Exhibit 6
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PREFERRED STOCK SUBSCRIPTION AGREEMENT
Dated as of August 15, 2000
By and Among
THE INVESTORS LISTED ON EXHIBIT A HERETO
and
INTERNATIONAL DISPENSING CORPORATION
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PREFERRED STOCK SUBSCRIPTION AGREEMENT
PREFERRED STOCK SUBSCRIPTION AGREEMENT (this "Agreement") dated as of
August 15, 2000, by and among the Investors listed on Exhibit A hereto (each a
"Investor," and collectively the "Investors"), and INTERNATIONAL DISPENSING
CORPORATION, a Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Investors desire to subscribe for, and the Company desires to
issue up to an aggregate of 500 shares of the Company's Series C Redeemable
Convertible Preferred Stock, par value $.001 per share (the "Preferred Stock")
for the per share purchase price of $2,000 on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
ISSUANCE OF STOCK AND PAYMENT OF SUBSCRIPTION PRICE; CLOSING
1.1 Issuance of Stock. Subject to the terms and conditions set forth
in this Agreement, the Company agrees to sell to the Investors, and the
Investors severally irrevocably subscribe for and agree to purchase for $2,000
per Share, 500 shares of Preferred Stock (the "Shares").
1.2 Closing Dates
(a) The purchase and sale of the Shares shall occur at one or
more closings (each, a "Closing") at such times as shall be determined by the
Company, subject to the conditions set forth in this Agreement. The initial
Closing shall occur within three business days after the execution of this
Agreement by the Company and the Investors . The date of the initial Closing is
hereinafter referred to as the "Initial Closing Date." On the Initial Closing
Date XXXXXXX X. XXXXXX, XXXXXX XXXXXX, XXXXXX X. XXXXXX, XXXXX XXXXXXX and XXXX
XXXXXXX (collectively, the "Investors") shall purchase Two Hundred (200) Shares
and shall pay to the Company by certified check or wire transfer of immediately
available funds, FOUR HUNDRED THOUSAND DOLLARS ($400,000).
(b) Subsequent Closings shall occur not less than thirty (30)
days after written notice by the Company to the Investors (the "Call Notice") in
the form attached hereto as Exhibit B. The Call Notice shall set forth the
number of Shares to be issued and sold to the Investors at such Closing. Within
thirty (30) days after the giving of the Call Notice to the Investors, the
Investors shall give written notice to the Company setting forth the amount of
Shares to be purchased by each Investor at the Closing to which the Call Notice
relates. The obligation of each
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Investor for subsequent closings shall be several and in the same proportion as
set forth in Section 1.2(a) hereof. Should any Investor give notice to the
Company that such Investor wishes to terminate such Investor's commitment to
purchase additional Shares, then the remaining Investors may, but are not
required, to purchase such Shares of the Investor who declines to purchase
additional Shares, in the same proportion as set forth above. Any Investor, at
any time, in his or its sole discretion, upon written notice to the Company, may
terminate his commitment to purchase Shares.
1.3 Warrants. For each Share purchased by an Investor at a Closing,
the Company shall issue to the Investor a warrant to purchase one additional
Share for $2,000 per Share. 50% of the Warrants issued to each Investor shall
expire if not exercised prior to December 15, 2000 and the remaining Warrants
shall expire on January 20, 2001. The Warrants shall be in the form of Exhibit
C.
1.4 Legends. From and after the date hereof, all share certificates
representing Shares, or shares of the Common Stock into which the Shares are
convertible ("Conversion Shares"), shall bear a legend which shall state as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT."
ARTICLE II
REPRESENTATIONS AND COVENANTS OF THE COMPANY
2. Representations and Covenants of the Company . The Company hereby
represents, warrants and agrees as follows:
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2.1 Existence and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The Company is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the character or location of the
properties owned, leased or operated by the Company or the nature of the
business conducted by the Company makes such qualification or license necessary,
except where the failure to be so duly qualified or licensed would not have a
material adverse effect on the business, operations, financial condition or
results of operations of the Company (a "Material Adverse Effect").
2.2 Capital Stock. The Company has an authorized capitalization
consisting of 40,000,000 shares of common stock, par value $.001 per share (the
"Common Stock") and 2,000,000 shares of Preferred Stock, par value $.001 per
share. Of the Common Stock, 9,666,668 shares are issued and outstanding. Of the
Preferred Stock, 560 shares of Series A Preferred Stock and 440 shares of Series
B Preferred Stock are issued and outstanding. Options and warrants to purchase
an aggregate of 2,327,776 shares of Common Stock are outstanding. On the Initial
Closing Date and on each subsequent date of Closing, after giving effect to the
transactions contemplated by this Agreement, each Investor will receive good and
marketable title to the Shares he acquires from the Company, free and clear of
all liens, claims and other encumbrances. All outstanding shares of capital
stock of the Company have been, and will on the Initial Closing Date be, duly
authorized and validly issued and fully paid and nonassessable. Other than as
set forth on Schedule 2.2 and as set forth in this Agreement, there will be on
the Initial Closing Date no outstanding subscriptions, options, registration
rights, warrants, rights, calls, commitments, conversion rights, rights of
exchange, preemptive rights, rights of first refusal, rights of first offer,
plans or other agreements of any character providing for the purchase,
registration, issuance or sale of any shares of the capital stock of the
Company.
2.3 Authorization and Validity of this Agreement. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company and the performance of its
obligations hereunder have been duly authorized and approved by its Board of
Directors and no other corporate action on the part of the Company is necessary
to authorize the execution, delivery and performance of this Agreement by the
Company. This Agreement has been duly executed and delivered by the Company and,
assuming due execution of this Agreement by the Investors, is a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
2.4 SEC Documents; No Material Changes. (a) The Company has
furnished to the Investors true, correct and complete copies of its Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1999 and its
Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000. Such
periodic reports constitute all the documents that the Company was required to
file with the Securities and Exchange Commission (the "SEC") from January 1,
2000 to the Initial Closing Date. Each of the periodic reports filed by the
Company with the SEC since June 30, 1999 ("SEC Documents") has been timely and
duly filed and when filed was in compliance in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
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Act") and the rules and regulations of the SEC thereunder applicable to such SEC
Document. Each of the SEC Documents (including the financial statements included
therein) was complete and correct in all material respects as of its date and,
as of its date, did not contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The financial statements included within the SEC
Documents have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and present fairly or will present fairly (subject, in the case of the
unaudited statements, to normal year-end audit adjustments) the consolidated
financial position of the Company as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
(b) Since March 31, 2000, there has been no (i) material
adverse change in the business, operations, financial condition, results of
operations or prospects of the Company or (ii) material damage, destruction or
loss to any asset or property, tangible or intangible, of the Company which
materially affects the ability of the Company to conduct its business.
Notwithstanding the foregoing, the Investors acknowledge that the Company is in
the development stage, has incurred significant losses since inception and will
continue to incur significant losses.
2.5 Consents and Approvals: No Violations. The execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby (a) will not violate or contravene
any provision of the Certificate of Incorporation or By-laws of the Company, or
any statute, rule, regulation, order or decree of any public body or authority
by which the Company is or any of its properties are bound, (b) will not require
any filing with, or consent of, or the giving of any notice to, any governmental
or regulatory body, agency or authority, or any other person and (c) will not
result in a violation or breach of, conflict with, constitute a default (or give
rise to any right of termination, cancellation, payment or acceleration) under,
or result in the creation of any encumbrance upon any of the properties or
assets of the Company under, any of the terms, conditions or provisions of any
agreement, instrument or obligation to which the Company is a party, or by which
any of its properties or assets may be bound or under which it may have any
rights, excluding from the foregoing clauses (b) and (c) filings, notices,
permits, consents and approvals, the absence of which, and violations, breaches,
defaults, conflicts and encumbrances of which, in the aggregate, would not have
a Material Adverse Effect.
2.6 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Company, is, or will be, entitled to any commission or
broker's or finder's fees from the Company, or from any person or entity
controlling, controlled by or under common control with the Company, in
connection with any of the transactions contemplated by this Agreement;
provided, however, that the independent committee of the Board of Directors of
the Company retained Xxxxxx, Houghton & Company, Inc. ("BHC") to render an
opinion concerning the fairness of the transactions
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contemplated by this Agreement to the holders of Common Stock of the Company and
BHC will be paid a fee by the Company in connection therewith.
2.7 Reverse Stock Split. The Board of Directors of the Company shall
meet at an appropriate time to consider the terms of a possible reverse stock
split of the Company's Common Stock, and if that occurs, the numbers set forth
herein will be adjusted in an equitable manner.
ARTICLE III
REPRESENTATIONS OF THE INVESTORS
3. Representations of the Investors. Each Investor, represents, warrants
and agrees, for itself or himself only, as follows:
3.1 Existence and Good Standing; Power and Authority. Such Investor,
if it is a corporation, a limited liability company or a limited liability
partnership, is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Such Investor has the legal power
and authority to enter into, execute and deliver this Agreement and perform its
obligations hereunder and thereunder. This Agreement has been duly authorized
and approved by such Investor and is a valid and binding obligation of such
Investor enforceable against such Investor in accordance with its terms, except
to the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws effecting the
enforcement of creditors' rights generally and by general equitable principles.
3.2 Restrictive Documents. Such Investor is not subject to any
mortgage, lien, lease, agreement, instrument, order, law, rule, regulation,
judgment or decree, or any other restriction of any kind or character, which
would prevent consummation by such Investor of the transactions contemplated by
this Agreement.
3.3 Purchase for Investment. Such Investor will acquire the Shares
for its own account for investment and not with a view toward any resale or
distribution thereof; provided, however, that the disposition of each such
Investor's property shall at all times remain within the sole control of the
Investor.
3.4 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of such Investor is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated by this
Agreement.
3.5 Exemption from Registration. Such Investor acknowledges that
the offering and sale of the Shares is intended to be exempt from registration
under the Securities Act of 1933,
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as amended (the "Securities Act"), by virtue of Section 4(2) of the Securities
Act and Regulation D promulgated thereunder.
3.6 Ability to Bear Economic Risk. Such Investor has determined that
the Shares are a suitable investment for the Investor, that the Investor has the
financial ability to bear the economic risk of its investment in the Company,
has adequate means of providing for its current needs and personal contingencies
and has no need for liquidity with respect to investment in the Company.
3.7 No Liquidity. Such Investor will not sell or otherwise transfer
the Shares without registration under the Act or an exemption therefrom, and
fully understands and agrees that the Investor must bear the economic risk of
its investment for an indefinite period of time because, among other reasons,
the Shares have not been registered under the Act or under the securities laws
of any state and, therefore, cannot be resold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and under
applicable state securities laws or an exemption from such registration is
available. Such Investor also understands that sales or transfers of the Shares
are further restricted by the provisions of state securities laws.
3.8 Suitability and Accredited Status. Such Investor represents and
warrants that such Investor is an accredited investor and that all information
provided by such Investor in the Purchaser Questionnaire executed simultaneous
herewith is true and correct as of the Initial Closing Date.
3.9 Access to Information. Such Investor acknowledges that the
Company has made available to him the opportunity to ask questions of, and
receive answers from, the management of the Company concerning the terms and
conditions of this Agreement and the business, financial condition and prospects
of the Company and to obtain additional information to the extent the Company
possesses such information or can acquire it without unreasonable effort or
expense, necessary to verify the accuracy of the information given to the
Investor in the SEC Documents or otherwise to make an informed investment
decision and acknowledges that all material documents, records and books
pertaining to the investment have, on request, been made available to any
advisors designated by the Investor to receive such information.
ARTICLE IV
COVENANTS
4.1 SEC Reports. So long as any Shares are outstanding the Company
shall (a) within 15 days of each required filing date (i.e., the date on which
the reports or other documents are required to be filed with the SEC pursuant to
Sections 13(a) and 15(d), (b) transmit by mail to all holders of Shares, as
their names and addresses appear in the corporate books and records maintained
by the Company, without cost to such holders, copies of the annual reports,
quarterly reports and other documents which the Company is required to file with
the SEC pursuant to Sections 13(a) and 15(d) of the Exchange Act, and (c)
transmit to all holders any and all documents or materials distributed to all of
the holders of the Common Stock simultaneously with the distribution to the
holders of Common Stock.
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ARTICLE V
REGISTRATION RIGHTS
5.1 Certain Definitions. As used in this Article V, the following
terms shall have the following respective meanings:
"Holders" shall mean the holders of Registrable Securities.
"Initiating Holders" shall mean any persons who in the aggregate are
Holders of at least a majority of the voting power held by all outstanding
Registrable Securities.
"Registrable Securities" shall mean (i) the Conversion Shares and
(ii) any Common Stock issued in respect thereof upon any stock split, stock
dividend, recapitalization or similar event.
"Requesting Stockholders" shall mean holders of securities of the
Company entitled to have securities included in any registration pursuant to
Section 5.2 and who shall request such inclusion.
The terms "register," "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in compliance with Sections 5.2 and 5.3 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, reasonable
fees and disbursements of one counsel for all the selling Holders for a "due
diligence" examination of the Company, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for any Holder, except as otherwise provided herein.
"Underwritten Offering" shall mean the offering and sale of
Registrable Securities in a registration pursuant to a firm commitment
underwriting to an underwriter at a fixed price for reoffering or pursuant to
agency or best efforts arrangements with a placement agent or underwriter.
5.2 Demand Registration.
(a) Requests for Registration. At any time after one hundred twenty
(120) days from the date of this Agreement the Initiating Holders may request
registration under the Securities Act of all or part of their Registrable
Securities. Within ten (10) days after receipt of any such request, the Company
will give written notice of such requested registration to all other Holders of
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Registrable Securities and any other stockholder having registration rights
which entitle it to participate in such registration. The Company will include
in such registration all Registrable Securities with respect to which it has
received written requests for inclusion therein within fifteen (15) days after
receipt of the Company's notice. The Company shall cause its management to
cooperate fully and to use its best efforts to support the registration of the
Registrable Securities and the sale of the Registrable Securities pursuant to
such registration as promptly as is practicable. Such cooperation shall include,
but not be limited to, management's attendance and reasonable presentations in
respect of the Company at road shows with respect to the offering of Registrable
Securities. All registrations requested under this Section 5.2(a) are referred
to herein as "Demand Registrations." The Holders of Registrable Securities will
be entitled to request one Demand Registration hereunder. A registration will
not count as a Demand Registration until it has become effective. Should the
Demand Registration not be filed by the Company within sixty (60) days of the
date of the Company's written notice to the Holders of Registrable Securities,
then the Company shall pay to all the Holders of Registrable Securities, on a
pro rata basis, as liquidated damages, the sum of TWO HUNDRED THIRTY-THREE
DOLLARS ($233) per day for each day beyond the sixty (60) day period that the
Demand Registration has not been filed; provided, however, that the maximum
amount of liquidated damages payable to the Holders hereunder shall be $100,000.
(b) Demand Registration Expenses. The Company will pay up to an
aggregate of TWENTY THOUSAND DOLLARS ($20,000) of Registration Expenses in
connection with a Demand Registration hereunder. The Requesting Stockholders
shall be obligated to pay their pro rata share (based on the number of their
Registrable Securities included in the registration statement) of any
Registration Expenses in connection with a Demand Registration which exceed
TWENTY THOUSAND DOLLARS ($20,000) in the aggregate. The Requesting Stockholders
shall also pay all Selling Expenses attributable to the sale of their securities
pursuant to any Demand Registration, including their pro rata share of all fees
and disbursements of counsel for the Holders in connection with such Demand
Registration.
(c) Priority on Demand Registrations. If a Demand Registration is an
Underwritten Offering, and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities requested to
be included exceeds the number which can be sold in such offering, the Company
will include in such registration such number of shares, which in the opinion of
such underwriters, may be sold, allocated among the Holders electing to
participate and all other persons entitled to and electing to participate pro
rata in accordance with the amounts of securities requested to be so included by
the respective Holders and other persons.
(d) Restrictions on Demand Registration. The Company will not be
obligated to effect any Demand Registration within six (6) months after the
effective date of a previous registration in which the Holders of Registrable
Securities were given piggyback rights pursuant to Section 5.3 other than a
registration of Registrable Securities intended to be offered on a continuous or
delayed basis under Rule 415 or any successor rule under the Securities Act.
5.3 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any of its securities under the Securities Act (other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration and contemplated disposition of
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Registrable Securities (a "Piggyback Registration"), the Company will give
prompt written notice to all Holders of Registrable Securities of its intention
to effect such a registration so that such notice is received by each Holder at
least twenty (20) days before the anticipated filing date. The Company will
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within ten (10)
days after the receipt of the Company's notice.
(b) Piggyback Expenses. In connection with each Piggyback
Registration, all of the Registration Expenses of the Holders of Registrable
Securities will be paid by the Company and such Holders shall pay all of the
Selling Expenses attributable to the sale of their securities pursuant to the
Piggyback Registration, including their pro rata share of all fees and
disbursements of counsel for the Holders in connection with such Piggyback
Registration.
(c) Priority on Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
distribution of the Registrable Securities to be included concurrently with the
securities being registered on behalf of the Company would materially adversely
affect the distribution of such securities by the Company, the Company will
include in such registration (i) first, the securities the Company proposes to
sell, (ii) second, the Registrable Securities and securities of the Company with
respect to which similar registration rights have heretofore been granted and
requested to be included in such registration, pro rata in accordance with the
amounts of Registrable Securities and such securities requested to be so
included by the respective Holders and holders of such securities of the
Company; and (iii) third, any other securities requested to be included in such
registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the distribution of the Registrable Securities to be included
concurrently with the securities being registered on behalf of the Company would
materially adversely affect the distribution of such securities by the Company,
the Company will include in such registration (i) first, the securities
requested to be included therein by the holders requesting such registration,
(ii) second, the Registrable Securities and securities of the Company with
respect to which similar registration rights have heretofore been granted and
requested to be included in such registration, pro rata in accordance with the
amounts of Registrable Securities and such securities requested to be so
included by the respective Holders and holders of such securities of the
Company, and (iii) third, other securities requested to be included in such
registration.
5.4 Holdback Agreements.
(a) Each Holder of Registrable Securities which is a party to this
Agreement agrees not to effect any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven (7) days prior to and the
90-day period beginning on the effective date of any underwritten Demand
Registration in which the Holder participates or any underwritten Piggyback
Registration in which the Holder participates (except as part of such
underwritten registration or with the consent of the managing underwriter).
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(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days prior
to and the 90-day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration (except (A) as
part of such underwritten registration, (B) with the consent of the managing
underwriter or (C) pursuant to registrations on Form S-8 or any other similar
form for employee benefit plans), and (ii) to use its reasonable best efforts to
cause each holder of its equity securities, or any securities convertible into
or exchangeable or exercisable for such securities, purchased from the Company
at any time after the date of this Agreement (other than in a registered public
offering) to agree not to effect any public sale or distribution of any such
securities during such period (except as part of such underwritten registration,
if otherwise permitted or with the consent of the managing underwriter).
5.5 Registration Procedures. Whenever the Holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Article V, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Securities, which registration statement will
state that the Holders of Registrable Securities covered thereby may sell such
Registrable Securities either under such registration statement or, at any
Holder's proper request, pursuant to Rule 144 (or any similar rule then in
effect), and use its best efforts to cause such registration statement to become
effective (provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to the counsel
selected by the Holders of a majority of the Registrable Securities covered by
such registration statement copies of all such documents proposed to be filed,
which documents will be subject to the review and approval of such counsel);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period set forth in Section 5.5(k) hereof and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(c) furnish to each Holder of Registrable Securities covered by such
registration such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities;
(d) use its best efforts to register or qualify such Registrable
Securities covered by such registration under such other securities or blue sky
laws of such jurisdictions as any Holder reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
the Holders thereof to consummate the disposition in such jurisdictions of the
Registrable Securities as requested by such Holders (provided that the Company
will not be required
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to qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection, subject itself to
taxation in any such jurisdiction, or consent to general service of process in
any such jurisdiction);
(e) notify each Holder of Registrable Securities covered by such
registration, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any fact necessary to make the
statements therein not misleading, and, the Company will prepare a supplement or
amendment to such prospectus so that, such prospectus (or any document
incorporated therein by reference) will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements therein
not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange or automated quotation system on which similar securities
issued by the Company are then listed or quoted;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as the Holders of a
majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, using its best efforts to
effect a stock split or a combination of shares);
(i) make available for inspection by any Holder of Registrable
Securities covered by such registration, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its security
holders, earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 45 days after the end of any 12-month period (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold and (ii) beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the registration statement, which
statements shall cover said 12-month periods; and
(k) keep each registration statement effective for a period of one
year after the effective date of such registration statement, except in the case
of a Form S-3 Registration Statement which shall continue to remain effective.
12
5.6 Indemnification. In the event of any registration under the
provisions of this Article V, the Company, to the extent permitted by law, will
indemnify any Holder participating in such registration, its respective officers
and directors, if any, and each person, if any, who controls such Holder within
the meaning of Section 15 of the Securities Act, against all losses, claims,
damages and liabilities caused by any untrue statement of a material fact
contained in the registration statement or prospectus (and as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading and
will reimburse such Holder its officers and directors and any person, if any,
who controls such Holder within the meaning of Section 15 of the Securities Act,
against any legal or other expenses reasonably incurred by such Holder, officer,
director or person in connection with investigating or defending any such
losses, claims, damages and liabilities, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission contained
in information furnished in writing to the Company by such Holder participating
in such registration or by underwriters expressly for use therein. The
obligation of the Company under this Article V to register securities for any of
the Holders shall be subject to the condition that each such Holder and the
underwriters involved in the offering shall furnish to the Company in writing
such information as shall be reasonably requested by the Company for use in
connection with the preparation of any such registration statement or prospectus
and, to the extent permitted by law, shall indemnify the Company, its directors
and officers, any other underwriter, the other Holders participating in such
registration and each person, if any, who controls the Company, any other
underwriter or such other Holders, within the meaning of Section 15 of the
Securities Act, against all losses, claims, damages and liabilities caused by
any untrue statement or omission contained in information so furnished in
writing to the Company by such Holder or such underwriter expressly for use
therein.
5.7 Contribution. If the indemnification provided for in this
Article V from the indemnifying party is unavailable as a matter of law or
public policy to any indemnified party hereunder in respect of any losses,
claims, damages or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages or liabilities,
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party under this Article V as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5.7 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to herein.
5.8 Termination. The registration rights provided in this Article V
shall terminate as to any Investor which can immediately sell all of the shares
of Common Stock issued or issuable
13
to such Investor upon conversion of the Shares in a single sale pursuant to Rule
144 under the Securities Act.
ARTICLE VI
INDEMNITIES
6.1 Indemnity of Investors. Each Investor, severally, agrees to
indemnify and hold harmless the Company and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act, against any
and all loss, liability, claim, damage and expense whatsoever (including, but
not limited to, any and all expenses reasonably incurred in investigating,
preparing or defending against any litigation commenced or threatened or any
claim whatsoever) arising out of or based upon any false representation or
warranty or breach or failure by such Investor to comply with any covenant or
agreement made by such Investor herein or in any other document furnished by the
Investor to any of the foregoing in connection with this transaction. The
Company hereby acknowledges that no Investor shall have any liability for a
breach by any other Investor of any representation, warranty or agreement
hereunder.
6.2 Indemnity of Company. The Company agrees to indemnify and hold
harmless the Investors, against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all expenses
reasonably incurred in investigating, preparing or defending against any
litigation commenced or threatened or any claim whatsoever) arising out of or
based upon any false representation or warranty or breach or failure by the
Company to comply with any covenant or agreement made by the Company herein or
in any other document furnished by the Company to any of the foregoing in
connection with this transaction.
6.3 Notice to Indemnifying Party. Each party entitled to
indemnification under this Article VI (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided, that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at such party's expense, and
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Article VI unless such failure has had a material adverse effect on
the defense against such claim. The parties to this Agreement reserve any rights
to claim under this Agreement for damages actually incurred by reason of any
failure of the Indemnified Party to give prompt notice of a claim. To the extent
counsel for the Indemnifying Party shall in such counsel's reasonable judgment,
have a conflict in representing an Indemnified Party in conjunction with the
Indemnifying Party or other Indemnified Parties, such Indemnified Party shall be
entitled to separate counsel at the expense of the Indemnifying Party subject to
the approval of such counsel by the Indemnified Party (whose approval shall not
be unreasonably withheld). No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.
14
Each Indemnified Party shall furnish such information regarding itself or the
claim in question as an Indemnifying Party may reasonably request in writing and
as shall be reasonably required in connection with the defense of such claim and
any litigation resulting therefrom.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS
7. Survival of Representations. The respective representations and
warranties of the Company and the Investors contained in this Agreement shall
survive the Closing for a period of two years.
ARTICLE VIII
MISCELLANEOUS
8.1 Knowledge of the Company. Where any representation or warranty
made by the Company contained in this Agreement is expressly qualified by
reference to its knowledge, such knowledge shall be deemed to exist if the
matter is within the knowledge of the executive officers of the Company.
8.2 Expenses. The parties hereto shall pay their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and financial
advisers.
8.3 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York applicable to agreements executed and to be performed solely
within such State.
8.4 Captions. The Article and Section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
8.5 Notices. Any notice or other communication required or permitted
under this Agreement shall be sufficiently given if delivered in person or sent
by telecopy or by registered or certified mail, postage prepaid, addressed as
follows: if to any Investor, to the address set forth on Exhibit A attached
hereto set forth below such Investor's name; and if to the Company, to it at
I-97 Business Park, 0000 Xxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxx 00000
(Facsimile No. 410-729-0275) Attention: Xxxx Xxxxxxxx, President and Chief
Executive Officer, with a copy to its counsel, Wolf, Block, Xxxxxx and
Xxxxx-Xxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Facsimile Number
212-986-0604) Attention: Xxxxxx X. Bring, Esq., or such other address or number
as shall be furnished in writing by any such party, and such notice or
communication shall be deemed to have been given upon automatic confirmation of
receipt by the receiving machine if sent by telecopier, upon delivery if
delivered in person, and upon mailing if mailed.
8.6 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be
15
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
8.7 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
8.8 Entire Agreement. This Agreement, including the exhibits,
schedules, and other documents referred to herein and therein which form a part
hereof and thereof, contain the entire understanding of the parties hereto with
respect to the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
8.9 Amendments. This Agreement may not be changed orally, but only
by an agreement in writing signed by the Investors and the Company.
8.10 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
8.11 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
8.12 Jurisdiction. Any judicial proceeding brought against any of
the parties to this Agreement or any dispute arising out of this Agreement or
any matter related hereto shall be brought in the courts of the State of New
York, or in the United States District Court for the Southern District of New
York, and, by execution and delivery of this Agreement, each of the parties to
this Agreement accepts the jurisdiction of such courts. The foregoing consent to
jurisdiction shall not be deemed to confer rights on any Person other than the
respective parties to this Agreement.
8.13 Availability of Equitable Remedies. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled, either before or after any Closing, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties hereby
consent to the issuance of such injunction and to the ordering of specific
performance.
16
IN WITNESS WHEREOF, the Investors have signed this Agreement and the
Company has caused its corporate name to be hereunto subscribed by its officers
thereunto duly authorized, all as of the day and year first above written.
INTERNATIONAL DISPENSING CORPORATION
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: President
INVESTORS:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
XXXXXXX X. XXXXXX
/s/ Xxxxxx Xxxxxx
----------------------------------------
XXXXXX XXXXXX
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
XXXXXX X. XXXXXX
/s/ Xxxxx Xxxxxxx
----------------------------------------
XXXXX XXXXXXX
/s/ Xxxx Xxxxxxx
----------------------------------------
XXXX XXXXXXX
17
EXHIBIT A
INVESTORS
Percentage of Shares
Name Address to be Purchased
Xxxxxxx X. Xxxxxx 000 Xxxxxxx Xxxxx 20%
Xxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx 00000 Xxxxxxxx Xxxx 20%
Xxxxxx, Xxxxxxxxxx 00000
Xxxxx Xxxxxxx c/o Plaza Investment Managers, Inc. 20%
0000 Xx Xxxxxxx, Xxxxxxxx X
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
Xxxx Xxxxxxx 000 Xxxxx Xxxxxxx Xxxxxx 00%
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxx 00 Xxxxxxxxxxx Xxxxx, Xxxxx 000 20%
Xxx Xxxx, Xxx Xxxx 00000
1
EXHIBIT B
CALL NOTICE
INTERNATIONAL DISPENSING CORPORATION
000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Reference is made to the Preferred Stock Purchase Agreement dated as of
August 15, 2000 by and among International Dispensing Corporation (the
"Company") and certain investors (the "Investors"), including you (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein
have the same meanings herein as in the Agreement.
In accordance with Section 1.2(a) of the Agreement you are hereby notified
that the Company will sell to the Investors at a closing to be held on [not less
than 30 days after the date of this Call Notice] ____ Shares.
In accordance with Section 1.2(a) of the Agreement you are required to
notify the Company within 30 days after the giving of this Call Notice how many
of such ________ Shares you shall purchase.
Very truly yours,
INTERNATIONAL DISPENSING CORPORATION
By:_____________________________________
EXHIBIT C
WARRANT TO PURCHASE
SERIES C REDEEMABLE CONVERTIBLE PREFERRED
STOCK, PAR VALUE $.001 PER SHARE
OF
INTERNATIONAL DISPENSING CORP.
THIS WARRANT, THE PREFERRED STOCK ISSUABLE UPON EXERCISE HEREOF AND THE COMMON
STOCK ISSUABLE UPON CONVERSION OF THE PREFERRED STOCK HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") NOR UNDER ANY STATE
SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE
TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (2) THE COMPANY
RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL TO THE HOLDER OF
SUCH WARRANT REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH WARRANT, PREFERRED
STOCK AND/OR COMMON STOCK MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
This certifies that, for value received, _________________ or
registered assigns ("Warrantholder"), is entitled to purchase from INTERNATIONAL
DISPENSING CORPORATION (the "Company"), subject to the provisions of this
Warrant, at any time during the Exercise Period (as hereinafter defined)
________ Shares of the Company's Series C Redeemable Convertible Preferred
Stock, par value $.001 per share ("Warrant Shares"). The purchase price payable
upon the exercise of this Warrant shall be $2,000 per Warrant Share.
For purposes of this Warrant, the term "Exercise Period" means the
period commencing on the date of issuance of this Warrant and (a) with respect
to an aggregate of 50% of the Warrant Shares purchasable upon exercise of this
Warrant, ending on December 15, 2000 and (b) with respect to an aggregate of 50%
of the Warrant Shares purchasable upon exercise of this Warrant, ending on
January 20, 2001.
This Warrant is subject to the following terms and conditions:
1. Exercise of Warrant.
(a) This Warrant may be exercised in whole or in part but not
for a fractional share. Upon delivery of this Warrant at the offices of the
Company or at such other address as the Company may designate by notice in
writing to the registered holder hereof with the Subscription Form annexed
hereto duly executed, accompanied by payment of the Warrant Price for the number
of Warrant Shares purchased (in cash, by certified, cashier's or other check
acceptable to the Company, the registered holder of this Warrant shall be
entitled to receive a certificate or certificates for the Warrant Shares so
purchased. Such certificate or certificates shall be promptly delivered to the
Warrantholder. Upon any partial exercise of this Warrant, the Company shall
execute and deliver a new Warrant of like tenor for the balance of the Warrant
Shares purchasable hereunder.
(b) The Warrant Shares deliverable hereunder shall, upon
issuance, be fully paid and non-assessable and the Company agrees that at all
times during the term of this Warrant it shall cause to be reserved for issuance
such number of Warrant Shares as shall be required for issuance and delivery
upon exercise of this Warrant.
2. Transfer or Assignment of Warrant.
(a) Any assignment or transfer of this Warrant shall be made
by surrender of this Warrant at the offices of the Company or at such other
address as the Company may designate in writing to the registered holder hereof
with the Assignment Form annexed hereto duly executed and accompanied by payment
of any requisite transfer taxes, and the Company shall, without charge, execute
and deliver a new Warrant of like tenor in the name of the assignee for the
portion so assigned in case of only a partial assignment, with a new Warrant of
like tenor to the assignor for the balance of the Warrant Shares purchasable.
(b) Prior to any assignment or transfer of this Warrant, the
holder thereof shall deliver an opinion of counsel to the Company to the effect
that the proposed transfer may be effected without registration under the
Securities Act of 1933, as amended (the "Securities Act"). Each Warrant issued
upon or in connection with such transfer shall bear the restrictive legend set
forth on the front of this Warrant unless, in the opinion of the Company's
counsel, such legend is no longer required to insure compliance with the
Securities Act.
3. Charges, Taxes and Expenses. The issuance of certificates for
Warrant Shares upon any exercise of this Warrant shall be made without charge to
the holder of this Warrant for any tax or other expense in respect to the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued only in the name of the
holder of this Warrant.
4. Miscellaneous.
2
(a) The terms of this Warrant shall be binding upon and shall
inure to the benefit of any successors or assigns of the Company and of the
holder or holders hereof and of the shares of Common Stock issued or issuable
upon the exercise hereof.
(b) No holder of this Warrant, as such, shall be entitled to
vote or receive dividends or be deemed to be a stockholder of the Company for
any purpose, nor shall anything contained in this Warrant be construed to confer
upon the holder of this Warrant, as such, any rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action,
receive notice of meetings, receive dividends or subscription rights, or
otherwise.
(c) Receipt of this Warrant by the holder hereof shall
constitute acceptance of an agreement to the foregoing terms and conditions.
(d) The Warrant and the performance of the parties hereunder
shall be construed and interpreted in accordance with the laws of the State of
Delaware.
(e) This Warrant is subject to certain other agreements
contained in the Purchase Agreement, a copy of which is on file with the
Secretary of the Company. Shares issued upon exercise of this Warrant shall
contain a legend substantially to the same effect as the legend set forth on the
first page of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer and its corporate seal to be affixed hereto.
Dated as of ________, 2000
INTERNATIONAL DISPENSING CORP.
BY:_____________________________________
Name:
Title:
3
SUBSCRIPTION FORM
(TO BE EXECUTED BY THE REGISTERED HOLDER
IF HE DESIRES TO EXERCISE THE WARRANT)
To: INTERNATIONAL DISPENSING CORPORATION
The undersigned hereby exercises the right to purchase
_________ shares of Series C Redeemable Convertible Preferred Stock, par value
$.001 per share, covered by the attached Warrant in accordance with the terms
and conditions thereof, and herewith makes payment of the Warrant Price for such
shares in full.
________________________________________
SIGNATURE
________________________________________
ADDRESS
________________________________________
DATED: ______________
ASSIGNMENT
(To be Executed by the Registered Holder
if he Desires to Transfer the Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _____________ the right to purchase shares of Series C Redeemable
Convertible Preferred Stock of INTERNATIONAL DISPENSING CORP., evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint _____________
Attorney to transfer the said Warrant on the books of the Company, with full
power of substitution.
________________________________________
SIGNATURE
________________________________________
ADDRESS
DATED: ______________
IN THE PRESENCE OF:
_____________________
