EXHIBIT 4.6
THIS SECURITIES PURCHASE AGREEMENT, as it may be amended from time to time (the
"Agreement"), dated as of the 24th day of June 1998, is entered into by and
among ENVIRONMENTAL REMEDIATION HOLDING CORPORATION, a Colorado corporation (the
"Company"); and the persons and/or entities who have executed this Agreement on
the signature pages hereof (hereinafter referred to individually as an
"Investor" and collectively as the "Investors").
WITNESSETH:
WHEREAS, the Company desires to sell to the Investors, and the Investors desire
to purchase from the Company, certain convertible notes of the Company and
warrants entitling the Investors to purchase certain shares of capital stock of
the Company, for the respective purchase prices and upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereby agree as follows:
1. AUTHORIZATION OF ISSUE.
The Company has authorized the issuance and sale to the Investors of: (i) up to
$2,500,000 principal amount of the Company's 5.5% convertible notes due June 23,
2000 (the "Notes"); and (ii) common stock purchase warrants (the "Warrants")
entitling the holders thereof to purchase, for an amount per share to be
determined by formula, that being 120% of the average of the "Closing Bid
Price", as that term is defined in the Notes, of the Company's Common Stock on
the Closing Date (as hereinafter defined) (the "Exercise Price"), an aggregate
number of shares of Common Stock equal to ten percent (10%) of the original
principal balance of the Notes, par value $.0001 per share (the "Warrant
Shares") of the Company.
(a) The Notes shall be substantially in the form of Exhibit A annexed
hereto and made a part hereof.
(b) The Warrants shall be substantially in the form of Exhibit B
annexed hereto and made a part hereof.
2. ISSUANCE OF NOTES AND WARRANTS; REGISTRATION OF CONVERSION SHARES
AND OPTION SHARES.
(a) Issuance of Notes and Warrants. On the terms and subject to the conditions
hereinafter set forth, on the Closing Date (as hereinafter defined), the Company
will issue and sell to each Investor the principal amount of Notes and the
number of Warrants set forth opposite the name of each such Investor on Schedule
I hereto and made a part hereof.
(b) Purchase Price: Payment. The purchase price for each of the Notes shall
equal 100% of the aggregate principal amount thereof and the purchase price for
each Warrant shall be one/one hundredth of one cent ($.0001), or an aggregate of
$25.00 for all Warrants. The purchase price payable by each Investor shall be
the amount set forth opposite the name of each such Investor on Schedule 1
annexed hereto. The purchase price for the Notes and Warrants shall be paid at
the Closing by wire transfer of immediately available funds or by certified or
bank cashier's checks (at the option of the Investors) payable to the order of
the Company, or otherwise as acceptable to the Company. The purchase price shall
be payable by each Investor against delivery of the Notes and Warrants being
purchased by it, all of which shall be registered in the name of the respective
Investor purchasing such Notes and Warrants.
(c) Registration of Conversion Shares and Warrant Shares. The Company shall file
with the United States Securities and Exchange Commission ("SEC") and use its
best efforts to cause to be declared effective a Form S-1 Registration Statement
or other appropriate form of registration in order to register for resale and
distribution under the Securities Act of 1933, as amended (the "Securities
Act"), all shares of Common Stock of the Company issuable upon voluntary or
mandatory conversion of all Notes (the "Conversion Shares") and all Warrant
Shares. The obligations of the Company to so register the Conversion Shares and
Warrant Shares are set forth in the registration rights agreement, dated of even
date herewith and in the form of Exhibit C annexed hereto and made a part hereof
(the "Registration Rights Agreement").
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As used in this Agreement, the term "Subsidiary" or "Subsidiaries" shall mean:
(i) the individual or collective reference to the corporations listed on
Schedule 2 annexed hereto and made a part hereof, including, without limitation,
Bass American Petroleum Corp. ("BAPCO"). The Company hereby represents and
warrants to the Investors, as follows:
(a) Organization and Good Standing. The Company and each of its existing
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, with full corporate power
and authority to own its properties and carry on its business as now being
conducted. Each of the Company and such Subsidiaries is qualified as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or the ownership of its assets requires such qualification.
(b) Capitalization of the Company. The authorized, issued and outstanding
capital stock of the Company is described on the Company's Form S-1
supplementally submitted to the Securities and Exchange Commission (the "SEC")
on January 8, 1998 (the "Form S-1"). The Company's Form S-1 and all other
documents and reports filed by the Company and/or its Subsidiaries with the SEC
since October 1, 1995 (the "SEC Documents") have been furnished to or otherwise
made available to the Investors or their representatives. The authorized, issued
and outstanding shares of capital stock of each of the Subsidiaries are
disclosed on the SEC Documents.
(c) Authorization, Execution and Effect of Agreements. The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Registration Rights Agreement to issue
the Notes and the Warrants in the manner and for the purpose contemplated by
this Agreement, and to execute, deliver and perform its obligations under this
Agreement, the Notes, the Warrants and the Registration Rights Agreement
(collectively, the "Transaction Documents") and all other agreements and
instruments heretofore or hereafter executed and delivered by it pursuant to or
in
connection with this Agreement. The execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action of the Company. This Agreement
and the other Transaction Documents have each been duly executed and delivered
and constitutes, and upon execution and delivery in accordance herewith each
other agreement or instrument executed and delivered by the Company pursuant
hereto, including the Notes and Warrants, will constitute, the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject in each such case, to applicable
bankruptcy, insolvency, reorganization and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(d) Conflicting Agreements and Other Matters. The execution, delivery and
performance by the Company of this Agreement and the other Transaction
Documents, and all other agreements and instruments heretofore or hereafter to
be executed and delivered by the Company in connection with the consummation of
the transactions contemplated by this Agreement and the other Transaction
Documents, and compliance by the Company with the terms and provisions hereof
and thereof applicable to it, including the issuance and sale of the Notes and
Warrants, does not and will not (i) violate any provision of any law, rule,
regulation, order, writ, judgment, decree, administrative determination or award
having applicability to the Company or any of the Subsidiaries or (ii) conflict
with or result in a breach of or constitute a default under the Certificate of
Incorporation or By-Laws of the Company or any of the Subsidiaries, or any
indenture or loan or credit agreement, or any other material agreement or
instrument, to which the Company or any of the Subsidiaries is a party or by
which the Company or the Subsidiaries, or any of their respective properties are
bound or affected, and will not result in, or require the creation or imposition
of, any lien upon or with respect to any of the properties now owned by the
Company or any of the Subsidiaries or hereafter acquired by the Company or any
of the Subsidiaries.
(e) Financial Information. The (i) audited consolidated financial statements of
the Company for the fiscal year ended September 30, 1997 as set forth in the
Company's Form 10-K/A filed with the SEC (the
"1998 Form 10-K") and (ii) the unaudited financial statements of the Company for
the nine months ended December 31, 1997 as set forth in the Company's Form
10-Q/A filed with the SEC, as amended from time to time (the "1998 Form 10Q/A"),
were prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied, and fairly present the financial condition and
results of operations of the Company and the Subsidiaries for the periods
indicated therein; provided, that the unaudited financial statements do not
contain certain footnote disclosures required under GAAP for audited financial
statements and are subject to year end audit adjustments, none of which would be
material to an Investor's decision to purchase the Notes and Warrants.
(f) Litigation, Proceedings: Defaults. Except as disclosed on the SEC Reports or
on Schedule 3(f) hereto, there is no action, suit, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of the Subsidiaries or any of their respective properties before
or by any court, governmental or regulatory authority (federal, state, local or
foreign) which either (i) relates to or challenges the legality, validity or
enforceability of this Agreement or any other document or agreement to be
executed and delivered by the Company pursuant hereto or in connection herewith,
or (ii) if determined adversely (A) would have a material adverse effect on the
condition (financial or otherwise), properties, assets, business or results of
operations of the Company or the Subsidiaries, when taken as a consolidated
whole (a "Material Adverse Effect") after giving effect to the transaction
contemplated by this Agreement, or (B) could materially impair the ability or
obligation of the Company or the Subsidiaries to perform fully on a timely basis
any obligation which it has or will have under this Agreement or the other
Transaction Documents, or any other agreement or document heretofore or
hereafter to be executed by the Company pursuant hereto or in connection
herewith. Neither the Company nor any of the Subsidiaries is in violation of its
Certificate of Incorporation or By-Laws. Neither the Company nor any of the
Subsidiaries is (i) in default under or in violation of any other material
agreement or instrument to which it is a party or by which it or any of its
properties are bound or affected, which default or violation would have a
Material Adverse Effect, (ii) in default with respect to any order of any court,
arbitrator or governmental body or subject to or party to any order of any court
or governmental
authority arising out of any action, suit or proceeding under any statute or
other law respecting antitrust, monopoly, restraint of trade, unfair competition
or similar matters, or (iii) in violation of any statute, rule or regulation of
any governmental authority material to its business.
(g) Governmental Consents, etc. No authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or any
securities exchange or any other person or entity (collectively "Approvals") is
required in connection with the execution, delivery or performance by the
Company of this Agreement.
(h) Use of Proceeds. The first $1,250,000 of the proceeds to the Company from
the sale of the Notes shall be used (i) $250,000 for general working capital
purposes, and (ii) $1,000,000 to perform certain obligations under its June 1997
joint venture agreement with the Democratic Republic of Sao Tome & Principe for
the development of potential oil and gas reserves in the Gulf of Guinea of West
Africa (the "Sao Tome Project"), with the balance, if any used by the Company
for additional payments for general working capital purposes or to perform on
its obligations to the Sao Tome Project, as the Company so directs.
(i) Accuracy of all SEC Public Filings, All SEC Reports furnished to the
Investors or their representatives and all other documents and reports filed by
or on behalf of the Company with the SEC, when filed, did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Company and
each of its Subsidiaries has filed, on a timely basis, all required forms,
reports and documents with the SEC required to be filed by it pursuant to the
Securities Act and the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), all of which complied at the time of filing in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act.
(j) Absence of Certain Changes or Events. Since June 30, 1997, except as
contemplated by this Agreement, disclosed on Schedule 3(j) hereto and made a
part hereof, or disclosed in any Company SEC Report filed
since June 30, 1997, the Company and the Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, in the Company's opinion, there has not been (i) any event or
events having, individually or in the aggregate, a Material Adverse Effect, (ii)
any change by the Company in its accounting methods, principles or practices,
(iii) any revaluation by the Company of any material asset (including, without
limitation, any writing down or writing up of the value of oil and gas reserves,
writing off of notes or accounts receivable or reversing of any accruals or
reserves), other than in the ordinary course of business consistent with past
practice, (iv) any entry by the Company or any Subsidiary into any commitment or
transaction material to the Company and the Subsidiaries taken as a whole,
except in the ordinary course of business and consistent in all material
respects with past practice, or (v) any declaration, setting aside or payment of
any dividend or distribution in respect of any capital stock of the Company or
any redemption, purchase or other acquisition of any of its securities.
(k) Absence of Litigation. Except as disclosed in the Company SEC Reports or in
Schedule3(k) annexed hereto and made a part hereof, there is no claim, action,
proceeding or investigation pending or, to the Company's knowledge, threatened
against the Company or any Subsidiary, or any property or asset of the Company
or any Subsidiary, before any court, arbitrator or Governmental Authority,
which, individually or when aggregated with other claims, actions, proceedings
or investigations or product liability claims, actions, proceedings or
investigations which are reasonably likely to result from facts and
circumstances that have given rise to such a claim, action, proceeding or
investigation, would have a Material Adverse Effect. As of the date hereof,
neither the Company nor any Subsidiary nor any property or asset of the Company
or any Subsidiary is subject to any order, writ, judgment, injunction, decree,
determination or award having, individually or in the aggregate, a Material
Adverse Effect.
(l) Labor Matters. Except as set forth in Schedule 3(l) annexed hereto and made
a part hereof, with respect to employees of the Company:
(i) to the best of the Company's knowledge, no senior executive or key
employee has any plans to terminate employment with the Company or any
of its Subsidiaries;
(ii) there is no unfair labor practice charge or complaint against the
Company or any of its Subsidiaries pending or, to the best of the Company's
knowledge, threatened before the National Labor Relations Board or any other
comparable authority;
(iii) there is no demand for recognition made by any labor organization
or petition for election filed with the National Labor Relations Board or any
other comparable authority which, individually or in the aggregate, would have a
Material Adverse Effect;
(iv) no grievance or any arbitration proceeding arising out of or under
collective bargaining agreements is pending and, to the best of the Company's
knowledge, no claims therefor have been threatened other than grievances or
arbitrations incurred in the ordinary course of business which, individually or
in the aggregate, would not have a Adverse Effect; and
(v) there is no litigation, arbitration proceeding, governmental
investigation, administrative charge, citation or action of any kind pending or,
to the knowledge of the Company or any of its Subsidiaries, proposed or
threatened against the Company relating to employment, employment practices,
terms and conditions of employment or wages and hours which, individually or in
the aggregate, would have a Material Adverse Effect. Except as disclosed in
Schedule 3(l), none of the Company nor any of its Subsidiaries has any
collective bargaining relationship or duty to bargain with any Labor
Organization (as such term is defined in Section 2(5) of the National Labor
Relations Act, as amended), and none of the Company nor any of its Subsidiaries
has recognized any labor organization as the collective bargaining
representative of any of its employees.
(m) Title to and Sufficiency of Assets. As of the date hereof, the Company and
the Subsidiaries own, and as of the Closing Date, the Company and the
Subsidiaries will own, good and marketable title to all of their assets
constituting personal property which is material to their business (excluding,
for purposes of this sentence, assets held under leases), free and clear of any
and all mortgages, liens, encumbrances, charges, claims, restrictions, pledges,
security
interests or impositions (collectively, "Liens") except as set forth in the
Company SEC Reports or Schedule 3(m) annexed hereto and made a part hereof. Such
assets, together with all assets held by the Company and the Subsidiaries under
leases, include all tangible and intangible personal property, contracts and
rights necessary or required for the operation of the businesses of the Company.
As of the date hereof, the Company and the Subsidiaries own, and as of the
Closing Date, the Company and the Subsidiaries will own, good and marketable
title to all of their real estate, including oil and gas reserves, which is
material to such persons (excluding, for purposes of this sentence, leases to
real estate and oil and gas reserves), free and clear of any and all Liens,
except as set forth in the Company SEC Reports or in Schedule 3(m) annexed
hereto or such other Liens which would not, individually or in the aggregate,
have a Material Adverse Effect. Such assets, together with real estate and oil
and gas reserve assets held by the Company and the Subsidiaries under leases,
are adequate for the operation of the businesses of the Company, as presently
conducted. The leases to all real estate and oil and gas reserves which are
material to the operations of the businesses of the Company and the Subsidiaries
are in full force and effect and no event has occurred which, with the passage
of time, the giving of notice, or both, would constitute a default or event of
default by the Company or any Subsidiary or, to the knowledge of the Company,
any other person who is a party signatory thereto, other than such defaults or
events of default which, individually or in the aggregate, would not have a
Material Adverse Effect.
(n) Environmental Matters. For purposes of this Agreement, the following terms
shall have the following meanings:
(i) "Hazardous Substances" means
(A) petroleum and petroleum products, by-products or breakdown
products, radioactive materials, asbestos- containing materials and
polychlorinated biphenyls, and
(B) any other chemicals, materials or substances regulated as
toxic or hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Law;
(ii) "Environmental Law" means any law, past, present or future
and as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment, or
common law, relating to pollution or protection of the environment, health or
safety or natural resources, including, without limitation, those relating to
the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Substances; and
(iii) "Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any applicable
Environmental Law.
(A) Except as disclosed on Schedule 3(n-1) annexed hereto and
made a part hereof, the Company and the Subsidiaries are and have been in
compliance with all applicable Environmental Laws, have obtained all
Environmental Permits and are in compliance with their requirements, and have
resolved all past non-compliance with Environmental Laws and Environmental
Permits without any pending, on-going or future obligation, cost or liability,
except in each case for the notices set forth in Schedule 3(n-1) or where such
non-compliance would not, individually or in the aggregate, have a Material
Adverse Effect.
(B) Except as disclosed in Schedule 3(n-2) annexed hereto and
made a part hereof, neither the Company nor any of the Subsidiaries has (I)
placed, held, located, released, transported or disposed of any Hazardous
Substances on, under, from or at any of the Company's or any of the
Subsidiaries' properties or any other properties, other than in a manner that
would not, in all such cases taken individually or in the aggregate, result in a
Company Material Adverse Effect, (II) any knowledge of the presence of any
Hazardous Substances on, under, emanating from, or at any of the Company's or
any of the Subsidiaries' properties or any other property but arising from the
Company's or any of the Subsidiaries' current or former properties or
operations, other than in a manner that would not result in a Material Adverse
Effect, or (III) any knowledge of nor has it received any written notice (x) of
any violation of or liability under any Environmental Laws, (y) of the
institution or pendency of any suit, action, claim, proceeding or investigation
by any Governmental Entity or any third party in connection with any such
violation or liability, (z) requiring the response to or remediation of
Hazardous
Substances at or arising from any of the Company's or any of the Subsidiaries'
current or former properties or operations or any other properties, (aa)
alleging noncompliance by the Company or any of the Subsidiaries with the terms
of any Environmental Permit requiring material expenditures or resulting in
material liability or (bb) demanding payment for response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of the
Subsidiaries' current or former properties or operations or any other
properties, except in each case for the notices set forth in Schedule 3(n-2)
annexed hereto.
(o) Brokers. No broker, finder or investment banker, is entitled to any
brokerage, finder's or other fee or commission in connection with the this
Agreement and the transactions contemplated hereby, other than the following:
International Holding Company
Xxxxxx Xxxxxxx & Associates
(collectively the "IHC Group"). The Company has agreed to pay the IHC Group cash
compensation not to exceed ten percent (10.0%) of the face amount of the Notes
sold pursuant to this Agreement and to issue to the IHC Group notes not to
exceed three and one-half percent (3.5%) of the face amount of the total notes
sold to the Investors (the "Consultant Notes"), which Consultant Notes shall be
on substantially the same terms and conditions as the Notes offered hereby and
warrants to purchase shares of Company Common Stock in an amount equal to six
percent (6.0%) of the face amount of the Notes on substantially the same terms
and conditions as the Warrants offered hereby.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor hereby separately represents and warrants to the Company as
follows (such representations and warranties being made separately and only to
the extent such representations and warranties relate to such Investor):
(a) Investigation; Investment Representation. Each Investor (i) possesses such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment hereunder; (ii) has been
afforded the opportunity to ask
questions of, and receive answers from, the Company concerning the terms and
conditions of its investment, the transactions contemplated hereby and the
business and affairs of the Company; (iii) has examined, to the extent it deems
appropriate, all of the agreements and documents referred to herein or in the
schedules hereto and such other documents that it has requested; and (iv)
understands that the Notes, the Warrants and the Warrant Shares are not being
registered under the Securities Act of 1933, as amended, on the ground that the
issuance thereof is exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended, as a transaction by an issuer not involving
a public offering, and the Company's reliance on this exemption is predicated in
part on the Investors' representations and warranties contained in this Section
4(a). The Investors are acquiring the Notes and Warrants and will acquire the
Warrant Shares for their own account, for investment purposes only and not with
a view to the sale or distribution thereof.
(b) Execution and Effect of Agreement. Each Investor has all necessary power and
authority to enter into this Agreement and consummate the transactions
contemplated hereby. This Agreement constitutes the legal, valid and binding
obligation of each Investor, enforceable against each Investor in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
5. COVENANTS.
As long as any of the Notes are outstanding, the Company agrees that, unless it
first procures the written consent to act otherwise of the holders of record of
66-2/3% of the outstanding principal amount of the Notes of record then
outstanding, it will use its best efforts to cause each of its Subsidiaries to:
(a) Promptly pay all taxes (exclusive of income taxes imposed on the Investors),
fees and charges payable, or ruled to be payable, by any federal, state or local
authority, in respect of this Agreement or the execution, delivery or issuance
of the Notes or Warrant Shares by reason of any now existing or hereafter
enacted federal, state or
local statute or ordinance, and indemnify and hold the Investors harmless from
and against all liabilities with respect to or in connection with any such
taxes, fees or charges.
(b) Maintain their corporate existence and right to carry on business, duly
procure all necessary renewals and extensions thereof, and use their best
efforts to maintain, preserve and renew all necessary or desirable rights,
powers, privileges and franchises owned by them.
(c) Promptly notify the Investors of any material adverse change in the
condition (financial or otherwise), properties, assets, business or results of
operations of the Company or any of the Subsidiaries.
(d) Not cause, suffer or permit any liquidation, winding up or dissolution of
the Company or the Subsidiaries.
(e) Maintain and cause the Subsidiaries to maintain a system of accounting
established and administered in accordance with generally accepted accounting
principles.
(f) Comply with all of the covenants and agreements on the part of the Company
to be performed under the terms of the Notes, the Warrants and the other
Transaction Documents.
(g) Terminate the Private Equity Line of Credit Agreement by and between
Kingsbridge Capital Limited and the Company dated as of March 23, 1998 and not
enter into a similar agreement with Kingsbridge Capital Limited while the Notes
are outstanding.
6. FINANCIAL STATEMENTS; INSPECTION; NON-PUBLIC INFORMATION.
(a) The Company will furnish to each Investor (and their permitted transferees,
successors and assigns), as long as such Investor owns any of the Notes, copies
of all Form 10-K Annual Report and Form 10-Q Quarterly Financial Reports filed
by the Company, with the SEC.
(b) The Company will, subject to execution of appropriate confidentiality and
non- disclosure agreements, permit the Investors, as long as they own Notes,
shares of Common Stock issuable upon conversion of the Notes (the "Conversion
Shares"), Warrants or shares
of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares"),
or any authorized representative designated by the Investors, to visit and
inspect at the Investors' expense any of the properties of the Company and the
Subsidiaries, and to discuss its affairs, finances and accounts with officers of
the Company, all at such reasonable times and as often as the Investors may
reasonably request.
(c) The Company in no event shall disclose non-public information to the
Investors, advisors to or representatives of the Investors unless prior to
disclosure of such information the Company marks such information as 'Non-Public
Information - Confidential" and provides the Investors, such advisors and
representatives with a reasonable opportunity to accept or refuse to accept such
non-public information for review. Nothing herein shall require the Company to
disclose non-public information to the Investors or their respective advisors or
representatives, and the Company represents that it does not disseminate
non-public information to any Investors who purchase stock in the Company in a
public offering, to money managers or to securities analysts; provided, however,
that notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, notify immediately the advisors and representatives of the
Investors and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting non-public information
(whether or not requested of the Company specifically or generally during the
course of due diligence by such persons or entities), which, if not disclosed in
the Prospectus included in the Registration Statement, would cause such
Prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading. Nothing herein
shall be construed to mean that such persons or entities other than the
Investors (without the written consent of the Investors prior to disclosure of
such information) may not obtain non-public information in the course of
conducting due diligence in accordance with the terms of this Agreement and
nothing herein shall prevent any such persons or entities from notifying the
Company of their opinion that based on such due diligence by such persons or
entities, that the Registration Statement contains an untrue statement of a
material fact or omits a material fact required to be stated in the Registration
Statement or
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
7. TRANSFER OF NOTES AND WARRANT SHARES.
(a) Permissible Transfers. The Investors acknowledge that the Company's
securities being issued and sold to them hereunder are being so issued and sold
in transactions which are exempt from the registration requirements of the
Securities Act of 1933, as amended. None of the Notes or Warrants, Conversion
Shares or Warrant Shares issuable upon conversion of the Notes or exercise of
the Warrants, may be distributed, transferred, or otherwise disposed of by the
Investors except pursuant to an effective Registration Statement under such Act
which is current with respect to the securities offered thereby, or pursuant to
an applicable exemption therefrom, and pursuant to applicable "Blue Sky" or
state securities laws or an applicable exemption therefrom.
(b) Legend. Unless the Conversion Shares or Warrant Shares have been registered
pursuant to an effective Registration Statement filed under the Securities Act
or held for the requisite period to be freely transferable pursuant to Rule 144
promulgated under the Securities Act and otherwise comply with Rule 144(k) (in
either such case the certificates shall bear no legend), the Company shall cause
to be set forth on the certificates representing any Conversion Shares and
Warrant Shares a legend substantially in the following form: "The shares
represented by this certificate have not been registered under the Securities
Act of 1933, as amended. No transfer of such shares shall be valid or effective
except in accordance with an effective registration statement covering such
shares or an opinion of counsel acceptable to the Company that registration of
such shares is not required pursuant to the applicable requirements of the
Securities Act of 1933, as amended."
(c) Registration of Conversion Shares and Warrant Shares, Other Exemption. The
Company shall use its best efforts to cause the Conversion Shares and the
Warrant Shares to be registered for resale or distribution under the Securities
Act, all in accordance with the terms of the Registration Rights Agreement in
the form annexed hereto as Exhibit C and made a part hereof.
8. CONDITIONS PRECEDENT TO CLOSING.
(a) Conditions Precedent to Obligations of the Investors. The obligation of each
Investor to purchase the Notes and Warrants to be purchased by it at the Closing
hereunder is subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(i) Such Investor shall have received an opinion, addressed to it and
each other Investor and dated the Closing Date, of counsel to the Company
acceptable to Investor, in the form of Exhibit D hereto and made a part hereof.
(ii) The representations and warranties made by the Company herein
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date, and the Company shall have complied in all
material respects with all covenants hereunder required to be performed by it at
or prior to the Closing Date.
(iii) There shall not have occurred and be continuing any Material
Adverse Effect.
(iv) The purchase of the Notes and Warrants agreed to be purchased by
such Investor hereunder shall not be prohibited or enjoined (temporarily or
permanently) under the laws of any jurisdiction to which such Investor is
subject.
(v) The Company and the Investors shall have executed the Registration
Rights Agreement in substantially the form of Exhibit C hereto.
(vi) All legal matters incident to the transactions contemplated by
this Agreement shall have been reasonably approved by counsel to the Investors.
(vii) Not less than $____________ of the Notes offered hereby shall
have been subscribed for by Investors as at the Closing Date. Following the
Closing Date and until 5:00 p.m. (New York time) on the thirtieth (30th) day
following the Closing Date, the Company shall be entitled to continue to offer
the Notes and Warrants to additional
investors, until such time as a maximum of $2,500,000 of Notes and an amount of
Warrants to be determined by formula shall have been sold; provided however,
that the Investors who have subscribed at the Closing Date shall have a first
right of refusal with reference to the additional $___________ of Notes and an
amount of Warrants to be determined by formulas during this thirty (30) day
period.
(viii) The Investors shall have received a certificate, dated the
Closing Date, and signed by the chief executive officer or chief financial
officer of the Company, stating that the conditions specified in subsections (i)
through (vii) of this Section 8(a) have been satisfied.
(b) Conditions Precedent to Obligations to the Company. The obligation of the
Company to issue and sell the Notes and Warrants to be issued pursuant to this
Agreement is subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(i) The representations and warranties made by the Investors herein
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date.
(ii) The sale of the Notes and Warrants by the Company shall not be
prohibited or enjoined (temporarily or permanently) as of the Closing Date.
(iii) The purchase of the Notes and Warrants agreed to be purchased by
such Investor hereunder shall not be prohibited or enjoined (temporarily or
permanently) under the laws of any jurisdiction to which such Investor is
subject.
(iv) All legal matters incident to the transactions contemplated by
this Agreement shall have been reasonably approved by counsel to the Company.
(v) Not less than $____________ of the Notes offered hereby shall have
been subscribed for by Investors as at the Closing Date. Following the Closing
Date and until 5:00 p.m. (New York time) on the thirtieth (30th) day following
the Closing Date, the Company shall be entitled to continue to offer the Notes
and Warrants to additional
investors, until such time as a maximum of $2,500,000 of Notes and an amount of
Warrants to be determined by formula shall have been sold; provided however,
that the Investors who have subscribed at the Closing Date shall have a first
right of refusal with reference to the additional $___________ of Notes and an
amount of Warrants to be determined by formulas during this thirty (30) day
period.
9. CLOSING.
The closing hereunder (the "Closing") shall take place at 10:00 A.M. at the
offices of Xxxxxxxxx Xxxxxxx Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on or before June 24, 1998, or at such other
location as may be mutually agreed upon. The date of such Closing is referred to
in this Agreement as the "Closing Date".
(a) At the Closing, in addition to true copies of the other Transaction
Documents duly executed by the Company, the Company shall deliver to each
Investor in the respective amounts set forth on Schedule 1 hereto: (a) a duly
executed Note in the form of Exhibit A hereto, and (b) a duly executed Warrant
in the form of Exhibit B, representing the right to purchase the number of
Warrant Shares set forth opposite such Investor's name on Schedule 1, all
against payment of the purchase price therefor by wire transfer of immediately
available funds or by certified or bank cashier's check payable to the order of
the Company.
(b) At the Closing, each Investor shall wire transfer the purchase price for the
Notes subscribed to by such Investor to following attorneys' escrow account
established by Xxxxxxxxx Traurig Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx, as counsel to
the Company, or such other location and counsel as may be mutually agreed upon.
All of such funds shall be held in escrow by such counsel until the Notes shall
have duly executed by the Company and delivered by the Company or such escrow
agent to the subject Investor or its representative.
Wire Instructions:
Citibank N.A.
000 Xxxx 00xx Xxxxxx
00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA #000000000
Attn: Xx. Xxxxx Xxxxxxx
For credit to: Xxxxxxxxx Xxxxxxx Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx
Escrow Account No. 3 0000000
Reference: Environmental Remediation Holding
Corporation: Client No. 23769.01000
10. ADJUSTMENT TO TERMS OF NOTES.
In the event and to the extent that the Company shall, at any time within one
hundred and twenty (120) days following the Closing Date, issue any (a) notes,
debentures, bonds or other debt instruments which, by their terms, are
convertible into shares of Common Stock of the Company, (b) shares of preferred
stock, which, by their terms, are convertible into shares of Common Stock of the
Company, or (c) other warrants, options or rights which are exercisable for
shares of Common Stock of the Company, excluding, however, warrants or options
issued to key employees, advisors and other consultants in the ordinary course
of business, or options, warrants or stock disclosed in the Form S-1 as
effective (all of the foregoing referred to herein as "Other Common Stock
Equivalents"), in each case, and such instruments are actually converted at a
conversion price which shall be lower than the Conversion Price set forth in the
Notes offered hereby, the Conversion Price for such time period set forth in the
Notes shall be automatically adjusted and amended to be equal to the terms of
the lowest conversion price provided for in the instruments governing the
issuance of such Other Common Stock Equivalents.
11. EXCHANGE OF NOTES.
At the request of any holder of any Note and upon surrender of any such Note for
such purpose to the Company at its principal office, the Company at its expense
will issue in exchange therefor a new Note, in such denomination or
denominations and payable to the order of such payee or payees as may be
requested, dated the date to which interest has been paid on the surrendered
Note, in an aggregate principal amount equal to the principal balance of the
surrendered Note. Such new Note shall be in the form of the surrendered Note.
12. REPLACEMENT OF NOTES
Upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of any Note and, in the case of any such loss,
theft or destruction, upon delivery of an indemnity bond by the holder in such
reasonable amount as the Company may determine, or, in the case of any such
mutilation, upon surrender and cancellation of such Note, the Company at its
expense will execute and deliver, in lieu thereof, a new Note of like tenor
dated the date to which interest on such lost, stolen, destroyed or mutilated
Note has been paid.
13. BROKERS.
(a) The Investors represent and warrant to the Company that they have not
engaged or authorized any broker, finder, investment banker or other third party
to act on their behalf, directly or indirectly, as a broker, finder, investment
banker or in any other like capacity in connection with the transactions
contemplated by this Agreement nor have they consented to or acquiesced in
anyone so acting, and they know of no claim by any person for compensation from
them for so acting or of any basis for such a claim.
(b) The Company represents and warrants to the Investors that, except for IHC
Group as disclosed in Section 3(o) hereto, neither the Company nor any of its
officers, directors or agents has engaged or authorized any broker, finder,
investment banker or other third party to act on its behalf, directly or
indirectly, as a broker, finder, investment banker or in any other like capacity
in connection with the transactions contemplated by this Agreement nor has it
consented to or acquiesced in anyone so acting, and it knows of no claim by any
person for compensation from it for so acting or of any basis for such a claim.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
All representations, warranties and agreements of the Company or of the
Investors contained in this Agreement or in any certificate, document, schedule
or instrument delivered pursuant hereto shall survive for a period of two (2)
years the Closing hereunder and the delivery of any and all documents and
instruments hereunder, regardless of any investigation made by or on behalf of
the Investors or the Company, respectively. All statements contained in any
certificate, schedule or other document delivered by the Company pursuant hereto
in connection with the transactions contemplated hereby shall be deemed
representations and warranties of the Company.
15. NOTICES.
Any notices or other communications required or permitted hereunder shall be in
writing and personally delivered or sent by telecopier or by registered or
certified mail, return receipt requested, postage prepaid, addressed or
telecopied as follows or to such other address or telecopier number of which
notice has been given pursuant hereto:
If to the Company: Environmental Remediation Holding Corp.
0-0 Xxxxxx Xxxxxx
Xxxxxx Xxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Secretary
Fax: (000) 000-0000
-and-
Environmental Remediation Holding Corp.
Attn: Xxxxxx Xxxxxx, Vice President and
Chief Financial Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxxx Xxxxx
Xxxxxx & Quentel
Met Life Building
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
-and-
Mintmire & Associates
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Investors:To the addresses set
forth below the name of each Investor on
Schedule I annexed hereto and made a part
hereof.
16. ENTIRE AGREEMENT: AMENDMENT ETC.
This Agreement and the Exhibits hereto represents the entire understanding and
agreement among the parties hereto with respect to the subject matter hereof.
With the written consent of the holders of 66-2/3% of the outstanding principal
amount of the Notes, the obligations of the Company and the rights of the
holders of the Notes may be waived or modified (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors ("Approved
Company Resolutions"), may enter into a supplementary agreement for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, except by a statement
in writing authorized as aforesaid and signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.
17. SUCCESSORS.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
18. SECTION READINGS.
The section headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
19. APPLICABLE LAW.
This Agreement shall be governed by, construed and enforced in accordance with
the laws of the State of New York, United States of America, without reference
to or application of principles of conflicts of laws.
20. SEVERABILITY.
If at any time subsequent to the date hereof, any provision of this Agreement
shall be held by any court of competent jurisdiction to be illegal, void or
unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no effect upon and
shall not impair the enforceability of any other provision of this Agreement.
21. NO WAIVER.
The failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by any party of any condition, or of the breach of any
provision, term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed to be construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
22. RESOLUTION OF DISPUTES.
Any dispute regarding the interpretation or application of this Agreement, the
Note, the Warrant, the Registration Rights Agreement or any of the other
Transaction Documents which cannot be settled among the parties shall be
resolved in Austin, Texas final and binding arbitration in accordance with the
then obtaining rules of the American Arbitration Association. There shall be
appointed three arbitrators, one of whom shall be selected by the Company, the
second by the Investor(s) and the third by mutual agreement of the parties or by
the American Arbitration Association. The decision of the arbitrators shall be
final and upon all Investors and the Company and may be enforced by the
prevailing party or parties in any court of competent jurisdiction. Each party
shall bear their own costs of the arbitration and shall share equally the costs
of the arbitrators.
23. ATTORNEY FEES.
Investors shall be entitled to recover from the Company the reasonable
attorneys' fees and expenses (and the reasonable costs of investigation)
incurred by such Holder in connection with enforcement by such Holder of any
obligation of the Company hereunder.
24. REIMBURSEMENT FEES AND EXPENSES.
The Company shall, at the Closing, reimburse _________________ for reasonable
fees and expenses of its counsel in connection with the preparation, negotiation
and coordination of this Agreement.
25. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of
the date first written.
ENVIRONMENTAL REMEDIATION HOLDING
CORPORATION
By: _________________________________
Xxxxx X. Xxxxxxx, Secretary
By: _________________________________
Xxx Xxxx, Chairman
THE INVESTORS:
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SCHEDULE 1
Name and Address
of Investor Amount of Note No. of Warrants Purchase Price
SCHEDULE 2
Subsidiaries
There are no subsidiaries other than BAPCO.
SCHEDULE 3(f)
Litigation, Proceedings: Defaults
There is no litigation, nor are there any
proceedings or defaults that have not
been disclosed in SEC Reports.
SCHEDULE 3(j)
Absence of Certain Changes or Events
There were no changes or events which have not been disclosed in SEC
Reports
SCHEDULE 3(k)
Absence of Litigation
There is no claim, action proceeding or litigation pending or
threatened which has not been disclosed in an SEC Report
SCHEDULE 3(l)
Labor Matters
None
SCHEDULE 3(m)
Title to and Sufficiency of Assets
There are Liens which have not been disclosed in an SEC Report
SCHEDULE 3(n-1)
Environmental Matters - Notice
None
SCHEDULE 3(n-2)
Environmental Compliance - Hazardous Waste
None
EXHIBITS
EXHIBIT A - Form of 5.5% Convertible Note due June __, 2000
EXHIBIT B - Form of Warrant
EXHIBIT C - Form of Registration Rights Agreement
EXHIBIT D - Opinion of Company Counsel
