SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of November 25, 1998, is
entered into by and between EASTBROKERS INTERNATIONAL INCORPORATED, a Delaware
corporation (the "Company"), and MACCABEE INVESTORS II LLC, a Delaware liability
company (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemptions from registration provided by
Regulation D ("Regulation D") promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), and/or Section 4(2) of the Securities Act; and
WHEREAS, the Purchaser wishes to purchase, and the Company wishes to
issue, upon the terms and subject to the conditions of this Agreement, 10 units
(the "Units"), each Unit consisting of $110,000 principal amount of the
Company's 7% Convertible Debentures (the "Debentures") and Series C warrants to
purchase 12,500 shares of Common Stock of the Company (the "Warrants"). The
Debentures are convertible, at the holder's option, into the Company's common
stock, par value $.05 per share (the "Common Stock"), on the terms set forth
therein, and the Warrants may be exercised for the purchase of Common Stock, on
the terms set forth therein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE
Closing. The Purchaser hereby agrees to purchase from the
Company 10 Units on the Closing Date (as defined herein). The Debentures shall
be issued in substantially the form attached hereto as Exhibit A, and the
Warrants shall be issued in substantially the form attached hereto as Exhibit B.
The purchase price for each Unit shall be $110,000, and shall be payable in same
day funds.
The Debentures and the Warrants to be purchased by the
Purchaser hereunder, in definitive form, and in such denominations and
registered in such names as the Purchaser or its representative, if any, may
request upon notice to the Company, shall be delivered by or on behalf of the
Company for the account of the Purchaser, against payment by the Purchaser or on
its behalf of the purchase price therefor by wire transfer to an account of the
Company, all at the offices of Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 9:30 a.m., New York time on November 25,
1998, or at such other time and date as the Purchaser or its representative, if
any, and the Company may agree upon in writing, such date being referred to
herein as the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Purchaser represents and warrants to, and covenants and
agrees with, the Company as follows:
a. The Purchaser and each of its equity owners is (i)
experienced in making investments of the kind described in this Agreement and
the related documents, (ii) able, by reason of the business and financial
experience of its management, to protect its own interests in connection with
the transactions described in this Agreement and the related documents, and
(iii) able to afford the entire loss of its investment in the Units.
b. All subsequent offers and sales of the Debentures, the
Warrants, and the Common Stock issuable upon conversion or exercise of, or in
lieu of interest payments on the Debentures or the Warrants, shall be made
pursuant to an effective registration statement under the Securities Act or
pursuant to an applicable exemption from such registration.
c. The Purchaser understands that the Units are being
offered and sold to it in reliance upon exemptions from the registration
requirements of the United States federal securities laws, and that the Company
is relying upon the truth and accuracy of the Purchaser's representations and
warranties, and the Purchaser's compliance with its agreements, each as set
forth herein, in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Units.
d. The Purchaser: (A) has been provided with sufficient
information with respect to the business of the Company and such documents
relating to the Company as the Purchaser has requested and Purchaser has
carefully reviewed the same including, without limitation, the Company's Form
10KSB for the fiscal year ended March 31, 1998 filed with the Securities and
Exchange Commission ("the Commission"), (B) has been provided with such
additional information with respect to the Company and its business and
financial condition as the Purchaser, or the Purchaser's agent or attorney, has
requested, and (C) has had access to management of the Company and the
opportunity to discuss the information provided by management of the Company and
any questions that the Purchaser had with respect thereto have been answered to
the full satisfaction of the Purchaser.
e. The Purchaser has the requisite corporate power and
authority to enter into this Agreement and this Agreement has been duly and
validly authorized, executed and delivered on behalf of the Purchaser and is a
valid and binding agreement of the Purchaser, enforceable in accordance with its
terms, except to the extent that enforcement of this Agreement may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally and to general principles of equity.
f. This Agreement and the registration rights agreement,
dated the date hereof, between the Company and the Purchaser (the "Registration
Rights Agreement"), and the transactions contemplated hereby and thereby, have
been duly and validly authorized by the Purchaser; and such agreements, when
executed and delivered by each of the Purchaser and the Company will each be a
valid and binding agreement of the Purchaser, enforceable in accordance with
their respective terms, except to the extent that enforcement of each such
agreement may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally and to general principles of equity.
3. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Purchaser that:
a. ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of the Company's subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation in all jurisdictions in which the failure to so qualify
would have a material adverse effect on the Company and its subsidiaries taken
as a whole. Schedule 3a lists all subsidiaries of the Company and, except as
noted therein, all of the outstanding capital stock of such subsidiaries is
owned of record and beneficially by the Company.
b. CAPITALIZATION. On the date hereof, the authorized
capital of the Company consists of 10,000,000 shares of Common Stock, par value
$.05 per share, of which 4,767,750 are issued and outstanding. Schedule 3b sets
forth all of the options, warrants and convertible securities of the Company,
and any other rights to acquire securities of the Company (collectively, the
"Derivative Securities") which are outstanding on the date hereof, including in
each case (i) the name and class of such Derivative Securities, (ii) the issue
date of such Derivative Securities, (iii) the number of shares of Common Stock
of the Company into which such Derivative Securities are convertible as of the
date hereof, (iv) the conversion or exercise price or prices of such Derivative
Securities as of the date hereof and (v) the expiration date of any conversion
or exercise rights held by the owners of such Derivative Securities.
c. CONCERNING THE COMMON STOCK AND THE WARRANTS. The Common
Stock issuable upon conversion of, or in lieu of interest payments on, the
Debentures, and upon exercise of the Warrants, when issued, shall be duly and
validly issued, fully paid and non-assessable, and will not subject the holder
thereof to personal liability by reason of being such a holder. There are no
preemptive rights of any stockholder of the Company, as such, to acquire the
Units, or the Common Stock issuable to the Purchaser pursuant to the terms of
the Debentures and the Warrants. The provisions of the Warrants contained in
Exhibit B are substantially the same as all other Class C Warrants of the
Company.
d. REPORTING COMPANY STATUS. The Common Stock is registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Company has duly filed all materials and documents required
to be filed pursuant to all reporting obligations under either Section 13(a) or
15(d) of the Exchange Act, if any, prior to the offer and sale of the Units. The
Common Stock is listed and traded on the Nasdaq Smallcap Market ("Nasdaq"), and
the Company is not aware of any pending or contemplated action or proceeding of
any kind to suspend the trading of the Common Stock.
e. AUTHORIZED SHARES. The Company has legally available a
sufficient number of authorized and unissued shares of Common Stock as may be
necessary to effect the conversion of the Debentures and the exercise of the
Warrants. The Company understands and acknowledges the potentially dilutive
effect to the Common Stock of the issuance of shares of Common Stock upon
conversion of the Debentures and the exercise of the Warrants. The Company
further acknowledges that its obligation to issue shares of Common Stock upon
conversion of the Debentures and upon exercise of the Warrants is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company and notwithstanding
the commencement of any case under 11 U.S.C. ss. 101 et seq. (the "Bankruptcy
Code"). In the event the Company becomes a debtor under the Bankruptcy Code, the
Company hereby waives to the fullest extent permitted any rights to relief it
may have under 11 U.S.C. ss. 362 in respect of the conversion of the Debentures
and the exercise of the Warrants. The Company agrees, without cost or expense to
the Purchaser, to take or consent to any and all action necessary to effectuate
relief under 11 U.S.C. ss. 362.
f. LEGALITY. The Company has the requisite corporate power
and authority to enter into this Agreement and to issue and deliver the
Debentures, the Warrants, and the Common Stock issuable upon conversion of, or
in lieu of interest payments on, the Debentures and the exercise of the
Warrants.
g. TRANSACTION AGREEMENTS. This Agreement, the Registration
Rights Agreement, the Debentures and the Warrants (collectively, the "Primary
Documents"), and the transactions contemplated hereby and thereby, have been
duly and validly authorized by the Company; this Agreement has been duly
executed and delivered by the Company and this Agreement is, and the Primary
Documents, when executed and delivered by the Company, will each be, a valid and
binding agreement of the Company, enforceable in accordance with their
respective terms, except to the extent that enforcement of each of the Primary
Documents may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally and to general principles of equity.
h. NON-CONTRAVENTION. The execution and delivery of this
Agreement and each of the other Primary Documents, and the consummation by the
Company of the other transactions contemplated by this Agreement and each of the
other Primary Documents, does not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of, or constitute a
default under, the Articles of Incorporation or By-laws of the Company, or any
material indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which they or any
of their properties or assets are bound, or any existing applicable law, rule,
or regulation or any applicable decree, judgment or order of any court or United
States federal or state regulatory body, administrative agency, or any other
governmental body having jurisdiction over the Company, its subsidiaries, or any
of their properties or assets. Except as set forth on Schedule 3(h), neither the
filing of the registration statement required to be filed by the Company
pursuant to the Registration Rights Agreement nor the offering or sale of the
Units, the Debentures, or the Warrants as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or satisfied on or
prior to the Closing Date, for or relating to the registration of any shares of
the Common Stock.
i. APPROVALS. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the entry into or the performance of this Agreement and the
other Primary Documents.
j. SEC FILINGS. Except as set forth in Schedule 3(j), none
of the reports or documents filed by the Company with the Commission contained,
at the time they were filed, any untrue statement of a material fact or omitted
to state any material fact required to be stated therein, or necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
k. STABILIZATION. Neither the Company, nor any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
shares of Common Stock.
l. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company's public filings with the Commission and the trading losses of EBI
Securities, Inc. previously disclosed to Purchaser and provided for on Schedule
3(l), since March 31, 1998, there has been no material adverse change nor any
material adverse development in the business, properties, operations, financial
condition, prospects, outstanding securities or results of operations of the
Company.
m. FULL DISCLOSURE. There is no fact known to the Company
(other than general economic conditions known to the public generally) that has
not been disclosed in writing to the Purchaser (i) that could reasonably be
expected to have a material adverse effect upon the condition (financial or
otherwise) or the earnings, business affairs, properties or assets of the
Company or (ii) that could reasonably be expected to materially and adversely
affect the ability of the Company to perform the obligations set forth in the
Primary Documents.
n. TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company
has good and marketable title to all of its material properties and assets, both
real and personal, and has good title to all its leasehold interests, in each
case subject only to mortgages, pledges, liens, security interests, conditional
sale agreements, encumbrances or charges created in the ordinary course of
business.
o. Patents and Other Proprietary Rights. The
Company has sufficient title and ownership of all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary for the conduct of its business as now conducted and as
proposed to be conducted, and such business does not and would not conflict with
or constitute an infringement on the rights of others.
p. PERMITS. The Company has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now conducted, the lack of which would materially and adversely affect the
business or financial condition of the Company. The Company is not in default in
any respect under any of such franchises, permits, licenses or similar
authority.
q. ABSENCE OF LITIGATION. Except as disclosed in the
Company's public filings with the Commission, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company or any of its subsidiaries, in which
an unfavorable decision, ruling or finding would have a material adverse effect
on the properties, business, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole, or the
transactions contemplated by the Primary Documents, or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, the Primary Documents.
r. NO DEFAULT. Each of the Company and its subsidiaries is
not in default in the performance or observance of any obligation, covenant or
condition contained in any indenture, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it or its property
may be bound.
s. TRANSACTIONS WITH AFFILIATES. Except as disclosed in the
Company's public filings with the Commission, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors or affiliates that, had they existed on March 31, 1998,
would have been required to be disclosed in the Company's 1998 Annual Report to
stockholders.
t. EMPLOYMENT MATTERS. The Company is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
u. INSURANCE. The Company maintains property and casualty,
general liability, personal injury and other similar types of insurance with
financially sound and reputable insurers that is adequate, consistent with
industry standards and the Company's historical claims experience. The Company
has not received notice from, and has no knowledge of any threat by, any insurer
(that has issued any insurance policy to the Company) that such insurer intends
to deny coverage under or cancel, discontinue or not renew any insurance policy
presently in force.
v. TAXES. All applicable tax returns required to be filed by
the Company and each of its subsidiaries have been prepared and filed in
compliance with all applicable laws, or if not yet filed have been granted
extensions of the filing dates which extensions have not expired, and all taxes,
assessments, fees and other governmental charges upon the Company, its
subsidiaries, or upon any of their respective properties, income or franchises,
shown in such returns and on assessments received by the Company or its
subsidiaries to be due and payable have been paid, or adequate reserves therefor
have been set up if any of such taxes are being contested in good faith; or if
any of such tax returns have not been filed or if any such taxes have not been
paid or so reserved for, the failure to so file or to pay would not in the
aggregate have a material adverse effect on the business or financial condition
of the Company and its subsidiaries, taken as a whole.
w. FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor
any of its directors, officers or other employees has (i) used any Company funds
for any unlawful contribution, endorsement, gift, entertainment or other
unlawful expense relating to any political activity; (ii) made any direct or
indirect unlawful payment of Company funds to any foreign or domestic government
official or employee; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other similar payment to any
person. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
x. INVESTMENT COMPANY ACT. The Company is not conducting,
and does not intend to conduct its business in a manner which would cause it to
become, an "investment company," as defined in Section 3(a) of the Investment
Company Act of 1940, as amended.
y. AGENT FEES. The Company has not incurred any liability
for any finder's or brokerage fees or agent's commissions in connection with the
offer and sale of the transactions contemplated by this Agreement.
z. PRIVATE OFFERING. Subject to the accuracy of the
Purchaser's representations and warranties set forth in Section 2 hereof, the
offer, sale and issuance of the Units and the other securities as contemplated
by this Agreement are exempt from the registration requirements of the
Securities Act. The Company agrees that neither the Company nor anyone acting on
its behalf will offer any of the Units, the Debentures, the Warrants, or any
similar securities for issuance or sale, or solicit any offer to acquire any of
the same from anyone so as to render the issuance and sale of such securities
subject to the registration requirements of the Securities Act. The Company has
not offered or sold the Units by any form of general solicitation or general
advertising, as such terms are used in Rule 502(c) under the Securities Act.
aa. FULL DISCLOSURE. The representations and warranties of
the Company set forth in this Agreement do not contain any untrue statement of a
material fact or omit any material fact necessary to make the statements
contained herein, in light of the circumstances under which they were made, not
misleading.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Purchaser acknowledges that,
except as provided in the Registration Rights Agreement, (1) neither the Units,
the Debentures, the Warrants, nor the Common Stock issuable upon conversion of,
or in lieu of interest payments on, the Debentures or upon exercise of the
Warrants, have been, and are not being, registered under the Securities Act, and
may not be transferred unless (A) subsequently registered thereunder or (B) they
are transferred pursuant to an exemption from such registration; and (2) any
sale of the Debentures, the Warrants or the Common Stock issuable upon
conversion or exchange thereof (collectively, the "Securities") made in reliance
upon Rule 144 under the Securities Act may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
the Securities under circumstances in which the seller, or the person through
whom the sale is made, may be deemed to be an underwriter, as that term is used
in the Securities Act, may require compliance with another exemption under the
Securities Act and the rules and regulations of the Commission thereunder. The
provisions of Section 4(a) and 4(b) hereof, together with the rights of the
Purchaser under this Agreement and the other Primary Documents, shall be binding
upon any subsequent transferee of the Debentures and the Warrants.
b. Restrictive Legend. The Purchaser acknowledges and agrees
that, until such time as the Securities shall have been registered under the
Securities Act or the Purchaser demonstrates to the reasonable satisfaction of
the Company and its counsel that such registration shall no longer be required,
such Securities may be subject to a stop-transfer order placed against the
transfer of such Securities, and such Securities shall bear a restrictive legend
in substantially the following form:
THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION SHALL NO LONGER BE REQUIRED.
c. FILINGS. The Company undertakes and agrees that it will
make all required filings in connection with the sale of the Securities to the
Purchaser as required by United States laws and regulations, or by any domestic
securities exchange or trading market, including, if applicable, the filing of a
notice on Form D (at such time and in such manner as required by the Rules and
Regulations of the Commission), and to provide copies thereof to the Purchaser
promptly after such filing or filings.
d. NASDAQ LISTING. The Company agrees and covenants that it
will not seek to have the trading of its Common Stock through Nasdaq suspended
or terminated, will use its best efforts to maintain its eligibility for trading
on Nasdaq and, if such trading of its Common Stock is suspended or terminated,
will use its best efforts to requalify its Common Stock or otherwise cause such
trading to resume.
e. REPORTING STATUS. So long as the Purchaser beneficially
owns any of the Securities, the Company shall timely file all reports required
to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act and shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
f. STATE SECURITIES FILINGS. The Company shall from time to
time promptly take such action as the Purchaser or any of its representatives,
if applicable, may reasonably request to qualify the Securities for offering and
sale under the securities laws (other than United States federal securities
laws) of the jurisdictions in the United States as shall be so identified to the
Company, and to comply with such laws so as to permit the continuance of sales
therein, provided that in connection therewith, the Company shall not be
required to qualify as a foreign corporation or to file a general consent to the
service of process in any jurisdiction.
g. USE OF PROCEEDS. The Company will use all of the net
proceeds from the issuance of the Units to satisfy certain net capital
requirements of EBI Securities, Inc.
h. RESERVATION OF COMMON STOCK. The Company will at all
times have authorized and reserved for the purpose of issuance a sufficient
number of shares of Common Stock to provide for the conversion of the Debentures
and the exercise of the Warrants. The Company will use its best efforts at all
times to maintain a number of shares of Common Stock so reserved for issuance
that is no less than two (2) times the number that is then actually issuable
upon the conversion of the Debentures and the exercise in full of the Warrants.
i. SALES OF ADDITIONAL SHARES. The Company shall not,
directly or indirectly, without the prior written consent of the Purchaser,
offer, sell, offer to sell, contract to sell or otherwise dispose of any of its
securities or any security or other instrument convertible into or exchangeable
for shares of its capital stock, in each case, for a period ending on the
earlier of two hundred seventy (270) days after the date of this Agreement or
the date the Debentures are redeemed in full (the "Lock-Up Period"), except that
the Company may (i) issue securities for the aggregate consideration of at least
$15 million in connection with a bona fide, firm commitment, underwritten public
offering under the Securities Act; (ii) may issue shares of Common Stock which
are issued in connection with a bona fide transaction involving the acquisition
of another business entity or segment of any such entity by the Company by
merger, asset purchase, stock purchase or otherwise; (iii) may issue shares of
common stock to directors, officers, employees or consultants of the Company for
the primary purpose of soliciting or retaining their services in an aggregate
amount, together with any New Options (as defined below) vesting or becoming
exercisable during the Lock-Up Period, not to exceed 150,000 shares; (iv) may
issue shares of Common Stock upon the exercise or conversion of currently
outstanding options, warrants and other convertible securities and up to 150,000
shares of Common Stock underlying New Options as provided in clause (v) below;
(v) may issue options to purchase shares of its Common Stock to its directors,
officers, employees and consultants in connection with its existing stock option
plans; provided, that, during the Lock-Up Period, New Options to purchase not
more than 150,000 shares of Common Stock shall vest or become exercisable; (vi)
may issue Common Stock in connection with a stock split, stock dividend or
similar recapitalization of the Company which affects all holders of the
Company's Common Stock on an equivalent basis, in each case, without the prior
written consent of the Purchaser and (vii) may sell securities if the proceeds
of such transaction are applied to redeem in full all of the Debentures. In
addition, the Company agrees that it will not cause any shares of its capital
stock that are issued in connection with a transaction of the type contemplated
by clause (ii) (or upon the conversion or exercise of other securities that are
issued in connection with such transaction) or that were issued in connection
with any financing, acquisition or other transaction that occurred prior or
subsequent to the date of this Agreement to be covered by a registration
statement that is filed with the Commission or declared effective by the
Commission prior to the earlier of the time (A) the Warrants and the Common
Stock underlying the Debentures and the Warrants are covered by a registration
statement filed by the Company pursuant to its obligations under the
Registration Rights Agreement has been effective under the Securities Act for a
period of at least one hundred eighty (180) days during which the Company has
not notified the Purchaser that such registration statement or the prospectus
included in such registration statement includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading or (B) the Debentures are redeemed in full prior
to the time a registration statement is declared effective.
j. STOCKHOLDER APPROVAL. The Company agrees to use its best
efforts (including obtaining any vote of its stockholders required by applicable
law or Nasdaq rules) to authorize and approve the issuance of the Common Stock
issuable upon conversion of the Debentures and Warrants, to the extent that such
conversion or issuance results in the issuance of 20 percent or more of the
Company's outstanding Common Stock.
k. OWNERSHIP. At no time shall the Purchaser (including its
officers, directors and affiliates) maintain in the aggregate beneficial
ownership (as defined for purposes of Section 16 of the Securities Exchange Act
of 1934, as amended) of shares of Common Stock in excess of 4.9 percent of the
Company's outstanding Common Stock unless the Purchaser gives the Company at
least sixty-one days notice that it intends to go higher.
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that no instruction, other than the
instructions referred to in this Section 5 and stop transfer instructions to
give effect to Sections 4(a) and 4(b) hereof prior to the registration and sale
of the Securities in the manner contemplated by the Registration Rights
Agreement, will be given by the Company to the transfer agent and that the
shares of Common Stock issuable upon conversion of, or in lieu of interest
payments on, the Debentures or upon exercise of the Warrants shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement and applicable
law. Nothing in this Section shall affect in any way the Purchaser's obligations
and agreement to comply with all applicable securities laws upon resale of the
Securities. If the Purchaser provides the Company with an opinion of counsel
reasonably satisfactory (as to both the identity of such counsel and the content
of such opinion) to the Company and its counsel that registration of a resale by
the Purchaser of any of the Securities in accordance with clause (1)(B) of
Section 4(a) of this Agreement is not required under the Securities Act, the
Company shall permit the transfer of the Securities and, in the case of the
Common Stock, promptly instruct the Company's transfer agent to issue one or
more certificates for Common Stock without legend in such names and in such
denominations as specified by the Purchaser.
b. The Company will permit the Purchaser to exercise its
right to convert the Debentures or to exercise the Warrants by faxing an
executed and completed Notice of Conversion or Form of Election to Purchase, as
applicable, to the Company, and delivering within three (3) business days
thereafter, the original Notice of Conversion (and the related original
debentures) or Form of Election to Purchase (and the related original Warrants)
to the Company by hand delivery or by express courier, duly endorsed. Each date
on which a Notice of Conversion or Form of Election to Purchase is faxed to and
received in accordance with the provisions hereof shall be deemed a "Conversion
Date." The Company will transmit the certificates representing the Common Stock
issuable upon conversion of any Debenture or upon exercise of any Warrants
(together with the debentures not so converted, or the Warrants not so
exercised) to the Purchaser via express courier as soon as practicable, but in
all events no later than three (3) business days in the case of conversion of
the Debentures or five (5) business days in the case of the exercise of any
Warrant after the Conversion Date (the "Delivery Date"). For purposes of this
Agreement, such conversion of the Debentures or the exercise of the Warrants
shall be deemed to have been made immediately prior to the close of business on
the Conversion Date.
c. In lieu of delivering physical certificates representing
the Common Stock issuable upon the conversion of the Debentures or the exercise
of the Warrants, provided the Company's transfer agent is participating in the
Depositary Trust Company ("DTC") Fast Automated Securities Transfer program, on
the written request of the Purchaser, who shall have previously instructed the
Purchaser's prime broker to confirm such request to the Company's transfer
agent, the Company shall cause its transfer agent to electronically transmit
such Common Stock to the Purchaser by crediting the account of the Purchaser's
prime broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC")
system no later than the applicable Delivery Date.
d. The Company understands that a delay in the issuance of
Common Stock beyond the applicable Delivery Date could result in an economic
loss to the Purchaser. As compensation to the Purchaser for such loss, the
Company agrees to pay to the Purchaser for late issuance of Common Stock upon
conversion of the Debentures or upon exercise of the Warrants the sum of $5,000
per day for each $100,000 in aggregate principal amount of debentures that are
being converted or for any or all shares of Common Stock purchased upon the
exercise of the Warrants. The Company shall pay any payments that are payable to
the Purchaser pursuant to this Section 5 in immediately available funds upon
demand. Nothing herein shall limit the Purchaser's right to pursue actual
damages for the Company's failure to so issue and deliver Common Stock to the
Purchaser. Furthermore, in addition to any other remedies which may be available
to the Purchaser, in the event that the Company fails for any reason to effect
delivery of such Common Stock within five (5) business days after the relevant
Delivery Date, the Purchaser will be entitled to revoke the relevant Notice of
Conversion or Form of Election to Purchase by delivering a notice to such effect
to the Company, whereupon the Company and the Purchaser shall each be restored
to their respective positions immediately prior to delivery of such Notice of
Conversion or Form of Election to Purchase. For purposes of this Section 5,
"business day" shall mean any day in which the financial markets of New York are
officially open for the conduct of business therein.
6. EXPENSES.
The Company covenants and agrees with the Purchaser that the
Company will pay or cause to be paid the following: (a) the fees, disbursements
and expenses of the Purchaser's counsel in connection with the issuance of the
Securities payable on the Closing Date, (b) all expenses in connection with
registration or qualification of the Securities for offering and sale under
state securities laws as provided in Section 4(f) hereof, and (c) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section, including the
fees and disbursements of the Company's counsel, accountants and other
professional advisors, if any. If the Company fails to satisfy its obligations
or to satisfy any condition set forth in this Agreement, as a result of which
the Securities are not delivered to the Purchaser on the terms and conditions
set forth herein, the Company shall reimburse the Purchaser for any
out-of-pocket expenses reasonably incurred in making preparations for the
purchase, sale and delivery of the Securities not so delivered.
7. GOVERNING LAW; MISCELLANEOUS
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to principles
of conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement or any of the
transactions contemplated hereby, and hereby waives, to the maximum extent
permitted by law, any objection, including any objections based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of this
Agreement. This Agreement and each of the Primary Documents have been entered
into freely by each of the parties, following consultation with their respective
counsel, and shall be interpreted fairly in accordance with its respective
terms, without any construction in favor of or against either party. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
unenforceability of this Agreement in any other jurisdiction. This Agreement
shall inure to the benefit of, and be binding upon the successors and assigns of
each of the parties hereto, including any transferees of the Securities. This
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
8. NOTICES.
Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by five days advance written
notice to each of the other parties hereto.
Company: EASTBROKERS INTERNATIONAL INCORPORATED
00000 Xxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxx, XX 00000
ATT: Xx. Xxxxxx X. Xxxxxxxxxx
Tel: 000-000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxx & Xxxxxx XXX
0 Xxxxxxxx Xxxxx
000 Xxxxxxx Xxxx.
Xxxxxxxx, XX 00000
ATT.: Xxx Xxxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
PURCHASER: MACCABEE INVESTORS II, LLC
c/o WEST END CAPITAL LLC
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
ATT.: Xxxxx X. Xxxxxxxx
Tel.: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATT.: Xxx Xxxxxxxxxx, Esq.
Tel.: 000-000-0000
Fax: 000-000-0000
9. SURVIVAL.
The agreements, covenants representations and warranties of
the Company and the Purchaser shall survive the execution and delivery of this
Agreement and the delivery of the Securities hereunder.
IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly
executed by each of the undersigned.
EASTBROKERS INTERNATIONAL
INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice Chairman
MACCABEE INVESTORS II, LLC
By: WEST END CAPITAL LLC, Manager
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Managing Director
