audit adjustments. Since December
31, 1997, except as specifically disclosed in the SEC Documents, (a) there has
been no event, occurrence or development that has had or that could have or
result in a Material Adverse Effect, (b) the Company has not incurred any
liabilities (contingent or otherwise) other than (x) liabilities incurred in
the ordinary course of business consistent with past practice and (y)
liabilities not required to be reflected in the Company's financial statements
pursuant to GAAP or required to be disclosed in filings made with the
Commission, (c) the Company has not altered its method of accounting or the
identity of its auditors and (d) except as set forth in Schedule 2.1(k), the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in compliance
with existing Company stock option plans) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares
of its capital stock. The Company last filed audited financial statements with
the Commission on April 19, 1998, and has not received any comments from the
Commission in respect thereof.
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(l) Investment Company. The Company is not, and is not controlled by
or under common control with an affiliate (an "Affiliate") of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(m) Certain Fees. Except for certain fees payable by the Company to
Century City Securities, Inc. ("Century"), no fees or commissions will be
payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, or bank with respect to the transactions
contemplated by this Agreement. The Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement. The Company
shall indemnify and hold harmless the Purchaser, its employees, officers,
directors, agents, and partners, and their respective Affiliates (as such term
is defined under Rule 405 promulgated under the Securities Act), from and
against all claims, losses, damages, costs (including the costs of preparation
and attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as such fees and expenses are incurred.
(n) Solicitation Materials. The Company has not (i) distributed any
offering materials in connection with the offering and sale of the Securities,
other than the Disclosure Materials and any amendments and supplements thereto,
or (ii) solicited any offer to buy or sell the Securities by means of any form
of general solicitation or advertising.
(o) Form S-3 Eligibility. The Company is eligible to register
securities for resale with the Commission under Form S-3 promulgated under the
Securities Act.
(p) Seniority. Except as set forth in Schedule 2.1(p), no indebtedness
of the Company is senior to the Debentures in right of payment, whether with
respect to interest or upon liquidation, dissolution or otherwise.
(q) Exclusivity. The Company shall not issue and sell the Debentures
to any Person other than the Purchasers other than with the specific prior
written consent of Encore.
(r) Listing and Maintenance Requirements Compliance. Except as
specifically set forth in Schedule 2.1(r), the Company has not since March 26,
1997 received notice (written or oral) from the NASDAQ or any other stock
exchange, market or trading facility on which the Common Stock is or has been
listed (or on which it has been quoted) to the effect that the Company is not
in compliance with the listing or maintenance requirements of such exchange or
market. Except as specifically set forth in Schedule 2.1(r), the Company is in
compliance with all such maintenance requirements.
(s) Patents and Trademarks. The Company has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and rights (collectively, the
"Intellectual Property Rights") which are necessary for use in connection with
its business, as currently conducted and as described in the SEC Documents, and
which the failure to so have would have a Material Adverse Effect. To the best
knowledge of the
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Company, there is no existing infringement by another Person of any of the
Intellectual Property Rights which are necessary for use in connection with the
Company's business.
(t) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate Federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Documents, except where the failure to
possess such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect ("Material Permits"), and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.
(u) Registration Rights; Rights of Participation. Except as set forth
on Schedule 6(b) to the Registration Rights Agreement, (i) the Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been satisfied and
(ii) no Person, has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.
(v) Disclosure. The Company confirms that it has not provided the
Purchasers or their agents or counsel with any information that constitutes or
might constitute material non-public information. The Company understands and
confirms that the Purchasers shall be relying on the foregoing representations
in effecting transactions in securities of the Company. None of the Disclosure
Materials or any other information provided to the Purchaser by or on behalf of
the Company in connection with the transactions contemplated herein contain any
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
2.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, severally and not jointly, represents and warrants to the Company as
follows:
(a) Organization; Authority. Such Purchaser is an entity organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents and to
carry out its obligations thereunder. The acquisition of the Securities to be
acquired hereunder by such Purchaser has been duly authorized by all necessary
action on the part of such Purchaser. Each Transaction Document, when executed
and delivered in accordance with the terms and conditions hereof, shall have
been duly executed and delivered by such Purchaser and shall constitute the
valid and legally binding obligation of such Purchaser, enforceable against it
in accordance with its terms.
(b) Investment Intent. Such Purchaser is acquiring the Securities to
be acquired hereunder by such Purchaser for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Securities or any part thereof or interest therein, without prejudice, however,
to such Purchaser's right, subject to the provisions of this Agreement and the
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Registration Rights Agreement, at all times to sell or otherwise dispose of all
or any part of such Securities pursuant to an effective registration statement
under the Securities Act and in compliance with applicable state securities
laws or under an exemption from such registration.
(c) Purchaser Status. At the time such Purchaser was offered the
Securities to be acquired hereunder by such Purchaser, it was, at the date
hereof, it is, and at the each of the Series A Closing Date and Series B
Closing Date, it will be, an "accredited investor" as defined in Rule 501(a)
under the Securities Act.
(d) Experience of Purchaser. 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 Securities, and has so evaluated the
merits and risks of such investment.
(e) Ability of Purchaser to Bear Risk of Investment. Such Purchaser
acknowledges that the Securities are speculative investments and involve a high
degree of risk. Such Purchaser can bear the loss of its entire investment in
the Securities.
(f) Access to Information. Such Purchaser acknowledges receipt of the
Disclosure Materials 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 Securities, and the merits and risks of
investing in the Securities, (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,
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
investment and to verify the accuracy and completeness of the information
contained in the Disclosure Materials. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its
representatives or counsel shall modify, amend or affect such Purchaser's right
to rely on the truth, accuracy and completeness of the Disclosure Materials and
the Company's representations and warranties contained in the Transaction
Documents.
(g) General Solicitation. Such Purchaser is not purchasing the
Securities to be acquired by it hereunder as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar.
(h) Certain Trading Activities. On the date of this Agreement such
Purchaser does not have a short position on any shares of Common Stock, and
from the date of this Agreement to the Series A Closing Date such Purchaser
will not establish a short position in the Common Stock.
(i) Reliance. Such Purchaser understands and acknowledges that (i) the
Securities to be acquired by it hereunder are being offered and sold to it
without registration under
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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 the Company will rely upon the accuracy and
truthfulness of, the foregoing representations and such Purchaser hereby
consents to such reliance.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities may only be disposed pursuant to
an effective registration statement under the Securities Act, to the Company or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with any transfer agent for the
securities of the Company any transfer of Securities (x) between Purchasers and
(y) by a Purchaser to an Affiliate thereof or to an investment fund under
common management with such Purchaser, or any transfer among any such
Affiliates or funds, provided that, in each case, transferee certifies to the
Company that it is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and that it is acquiring the Securities solely for investment
purposes. Any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights of a Purchaser under this Agreement
and the Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE 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 OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
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Underlying Shares shall not contain the legend set forth above nor any
other legend if the conversion of Debentures, the payment of interest thereon,
exercise of Warrants or other issuances of Underlying Shares as contemplated
hereby or by the Debentures occurs at any time while an Underlying Shares
Registration Statement is effective under the Securities Act or in the event
there is not an effective Underlying Securities Registration Statement at such
time, if in the opinion of counsel to the Company such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The
Company shall cause its counsel to issue the Transfer Agent Instructions
attached hereto as Exhibit E to the Company's transfer agent on the day that
the Underlying Securities Registration Statement is declared effective by the
Commission. The Company agrees that it will provide the Purchaser, upon
request, with a certificate or certificates representing Underlying Shares and
Common Shares (as the case may be), free from such legend at such time as such
legend is no longer required hereunder. The Company may not make any notation
on its records or give instructions to any transfer agent of the Company which
enlarge the restrictions of transfer set forth in this Section.
3.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of the Common Shares and the issuance of the Underlying Shares upon (i)
conversion of the Debentures and payment of interest thereon in accordance with
the terms of the Debentures and (ii) exercise of the Warrants may result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges
that its obligation to issue Underlying Shares upon (x) conversion of the
Debentures and payment of interest thereon in accordance with the terms of the
Debentures, and (y) exercise of the Warrants is unconditional and absolute,
subject to the limitations set forth in the Debentures or pursuant to the
Warrants, regardless of the effect of any such dilution.
3.3 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) 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. As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to Section 13(a) or 15(d) of the Exchange
Act, it will prepare and furnish to each Purchaser and make publicly available
in accordance with Rule 144(c) promulgated under the Securities Act 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, as well as any other information required
thereby, in the time period that such filings would have been required to have
been made under the Exchange Act. The Company further covenants that it will
take such further action as any holder of Securities may reasonably request,
all to the extent required from time to time to enable such Person to sell
Underlying Shares and Common Shares without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 promulgated
under the Securities Act. Upon the request of any such Person, the Company
shall deliver to such Person a written certification of a duly authorized
officer as to whether it has complied with such requirements.
-12-
3.4 Blue Sky Laws. In accordance with the Registration Rights Agreement,
the Company shall qualify or exempt the issuance and sale of the Underlying
Shares under the securities or Blue Sky laws of such jurisdictions as the
Purchasers may request and shall continue such qualification or exemption at
all times until each Purchaser notifies the Company in writing that it no
longer owns Securities; 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 or to take any action that
would subject the Company to general service of process or material tax in any
such jurisdiction where it is not then so subject.
3.5 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 of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers.
3.6 Increase in Authorized Shares. At such times as the Company would be,
if a notice of conversion or exercise (as the case may be) were to be delivered
on such date, precluded from (a) converting, subject to the operation of the
conversion limitation set forth in Section 4(a)(iv)(C) of the Debentures, 130%
of the full outstanding principal amount of Debentures (and paying any earned
and unpaid interest in respect thereof in shares of Common Stock) that remain
unconverted at such date or (b) honoring the exercise in full of the Warrants
due to the unavailability of a sufficient number of shares of authorized but
unissued or reserved Common Stock, the Board of Directors of the Company shall
promptly (and in any case, within 30 Business Days from such date) prepare and
mail to the stockholders of the Company proxy materials requesting
authorization to amend the Company's Certificate of Incorporation to increase
the number of shares of Common Stock which the Company is authorized to issue
to at least such number of shares as reasonably requested by the Purchaser in
order to provide for such number of authorized and unissued shares of Common
Stock to enable the Company to comply with its conversion, exercise and
reservation of shares obligations as set forth in this Agreement, the
Debentures and the Warrants (the sum of (x) the number of shares of Common
Stock then authorized, (y) the number of shares of Common Stock then
outstanding plus all shares of Common Stock issuable upon exercise of all
outstanding options, warrants (including the Warrants) and convertible
instruments, and (z) (subject to the operation of the conversion limitation set
forth in Section 4(a)(iv)(C) of the Debentures) 130% of the number of
Underlying Shares as are then issuable upon a conversion of the full
outstanding principal amount of Debentures then outstanding and as payment of
interest thereon, shall be a reasonable number). In connection therewith, the
Board of Directors shall (a) adopt proper resolutions authorizing such
increase, (b) recommend to and otherwise use its best efforts to promptly and
duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the 60th day after delivery
of the proxy materials relating to such meeting) and (c) within 5 business Days
of obtaining such stockholder authorization, file an appropriate amendment to
the Company's Certificate of Incorporation to evidence such increase.
3.7 Listing and Reservation of Underlying Shares. (a) The Company shall (i)
not later than the fifth Business Day following each Closing Date hereunder
prepare and file with the
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NASDAQ (or such other national securities exchange or market or trading or
quotation facility on which the Common Stock is then listed) an additional
shares listing application covering a number of shares of Common Stock which is
at least equal to the number of shares required to be reserved pursuant to
Section 2.1(d) with respect to the Warrants, Common Shares and principal amount
of Debentures to be issued and sold at such Closing, (ii) take all steps
necessary to cause such shares to be approved for listing in the NASDAQ (or
such other national securities exchange or market or trading or quotation
facility on which the Common Stock is then listed) as soon as possible
thereafter, and (iii) provide to the Purchasers evidence of such listing, and
the Company shall maintain the listing of its Common Stock thereon. If the
number of Underlying Shares as are issuable upon conversion in full of the then
outstanding principal amount of Debentures, as payment or interest thereon, and
upon exercise of the then unexercised portion of the Warrants exceeds 85% of
the number of Underlying Shares previously listed on account thereof with
NASDAQ (or such other required exchanges), the Company shall take the necessary
actions to immediately list a number of Underlying Shares as equals 130% of the
number of Underlying Shares then issuable upon conversion of the Debentures and
as payment of interest thereon and exercise of Warrants (subject to the
operation of the conversion limitations set forth in Section 4(a)(iv)(C) of the
Debentures).
(b) The Company shall maintain a reserve of Common Stock for issuance
upon conversion of the Debentures and for payment of interest thereupon in
shares of Common Stock pursuant to the terms of the Debentures and upon
exercise of the Warrants in accordance with their terms, in such amount as may
be required to fulfill obligations in full under the Transaction Documents,
which reserve shall include a number of shares of Common Stock equal to
(subject to the operation of Section 4(a)(iv)(C) of the Debentures) no less
than 130% the number of shares of Common Stock as would be issuable upon
conversion in full of the Debentures and or payment of interest thereon in
shares of Common Stock.
3.8 Conversion Procedures. The Transfer Agent Instructions, Conversion
Notices (as defined in Exhibit A) and Notice of Exercise set forth the totality
of the procedures with respect to the conversion of the Debentures and exercise
of Warrants, including 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 convert
Debentures and exercise Warrants as contemplated in the Debentures and
Warrants.
3.9 Notice of Breaches. (a) 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 any Transaction Document, as well as
any events or occurrences arising after the date hereof which would reasonably
be likely to cause any representation or warranty or other agreement of such
party, as the case may be, contained therein to be incorrect or breached as of
any Closing Date. However, no disclosure by either party pursuant to this
Section shall be deemed to cure any breach of any representation, warranty or
other agreement contained in any Transaction Document.
(b) Notwithstanding the generality of Section 3.9(a), the Company
shall promptly notify the Purchaser 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 Transaction
-14-
Document 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 Securities a copy of any written statement in
support of or relating to such claim or notice.
3.10 Conversion and Exercise Obligations of the Company. The Company shall
honor conversions of the Debentures and exercises of the Warrants and shall
deliver Underlying Shares in accordance with the respective terms and
conditions and time periods set forth in the Debentures and Warrants.
3.11 Right of First Refusal; Subsequent Registrations. (a) The Company
shall not, directly or indirectly, without the prior written consent of Encore,
offer, sell, grant any option to purchase (other than the warrants to be issued
to Century in connection with the transactions contemplated by this Agreement),
or otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition) any of its or its Affiliates' equity or
equity-equivalent securities in a transaction intended to be exempt or not
subject to registration under the Securities Act (a "Subsequent Placement") for
a period of 180 days after each Closing Date, except (i) the granting of
options or warrants 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 of Common Stock issued
upon exercise of any currently outstanding warrants and upon conversion of any
currently outstanding convertible preferred stock in each case disclosed in
Schedule 2.1(c), (iii) shares of equity or equity-equivalent securities issued
or issuable as part of a primary underwritten offering by the Company, (iv)
shares of Common Stock issued upon conversion of Debentures, as payment of
interest thereon, or upon exercise of the Warrants in accordance with their
respective terms, and (v) equity or equity-equivalent securities issued by the
Company in connection with business combinations with non-affiliated third
parties or acquisitions of non-affiliated third parties, unless (A) the Company
delivers to Encore a written notice (the "Subsequent Placement Notice") of its
intention to effect such Subsequent Placement, which Subsequent Placement
Notice shall describe in reasonable detail the proposed terms of such
Subsequent Placement, the amount of proceeds intended to be raised thereunder,
the Person with whom such Subsequent Placement shall be affected, and attached
to which shall be a term sheet or similar document relating thereto, and (B)
Encore shall not have notified the Company by 5:00 p.m. (New York City time) on
the tenth (10th) Trading Day after its receipt of the Subsequent Placement
Notice of its willingness to cause the Purchasers to provide (or to cause its
sole designee to provide), subject to completion of mutually acceptable
documentation, financing to the Company on substantially the terms set forth in
the Subsequent Placement Notice. If Encore shall fail to notify the Company of
its intention to enter into such negotiations within such time period, the
Company may effect the Subsequent Placement substantially upon the terms and to
the Persons (or Affiliates of such Persons) set forth in the Subsequent
Placement Notice; provided, that the Company shall provide Encore with a second
Subsequent Placement Notice, and Encore shall again have the right of first
refusal set forth above in this paragraph (a), if the Subsequent Placement
subject to the initial Subsequent Placement Notice shall not have been
consummated for any reason on the terms set forth in such Subsequent Placement
Notice within thirty (30) Trading Days after the date of the initial Subsequent
Placement Notice with the Person (or an Affiliate of such Person) identified in
the Subsequent Placement Notice.
-15-
(b) Except for (x) Underlying Shares, (y) other "Registrable
Securities" (as such term is defined in the Registration Rights Agreement) to
be registered (and as set forth in Schedule 6(b) to the Registration Rights
Agreement) in accordance with the Registration Rights Agreement, and (z) Common
Stock to be registered for resale in connection with financings permitted
pursuant to paragraph (a)(i) through (v) of paragraph (a) of this Section, the
Company shall not, without the prior written consent of the Purchasers (i)
issue or sell any of its or any of its Affiliates' equity or equity-equivalent
securities pursuant to Regulation S promulgated under the Securities Act, or
(ii) register for resale any securities of the Company for, in either case of
(i) and (ii) above, a period of not less than 90 Trading Days after the date
that the Underlying Securities Registration Statement is declared effective by
the Commission. Any days that a Purchasers is not permitted to sell Underlying
Shares under the Underlying Securities Registration Statement shall be added to
such 90 Trading Day period for the purposes of (i) and (ii) above.
3.12 Certain Securities Laws Disclosures; Publicity. The Company shall (i)
issue on each Closing Date a press release reasonably acceptable to the
Purchasers disclosing the transactions contemplated hereby, (ii) file within
ten (10) Business Days after each Closing Date with the Commission a Report on
Form 8-K disclosing the transactions contemplated hereby, and (iii) timely file
with the Commission a Form D promulgated under the Securities Act as required
under Regulation D promulgated under the Securities Act and provide a copy
thereof to the Purchaser promptly after the filing thereof. The Company shall,
no less than two (2) Business Days prior to the filing of any disclosure
required by clauses (ii) and (iii) above, provide a copy thereof to Encore.
Except as required by law and the rules and regulations of the Commission and
the Nasdaq Stock Market, Inc., no such filing or disclosure may be made that
mentions the Purchasers or Encore by name with the prior written consent of
Encore.
3.13 Use of Proceeds. The Company shall use all of the proceeds from the
sale of the Debentures and Common Shares for working capital purposes and to
fund acquisitions and not for the satisfaction of any portion of Company debt
or to redeem Company equity or equity-equivalent securities. Pending
application of the proceeds of this placement in the manner permitted hereby,
the Company will invest such proceeds in interest bearing accounts and/or
short-term, investment grade interest bearing securities.
3.14 Transfer of Intellectual Property Rights. So long as either Purchaser
owns Debentures and except in connection with the sale of all or substantially
all of the assets of the Company, the Company shall not transfer, sell or
otherwise dispose of any Intellectual Property Rights, or allow any of the
Intellectual Property Rights to become subject to any Liens, or fail to renew
such Intellectual Property Rights (if renewable and it would otherwise lapse if
not renewed), without the prior written consent of the Purchasers.
3.15 Reimbursement. In the event that a Purchaser, other than by reason of
its gross negligence or willful misconduct, becomes involved in any capacity in
any action, proceeding or investigation brought by or against any Person,
including stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated pursuant to the Transaction
Documents, the Company will reimburse such Purchaser for its reasonable legal
and
-16-
other expenses (including the cost of any investigation and preparation)
incurred in connection therewith. In addition, other than with respect to any
matter in which such Purchaser is a named party, the Company will pay such
Purchaser the charges, as reasonably determined by each Purchaser, for the time
of any officers or employees of such Purchaser devoted to appearing and
preparing to appear as witnesses, assisting in preparation for hearings, trials
or pretrial matters, or otherwise with respect to inquiries, hearings, trials,
and other proceedings relating to the subject matter of this Agreement. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliate of the Purchasers and
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of the Purchasers and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any person asserting claims on behalf of
or in right of the Company in connection with or as a result of the
consummation of the Transaction Documents except to the extent that any losses,
claims, damages, liabilities or expenses incurred by the Company result from
the gross negligence or willful misconduct of such Purchaser or entity in
connection with the transactions contemplated by this Agreement. The Purchasers
shall not, without the prior written consent of the Company, effect any
settlement of any action in respect of which the Company is a party.
3.16 Cut-Back Applicable to a Subsequent Financing Notice. Notwithstanding
anything herein to the contrary, the maximum principal amount of Debentures
that the Company may require the Purchasers to purchase at the Series B Closing
shall be limited to such principal amount as would, assuming the conversion of
the full principal amount of such Debentures occurs on the Original Issue Date
thereof and the payment of interest on account of such principal amount is made
for the full term in shares Common Stock, result in the issuance of a number of
Underlying Shares which, when added to the number of Underlying Shares
previously issued in respect of conversions of Debentures and as payment of
interest thereon and as are then issuable upon conversion in full of the
unconverted principal amount of all previously issued Debentures and as payment
of interest thereon in shares of Common Stock, equals 70% of the Issuable
Maximum (as defined in Exhibit A).
3.17 Transactions in the Common Stock. During the period from the receipt
by each Purchaser of a Subsequent Financing Notice until the earlier of (i)
five (5) Trading Days following such receipt and (ii) the Series B Closing
Date, such Purchaser, for itself and not for any other Purchaser, agrees that
it shall not establish a short position in the Common Stock (but may maintain
any short positions established prior to the beginning of such period).
-17-
ARTICLE IV
CONDITIONS
4.1 Conditions Precedent to the Obligation of the Purchasers to Purchase
Series B Debentures and Series B Warrants. The obligation of each Purchaser to
acquire and pay for the Series B Debentures and the Series B Warrants is
subject to the satisfaction or waiver by such Purchaser, at or before the
Series B Closing of each of the following conditions:
(a) Series A Closing. The Series A Closing shall have occurred;
(b) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained herein shall be true
and correct as of the date when made and as of the Series B Closing Date as
though made on and as of the Series B Closing Date;
(c) Performance by the Company. The Company shall have performed,
satisfied and complied with all covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Series B Closing Date;
(d) Underlying Securities Registration Statement. If an Underlying
Securities Registration Statement shall have been declared effective under the
Securities Act by the Commission between the Series A Closing Date and the
Series B Closing, then on the Series B Closing Date such Underlying Securities
Registration Statement shall be effective, not subject to any actual or
threatened stop order and not be subject to any actual or threatened
suspension;
(e) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court of governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents relating to the issuance or conversion of any of the
Securities;
(f) Adverse Changes. Since the Series A Closing there shall not
occurred any event or series of events which have had or could reasonably be
expected to result in a Material Adverse Effect and no material adverse change
in the condition (financial or otherwise) or prospects of the Company shall
have occurred which is not disclosed in the Disclosure Materials;
(g) Litigation. No material litigation shall have been instituted or
threatened against the Company;
(h) Management. In the reasonable judgment of the Purchaser, there
have been no substantial changes in the senior management of the Company;
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(i) No Suspension from Trading in or Delisting of Common Stock. The
trading in the Common Stock shall not have been suspended or delisted from the
NASDAQ (except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company) at any time
since the Series A Closing Date;
(j) Change of Control. No Change of Control in the Company shall have
occurred. "Change of Control" means the occurrence of any of (i) an acquisition
after the date hereof by an individual or legal entity or "group" (as described
in Rule 13d-5(b)(1) promulgated under the Exchange Act) of in excess of 33% of
the voting securities of the Company, (ii) a replacement of more than one-half
of the members of the Company's board of directors which is not approved by
those individuals who are members of the board of directors on the date hereof
in one or a series of related transactions, (iii) the merger of the Company
with or into another entity, consolidation or sale of all or substantially all
of the assets of the Company in one or a series of related transactions or (iv)
the execution by the Company of an agreement to which the Company is a party or
by which it is bound, providing for any of the events set forth above in (i),
(ii) or (iii);
(k) Legal Opinion. The Company shall have delivered to the Escrow
Agent the opinion of the Company's outside counsel, in substantially the form
attached hereto as Exhibit D dated the Series B Closing Date;
(l) Required Approvals. All Required Approvals shall have been
obtained;
(m) Shares of Common Stock. On the Series B Closing Date, the Company
shall have duly reserved the number of Underlying Shares required by this
Agreement to be reserved for issuance upon conversion of Series B Debentures
and as payment of interest thereon;
(n) Delivery of Series B Debentures and Series B Warrants. The Company
shall have delivered to the Escrow Agent the Series B Debentures and Series B
Warrants to be issued and sold at the Series B Closing, registered in the name
of the appropriate Purchasers, each in form satisfactory to the Escrow Agent;
(o) Transfer Agent Instructions. Transfer Agent Instructions, dated
the Series B Closing Date, shall have been delivered to and acknowledged in
writing by the Company's transfer agent; and
(p) Certain Acquisitions. The Company shall have consummated, or shall
simultaneously consummate, an acquisition of a non-Affiliated Person which (i)
had a positive EBITDA in its most recently completed fiscal quarter and (ii)
had revenues equal to or greater than DM 100 million in its most recently
completed fiscal year; and
(q) Officer's Certificate. The Company shall deliver to the Escrow
Agent an Officer's Certificate dated the Series B Closing Date and signed by an
executive officer of the
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Company confirming the Company's satisfaction of the conditions set forth in
Section 4.1(b) and (c) as of the Series B Closing Date.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. At the Series A Closing, the Company shall pay
$15,000 to the Escrow Agent, in connection with the preparation and negotiation
of the Transaction Documents, and $10,000 to Encore or its designee for due
diligence expenses. Otherwise, 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. The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the Debentures
pursuant hereto.
5.2 Entire Agreement; Amendments. This Agreement, together with the
Exhibits and Schedules hereto, the Registration Rights Agreement, the
Debentures, the Escrow Agreements and the Warrants 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, which the parties acknowledge have been merged into
such documents, exhibits and schedules.
5.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 8:00 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in the Purchase Agreement later than 8:00 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
If to the Company: c/o Orinda Capital International, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxx
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With copies to: Xxxxx & XxXxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxxxxx
If to Opportunity: JNC Opportunity Fund Ltd.
c/o Olympia Capital (Cayman) Ltd.
Xxxxxxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Facsimile No.: (000) 000-0000
Attn: Director
If to Strategic: JNC Strategic Fund Ltd.
c/o Olympia Capital (Cayman) Ltd.
Xxxxxxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Facsimile No.: (000) 000-0000
Attn: Director
With copies to (for Encore Capital Management, L.L.C.
communications to 00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
either Purchaser): Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Managing Member
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx
or to such other address as may be designated in writing hereafter, in the same
manner, by such Person.
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 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.
-21-
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.
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. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. Except as set forth in
Section 3.1(a), the Purchasers may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Company. This
provision shall not limit the Purchasers' right to transfer Securities or
transfer or assign rights under the Transaction Documents in accordance with
applicable law and the Transaction Documents.
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, other than with respect to Encore who is an intended beneficiary
of, and entitled to enforce, Sections 3.11, 3.12, 5.1 and 5.11 is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
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. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any Transaction Document), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
5.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive each Closing and the delivery and conversion or
exercise (as the case may be) of the Debentures and Warrants.
5.10 Execution. 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.
-22-
5.11 Publicity. The Company and the Purchasers shall consult with each
other in issuing any press releases or otherwise making public statements or
filings and other communications with the Commission or any regulatory agency
or stock market or trading facility with respect to the transactions
contemplated hereby and no party hereto shall issue any such press release or
otherwise make any such public statement, filings or other communications
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 or by the Commission or the
Nasdaq Stock Market (as the case may be), in which such case the disclosing
party shall provide the other parties with prior notice of such public
statement, filing or other communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of a Purchaser or Encore, or
include the name of a Purchaser or Encore in any filing with the Commission, or
any regulatory agency, trading facility or stock market without the prior
written consent of Encore, except to the extent such disclosure (but not any
disclosure as to the controlling Persons thereof) is required by law or by the
Commission or the Nasdaq Stock Market, Inc., in which case the Company shall
provide the Purchasers and Encore with prior notice of such disclosure. If
there is a dispute as to whether disclosure of controlling persons of the
Purchasers or Encore is required by applicable law, the Commission or the
Nasdaq Stock Market, Inc. (as evidenced either by a letter from a governmental
or regulatory authority of competent jurisdiction or a written rule promulgated
thereunder) the failure to make such disclosure at the request of Purchaser of
Encore, as the case may be, shall not constitute a default under the other
provisions hereof.
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.
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 the Transaction Documents. Each of the Company and the Purchasers
(severally and not jointly) agree that monetary damages may 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
-23-
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
IAT MULTIMEDIA, INC.
By: /s/ Xxxxx Xxxx
------------------------------
Name: Xxxxx Xxxx
Title: Chief Executive Officer
JNC OPPORTUNITY FUND LTD.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
JNC STRATEGIC FUND LTD.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
SCHEDULE 2.1(a)
SUBSIDIARIES
Name Place of Incorporation
---- ----------------------
IAT AG Switzerland
IAT Deutschland GmbH Germany
Interaktive Medien Systeme
FSE Computer-Handel GmbH & Co. KG Germany
FSE Computer Handel
Verwaltungsgesellschaft GmbH Germany
IAT Communication Systems GmbH Germany
IAT Communication AG Switzerland
SCHEDULE 2.1(c)
CAPITAL STOCK
Preferred stock, $.01 par value, authorized 500,000 shares, none outstanding
Common stock, $.01 par value, authorized 20,000,000 shares, 9,751,949
(including 50,000 shares of treasury stock and 498,285 escrowed shares).
Options to purchase shares of common stock:
500,000 shares pursuant to 1996 Qualified Stock Option Plan options as
set forth in attachment
Warrants to certain investors to purchase 2,348,485 shares of Common Stock
Warrants to the IPO underwriter to purchase 335,000 shares of Common Stock
Warrants to Century Cities Securities to purchase 100,000 shares of Common
Stock
The warrants and options are subject to anti-dilution provisions.
Except as disclosed in the Company's SEC Documents and filings by investors
pursuant to the Securities Exchange Act of 1934, as amended, the Company does
not know of Persons or groups of related persons who beneficially own (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) or has
the right to acquire by agreement with or by obligation binding upon the
Company beneficial ownership of in excess 5% of the Common Stock.
Stock options in addition to Underwriters' and Investors' Warrants
--------------------------------------------------------------------------------
Option Description of Vesting
Date of Xxxxx Xxxxx $ Period
------------- ------- ----------------------
X. Xxxxxxxx Retainment Agreement 50,000 8/15/97 6. retainment agreement
Retainment Agreement 25,000 8/15/97 6. retainment agreement
------
(Board Resolution 04/21/98) 75,000
X. Xxxxxxxxx Consulting Agreement 40,000 7/18/97 5. consultant agreement
Consulting Agreement 30,000 7/18/97 5. consultant agreement
Board Resolution 04/21/98 25,000 4/21/98 6. immediate
------
95,000
X. Xxxx Spinoff Agreement 16,666 3/24/98 5. the spinoff agreement
16,666 3/24/98 5. the spinoff agreement
16,666 3/24/98 5. the spinoff agreement
Board Resolution 04/21/98 25,000 4/21/98 6. immediate
------
75,000
Option Description of Vesting
Date of Xxxxx Xxxxx $ Period
------------- ------- -------------------------
K. Grissemann Board Resolution 04/21/98 50,000 4/21/98 6. immediate (to be defined)
X. Xxxxxx Board Resolution 04/21/98 50,000 4/21/98 6. immediate (to be defined)
X. Xxxxxx Board Resolution 04/21/98 25,000 4/21/98 6. immediate (to be defined)
FSE Board Resolution 04/21/98 25,000 4/21/98 6. immediate (to be defined)
employees
Value Retainment Agreement 10,000 2/5/98 average immediate
Management price
& Research, 2/9/98
London 4.25
Value Retainer Agreement 80,000 3/27/98 average the agreement
Management price
& Research, 2/9/98
Luxemburg 4.25
Xxxxxxx Xxxxx Investor Relations 25,000 no formal agreement yet
New Board 20,000 no formal agreement yet
Members ------
TOTAL 530,000
- 2 -
SCHEDULE 2.1(k)
PAYMENTS ON CAPITAL STOCK, ETC.
The Company distributed cash or other property to its stockholders or officers
or directors in connection with the Spinoffs and the acquisition of FSE as
described in the SEC Documents. As described in Schedule 2.1(c), the Company
has issued stock options outside of its existing stock option plans.
SCHEDULE 2.1(p)
SENIOR INDEBTEDNESS
Approximately $2,748,623 in accounts payable and other current liabilities at
March 31, 1998.
Approximately $1,045,704 in indebtedness to stockholders, at June 17, 1998.
Approximately $322,582 in deferred taxes at March 31, 1998.
SCHEDULE 2.1(r)
COMPLIANCE WITH NASDAQ
After the filing to the Company's annual report on Form 10-K for the year ended
December 31, 1997, the Company received an oral inquiry from the NASDAQ with
respect to the filing certain reports on form 10b-17 with the NASDAQ regarding
certain issuances of stock. Such reports were filed with the NASDAQ on June 17,
1998. Copies of such reports are attached hereto.
While the Company has not received any notice from the NASDAQ, it is currently
late with holding its annual meeting of stockholders. The Company expects to
submit its proxy materials to the SEC within 7 days and to hold its annual
meeting of stockholders as soon thereafter as practicable.
NASDAQ NATIONAL MARKET NOTIFICATION FORM
FOR LISTING OF ADDITIONAL SHARES
And Notification Pursuant to SEC Rule 10b-17*
*This form is not to be used for notification of a cash dividend/distribution.
For such issuance, please use "The Nasdaq Stock Market(TM) Cash
Dividend/Distribution Form." Please see "Information & Instructions" for
further details.
PART 1: GENERAL CORPORATE INFORMATION
COMPLETE CORPORATE NAME: IAT Multimedia, Inc.
-------------------------------------------------------
CONTACT NAME: Xxxxx Xxxxxxxxxx
------------------------------------------------------------------
TELEPHONE: (011)(41)(00)000-0000 FACSIMILE: (011)(41)(00)000-0000
---------------------------------------------------------------------
TRANSFER AGENT: American Stock Transfer & Trust Company
----------------------------------------------------------------
TELEPHONE: (000) 000-0000 FACSIMILE: (000) 000-0000
---------------------------------------------------------------------
PART II: SECURITY INFORMATION
NASDAQ(R) ISSUE SYMBOL: IATA CUSIP/CINS NUMBER: 00000000
--------------------------------------------------------
SECURITY CLASS AND DESCRIPTION: Common Stock $0.01 per value
------------------------------------------------
Include per or stated value, warrant expiration date, components of units, face
amount and interest rate on convertible debt, and other relevant information.
TOTAL SHARES OUTSTANDING BEFORE THE PLAN(S)/ISSUANCE(S): 9,600,000
-----------------------
Treasury stock should be excluded in determination of Total Shares Outstanding.
TYPE OF PLAN(S)/ISSUANCE(S): Please check appropriate line(s) and complete
applicable section(s) in Part III. For all plans/issuances, pertinent
supporting documentation is required.
( ) Public Offering ( ) Underwriter Fees ( ) Preferred Stock Conversion ( ) Employee Stock Purchase Plan
( ) Rights Offering ( ) Private Placement ( ) Warrant Exercise ( ) Employee Savings or 401(k)
( ) Subscription Offering ( ) Acquisition/Merger ( ) Stock Split Plan
( ) Exchange Offering ( ) Placement Fees ( ) Stock Dividend ( ) Amendment to Existing Plan
( ) Regulation S Offering ( ) Recapitalization ( ) Stock Option Plan (X) Professional Services Agreement
(x) Private Offering ( ) Debt Conversion ( ) Dividend Reinvestment ( ) Litigation or Settlement
Plan ( ) Other: Please specify
MAXIMUM NUMBER OF SHARES TO BE OFFERED PURSUANT TO THE ACTION(S): 5,000 shares
-------------
For each action, identify the source and number of shares. Note: The aggregate
number of shares listed in the categories below should equal the maximum number
of shares to be offered pursuant to the action(s). Please attach a separate
sheet, if necessary.
Shares offered by Company: 5,000 Shares offered by selling shareholders:
------------------ -------------
Treasury shares: Shares purchased on the open market:
---------------------------- ----------------
Other - Specify source:
----------------------------------------------------------------------------
DATE OF APPROVAL FOR THE ACTION(S) BY THE BOARD OF DIRECTORS: June 18, 1997
------------------
DATE OF APPROVAL FOR THE ACTION(S) BY SHAREHOLDERS (IF APPLICABLE):
------------
AMOUNT OF FEE PAYMENT ENCLOSED (IF APPLICABLE):$
-------------------------------
Authorization by Company Corporate Officer
SIGNATURE: /s/ Xxxxx Xxxxxxxxxx DATE: 05/20/98
--------------------------------- ----------------------------
NAME (PRINT): Xxxxx Xxxxxxxxxx TITLE: Chief Financial Officer
------------------------------ ----------------------------
NASDAQ NATIONAL MARKET NOTIFICATION FORM
FOR LISTING OF ADDITIONAL SHARES
And Notification Pursuant to SEC Rule 10b-17*
*This form is not to be used for notification of a cash dividend/distribution.
For such issuance, please use "The Nasdaq Stock Market(TM) Cash Dividend/
Distribution Form." Please see "Information & Instructions" for further details.
PART 1: GENERAL CORPORATE INFORMATION
COMPLETE CORPORATE NAME: IAT Multimedia, Inc.
-------------------------------------------------------
CONTACT NAME: Xxxxx Xxxxxxxxxx
-----------------------------------------------------------------
TELEPHONE: (011)(41)(00)000-0000 FACSIMILE: (011)(41)(00)000-0000
---------------------------------------------------------------------
TRANSFER AGENT: American Stock Transfer & Trust Company
---------------------------------------------------------------
TELEPHONE: (000) 000-0000 FACSIMILE: (000)000-0000
---------------------------------------------------------------------
PART II: SECURITY INFORMATION
NASDAQ(R) ISSUE SYMBOL: IATA CUSIP/CINS NUMBER: 00000000
----------------------- --------------
SECURITY CLASS AND DESCRIPTION: Common Stock $0.01 per value
-----------------------------------------------
Include per or stated value, warrant expiration date, components of units, face
amount and interest rate on convertible debt, and other relevant information.
TOTAL SHARES OUTSTANDING BEFORE THE PLAN(S)/ISSUANCE(S): 9,555,000
----------------------
Treasury stock should be excluded in determination of Total Shares Outstanding.
TYPE OF PLAN(S)/ISSUANCE(S): Please check appropriate line(s) and complete
applicable section(s) in Part III. For all plans/issuances, pertinent
supporting documentation is required.
( ) Public Offering ( ) Underwriter Fees ( ) Preferred Stock Conversion ( ) Employee Stock Purchase Plan
( ) Rights Offering ( ) Private Placement ( ) Warrant Exercise ( ) Employee Savings or 401(k)
( ) Subscription Offering (X) Acquisition/Merger ( ) Stock Split Plan
( ) Exchange Offering ( ) Placement Fees ( ) Stock Dividend ( ) Amendment to Existing Plan
( ) Regulation S Offering ( ) Recapitalization ( ) Stock Option Plan ( ) Professional Services Agreement
(x) Private Offering ( ) Debt Conversion ( ) Dividend Reinvestment ( ) Litigation or Settlement
Plan ( ) Other: Please specify
MAXIMUM NUMBER OF SHARES TO BE OFFERED PURSUANT TO THE ACTION(S): 146,949 shares
--------------
For each action, identify the source and number of shares. Note: The aggregate
number of shares listed in the categories below should equal the maximum number
of shares to be offered pursuant to the action(s). Please attach a separate
sheet, if necessary.
Shares offered by Company: 146,949 Shares offered by selling shareholders:
------------ ------------------
Treasury shares: Shares purchased on the open market:
---------------------- ---------------------
Other - Specify source:
---------------------------------------------------------------------------------
DATE OF APPROVAL FOR THE ACTION(S) BY THE BOARD OF DIRECTORS: November 7, 1997
------------------
DATE OF APPROVAL FOR THE ACTION(S) BY SHAREHOLDERS (IF APPLICABLE):
------------
AMOUNT OF FEE PAYMENT ENCLOSED (IF APPLICABLE): $
--------------------------------
Authorization by Company Corporate Officer
SIGNATURE: /s/ Xxxxx Xxxxxxxxxx DATE: 05/20/98
--------------------------------- ---------------------------
NAME (PRINT): Xxxxx Xxxxxxxxxx TITLE: Chief Financial Officer
------------------------------ ---------------------------
SCHEDULE 6(b)
REGISTRATION RIGHTS
Type Holder Common Stock Warrants Options
-----------------------------------------------------------------------------------
D, P* Vertical Financial 890,152 690,152
D, P* Avi Xxxxxx 94,697 94,697
D, P* Behala Xxxxxxx 296,402 296,402
D, P* Henilia 297,347 297,347
D, P* Lupin 296,402 296,402
D, P* Xxxxxx Xxxx 250,000 75,000
D, P* Xxxxxx Xxxxxxxxx 95,000
D, P* Xxxxxx Xxxxxxxx 75,000
D, P* X-X Xxxxxx 707,059 200,000
D, P* Walther Glas GmbH 890,750 50,000
and Xxxxxx Xxxxxxx
D, P* Royce (IPO undw) 335,000
P Ballin Consulting 10,000
other option holders 235,000
D, P Century City Securities 150,000
--------------------------------------------------
3,732,809 2,360,000 530,000 6,622,809
*Such registration rights are more fully described in the Company's filings
with the Securities and Exchange Commission, including the documents
attached to such filings as exhibits.
