PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made as of this 18th day of June 1998, by
and between ULTRA PACIFIC HOLDINGS S.A., a Liberian corporation, with its
office at c/o Xx. Xxxxxxx Xxxxxxxx, Xxxxxxxxxxxx 00, Xxxx Xxx 00, F.L.
9490, Vaduz, Liechtenstein, Attention: Xxxx Xxxx Xxxxxxx, (the
"Purchaser"), and METALCLAD CORPORATION, a Delaware corporation, with its
principal offices at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of America (the "Company").
WHEREAS, the Company is offering to sell a U.S. $252,812.50 Principal
Amount Zero Coupon Secured Note (the "Note"), to be dated and issued as
of the date hereof and to be due 45 days following the date hereof being
July 31, 1998 (the "Maturity Date"), the Purchaser or any other holder of
the Note being hereinafter sometimes referred to as the "Noteholder, and
the principal amount of the Note being hereinafter sometimes referred to
as the "Principal Amount", the Note to be substantially in the form of
Exhibit A annexed hereto and made a part hereof;
WHEREAS, on the Maturity Date of the Note, the Company shall issue to
the Purchaser 250,000 "Warrants" (hereinafter defined) to purchase the
Company s common stock par value U.S.$.10 per share ("Common Stock");
WHEREAS, for each day following the Maturity Date that the Note is
not paid in full (whether or not the Noteholder has declared an Event of
Default), the Company will issue to the Noteholder an additional 7,143
Warrants to and including the date on which payment in full of the Note is
made;
WHEREAS, the obligations of the Company under this Purchase Agreement
and the Note are entitled to the benefits of the Pledge Agreement and the
Assignment mentioned below;
WHEREAS, the placement of the Note has been arranged directly by and
between the Company and the Purchaser;
WHEREAS, the Company has furnished to the Purchaser, in accordance
with Section 4.2(c) hereof, the latest annual and quarterly reports and
other public information referred to below filed with the United States
Securities and Exchange Commission ("SEC") constituting all of the filings
of any nature which the Company has filed and was required to file with
the SEC from and including January 1, 1998 through and including the date
hereof;
WHEREAS, the Company, the Purchaser and Sundial International Fund
Limited ("Sundial") heretofore entered into that certain Purchase
st
Agreement dated as of the 31 day of December, 1997 ("Prior Purchase
Agreement") pursuant to which the Purchaser and Sundial purchased
U.S.$2,200,000.00 Principal Amount of the Company s Zero Coupon Secured
Notes due December 31, 2002 (each a "Prior Note" and together the "Prior
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Notes" and the Purchaser and Sundial in such capacity being herein
referred to individually as "Prior Noteholder" and together as the "Prior
Noteholders") which Prior Purchase Agreement provided for the issuance to
the Prior Noteholders of certain Warrants to purchase Common Stock of the
Company and the right of the Prior Noteholders to convert the Prior Notes
into Common Stock of the Company and the right of the Company to require
the conversion of the Prior Notes into Common Stock of the Company, each
under certain circumstances, and all on the terms and conditions set forth
in the Prior Purchase Agreement and the documents referred to therein; and
WHEREAS, due to a mutual factual misunderstanding respecting
adjustment to the exercise price of the Warrants to be issued under the
Prior Purchase Agreement and certain other warrants, the number of
Warrants to be issued thereunder and the price at which the Prior Note to
be convertible into Common Stock of the Company, which mutual factual
misunderstanding the parties hereto wish to correct for their mutual
benefit and for the benefit of Sundial, all as more particularly set forth
in Section 2.7 of this Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Purchase Agreement, the undersigned agree as
follows:
Section 1. Agreement to Sell and Purchase the Note.
1.1 On the basis of the representations, warranties and agreements
contained in this Purchase Agreement but subject to the terms and
conditions set forth in this Purchase Agreement, the Company agrees to
issue and sell to the Purchaser, and the Purchaser agrees to purchase from
the Company on the date hereof, or on such other date as shall be mutually
agreed upon by the Company and the Purchaser (the "Closing Date"), the
Note for a purchase price of U.S.$250,000.00 (the "Purchase Price").
1.2 Payment of the Purchase Price shall be made by the Purchaser to
the Company by wire transfer, net of all wire transfer charges, in
immediately available funds for value on the date hereof, or such other
date as the Company and the Purchaser shall agree, in United States
dollars to:
Account: Metalclad Corporation
Account No.: 040116487
ABA No.: 000000000
Bank: Sanwa Bank, Santa Xxx Main Branch
0000 Xxxxx Xxxx Xxxxxx,
Xxxxx Xxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxx of America
Alternatively, at the option of the Purchaser, payment may be made in
escrow in advance of the Closing Date by wire transfer of the Purchase
Price in immediately available funds to:
Account: Xxxxxxxxx, Poster & Xxxxxx Trust Account
Account No. 00000000
ABA No. 0210000089
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Bank: Citibank, N.A.
Xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxxxx
Should the funds be transferred in such alternative manner and should the
Closing take place at a time of day when it is no longer practicable or
possible to wire transfer said funds to the above mentioned account of the
Company, Purchaser will cause Messrs. Xxxxxxxxx, Poster & Xxxxxx
("Agent"), concurrently with the Closing, to: (i) issue and deliver to the
Company the Agent s irrevocable and unconditional confirmation that
concurrently with the Closing the Agent holds such Purchase Price solely
and exclusively for the benefit of the Company, and (ii) issue and deliver
to Citibank, N.A. no later than the opening of business on the following
Business Day its irrevocable and unconditional instructions forthwith to
wire transfer, net of all wire transfer charges, the Purchase Price of
the Note to the Company s account with said Sanwa Bank above mentioned.
1.3 The completion of the sale and purchase of the Note (the
"Closing") shall take place at the offices of the Agent, 0xx Xxxxx, Xxx
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. local time on the
Closing Date. At the Closing, the Company shall deliver to the Agent, for
the account of Purchaser, the Note registered in the name of the
Purchaser or its nominee, representing the Note being purchased by
Purchaser, against payment of the Purchase Price therefor in immediately
available funds to the account of the Company designated in or otherwise
as provided in Section 1.2 of this Purchase Agreement.
1.4 The obligation of the Purchaser to purchase the Note at the
Closing shall be conditional upon the delivery by the Company to the
Agent, on behalf of the Purchaser, of:
1.4.1 The Secondary Pledge Agreement (as executed and
delivered, the "Pledge Agreement") by and between the Company and the
Agent dated as of the Closing Date substantially in the form of Schedule 1
annexed hereto and made a part hereof pursuant to which the Company
pledges to the Agent for the benefit of the Noteholder and as security
for, among other things, the obligations of the Company under the Note and
this Purchase Agreement, all of the issued and outstanding capital stock
("MIC Shares") of the Company s wholly owned subsidiary, Metalclad
Insulation Corporation ("MIC"), a California corporation, subject to the
prior rights of the Agent under that certain Pledge Agreement dated as of
st
the 31 day of December, 1997 between the Company and the Agent (the
"Prior Pledge Agreement"), the MIC Share Certificates and the MIC Stock
Powers having been previously delivered by the Company to the Agent
pursuant to the Prior Pledge Agreement.
1.4.2 An Assignment of Account ("Assignment") substantially in
the form of Schedule 2 annexed hereto and made a part hereof pursuant to
which the Company assigns to the Agent, as secured party, acting on behalf
of the Noteholder, all of the Company s right, title and interest in and
to the "Fund Trust Agreement"(hereinafter defined) as security, inter
alia, for all of the "Obligations" (hereinafter defined).
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1.4.3 The Company s irrevocable and unconditioned undertaking
hereby made, to issue on, but not before, the Maturity Date (July 31,
1998), a Warrant dated the Maturity Date to purchase 250,000 Shares of the
Company s Common Stock at the Warrant Exercise Price with an expiration
date of July 31, 2003 registered to Purchaser.
1.44 Evidence satisfactory to the Agent of the authority of the
persons executing the Note, the Pledge Agreement, the Assignment and all
other transaction documents on behalf of the Company.
1.4.5 The Note.
1.4.6 UCC Financing Statements relating to the Collateral to be
filed in such jurisdictions as are determined appropriate by the Agent.
1.4.7 An opinion of Messrs. Xxxxxx, Xxxxxxx & Xxxxxxx, counsel
to the Company, in form and substance satisfactory to the Agent.
Section 2. Definitions; Certain Rights of the Noteholder Upon the
Occurrence of an Event of Default.
2.1 When used in this Purchase Agreement, the following terms shall
have the following meanings:
2.1.1 "Agent" shall have the meaning set forth in Section 1.2
of this Agreement.
2.1.2 "Assignment" shall mean that certain Assignment of
Account executed by the Company in favor of the Agent dated as of the date
hereof substantially in the form of Schedule 2 annexed hereto and made a
part hereof pursuant to which, among other things, the Company assigns to
the Agent for the benefit of the Noteholder and as security for the
payment of any and all indebtedness of the company to Ultra all right,
title and interest of the Company in and to, among other things, the
account and all proceeds thereof established pursuant to the Fund Trust
Agreement.
2.1.3 "Business Day" shall mean a day on which banks are open
for business in each of Los Angeles, California, New York City, New York,
London, England and the Channel Islands.
2.1.4 "Closing Date" shall have the meaning set forth in
Section 1.1 of this Agreement.
2.1.5 "Collateral" shall mean all the right, title and interest
of the Agent in and to the property described in the Assignment and the
Pledge Agreement, which property the Agent holds for the benefit of the
Noteholder and as security for the performance of the Obligations.
2.1.6 "Common Stock" shall have the meaning set forth in the
second recital of this Agreement.
2.1.7 "Company" shall have the meaning set forth in the first
paragraph of this Agreement.
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2.1.8 "Debentures" shall have the meaning set forth in Section
3.1 of this Agreement.
2.1.9 "Default Rate" shall be a per annum rate of interest
equal to (i) the greater of (w) 15% or (x) the sum of 6% plus the rate
announced from time to time by Citibank, N.A. as its prime or stated rate
for unsecured short term U.S. dollar commercial loans in the United
States.
2.1.10 "Discounted Present Value"with respect to the Note shall
be based on a simple interest rate of 9% per annum without compounding and
shall mean with respect to the Note an amount calculated in accordance
with the following formula:
$250,000.00 + ($2,812.50 (n/45))
wherein n equals the number of days elapsed from and including the date of
issuance of any Note to and including the date of occurrence of an Event
of Default, as the case may be, and 45 equals the total number of days
from and including the date of issuance to and including the date of
maturity of the Note.
2.1.11 "EPA" shall have the meaning set forth in Section 6.15
of this Agreement.
2.1.12 "Event of Default" shall mean any of the events referred
to in Section 7.1 of this Agreement; and "Events of Default" shall mean
more than one such event.
2.1.13 "Fund Trust Agreement" shall mean that certain Amended
and Restated Fund Trust Agreement" between the Company and Pacific
National Bank, a copy of the Fund Trust Agreement being annexed hereto as
Schedule 4 and made a part hereof.
2.1.14 "GAAP" shall mean the standards, conventions, rules and
principles generally accepted and followed by accountants in the United
States in recording and summarizing transactions and in the preparation of
financial statements.
2.1.15 "Market Price" shall have the meaning set forth in the
form of Warrant annexed to this Purchase Agreement as Schedule 3 and made
a part hereof.
2.1.16 "MIC Shares" shall mean all of the issued and
outstanding capital stock of Metalclad Insulation Corporation, a
California corporation.
2.1.17 "MIC Stock Powers" shall mean stock powers executed in
blank, with signature guaranteed, in form sufficient to enable the Agent
to transfer the registered and beneficial ownership of the whole or any
portion of the MIC Shares pursuant to the terms of the Pledge Agreement.
2.1.18 "Noteholder" and "Noteholders" shall have the meanings
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set forth in the first recital of this Agreement.
2.1.19 "Note" shall have the meaning set forth in the first
recital of this Agreement.
2.1.20 "Obligations" shall mean all of the obligations of the
Company to the Noteholder under or pursuant to the Note, this Purchase
Agreement, the Pledge Agreement and the Assignment.
2.1.21 "OFW Ratchet Clause" shall mean the adjustments to the
Warrant Exercise Price set forth in Section 7 of the form of Warrant
annexed hereto as Schedule 3 and made a part hereof.
2.1.22 "OSHA" shall have the meaning set forth in Section 6.15
of this Agreement.
2.1.23 "Pledge Agreement" shall mean that certain Secondary
Pledge Agreement by and between the Company and the Agent dated as of the
date hereof substantially in the form of Schedule 1 annexed hereto and
made a part hereof, pursuant to which, among other things, the Company
pledges to the Agent for the benefit of the Noteholder and as security for
all of the Obligations, the MIC Shares subject, however, to the prior
rights of the Agent under and pursuant to the Prior Pledge Agreement. .
2.1.24 "Principal Amount" shall mean with respect to the Note,
U.S. $252,812.50.
2.1.25 "Prior Note"and "Prior Notes" shall have the meaning set
forth on the penultimate recital to this Agreement.
2.1.26 "Prior Noteholder" and "Prior Noteholders" shall have
the meaning set forth in the penultimate recital to this Agreement.
2.1.27 "Prior Pledge Agreement" shall mean that certain Pledge
st
Agreement dated the 31 day of December, 1997 by and between the Company
and the Agent pursuant to which the MIC shares and the MIC Stock Powers
were delivered to the Agent as security for the "Obligations" referred to
therein.
2.1.28 "Prior Purchaser" shall have the meaning set forth in
the penultimate recital to this Agreement.
2.1.29 "Purchaser" shall have the meaning set forth in the
first paragraph of this Agreement.
2.1.30 "Purchase Price" of the Note shall mean U.S.$250,000.00.
2.1.31 "Registration Rights Agreement" shall have the meaning
set forth in the Prior Purchase Agreement.
2.1.32 "Restricted Period" shall have the meaning set forth in
Section 4.3(a) of this Agreement.
2.1.33 "SEC" shall have the meaning set forth in the last
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recital of this Agreement.
2.1.34 "Securities" shall have the meaning set forth in
Section 3.6 of this Agreement.
2.1.35 "Sundial"shall have the meaning set forth in the
penultimate recital to this Agreement.
2.1.36 "Transaction documents" shall have the meaning set forth
in Section 3.3 of this Agreement.
2.1.37 "Warrant" shall mean the non-redeemable right to
purchase shares of Common Stock at the Warrant Exercise Price; and
"Warrants" shall mean the plural thereof, each Warrant to be substantially
in the form of Schedule 3 annexed hereto and made a part hereof.
2.1.38 "Warrant Exercise Price" shall mean U.S. $1.25 per share
of Common Stock as the same may be adjusted pursuant to the OFW Ratchet
Clause.
2.1.39 "Warrant Shares" shall mean the shares of Common Stock
of the Company issuable upon exercise of the Warrants.
2.2 Concurrently with the Maturity of the Note on the Maturity
Date, the Company will issue to the Purchaser a Warrant dated the Maturity
Date to purchase 250,000 shares of Common Stock. For each day following
th
the 45 day from the date of issuance of the Note that the Note has not
been paid in full (together with any default interest due thereon), the
Company will issue to the Purchaser an additional Warrant to purchase
7,143 shares of the Common Stock.
2.3 Upon the occurrence of an Event of Default and so long as the
same shall be continuing, the Noteholder shall have the right to declare
the Note to be in default. In the event of any such declaration, the
Discounted Present Value of such Note shall be calculated to the date of
the occurrence of such Event of Default and, (i) thereafter, such
Discounted Present Value of the Note shall bear interest at the Default
Rate until all amounts due the Noteholder are paid in full, and (ii) in
addition to the Warrant to purchase 250,000 shares of Common Stock,
Noteholder shall receive a Warrant to purchase 7,143 shares of Common
th
Stock of the Company for each day following the 45 day after the date of
issuance of the Note until the entire Principal Amount of the Note and
default interest thereon, if any, have been paid in full (whether or not
an Event of Default has been declared or waived by the Noteholder). Upon
the occurrence of an Event of Default the Noteholder may instruct the
Agent to exercise any one or more or all of the Agent s rights under the
Pledge Agreement and the Assignment, all without prejudice to the
Noteholder s rights in law or equity.
2.4 If the SEC or any other agency of the government of the United
States abolishes, modifies or otherwise changes the terms of Regulation S
or Rule 144 promulgated under the Securities Act of 1933, as amended, so
as to (i) extend the holding period under Regulation S to a period greater
than one year, or (ii) extend the holding period under Rule 144 to greater
7
than one year, the Purchaser adversely affected thereby shall have
piggyback registration rights to the registration rights set forth in the
Registration Rights Agreement.
2.5 In the event there shall have accumulated $250,000.00 in the
Fund Trust Agreement at a time when any of the Obligations shall remain
outstanding, the Company shall cause a "Closing" (as defined in the Fund
Trust Agreement to take place) and shall apply the proceeds thereof to
payment of any the Obligations which then remaining outstanding.
2.6 The Purchaser hereby appoints the Agent to act as its agent for
purposes of retaining, perfecting and enforcing all of the rights
conferred upon Agent pursuant to the Pledge Agreement and the Assignment.
2.7.1 For the purposes of this Section 2.7 only, capitalized terms
used herein and not defined herein are used as defined in the Prior
Purchase Agreement.
2.7.2 The form of Warrant annexed to the Prior Purchase Agreement as
"Exhibit B" and made a part thereof is hereby amended by inserting a
subsection 7(e) following subsection 7(d) and renumbering existing
subsections (e) and (f) as subsections (f) and (g):
(e) Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this paragraph 7, the
number of Shares issuable upon the exercise of each Warrant shall be
adjusted to the nearest full Share by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the
number of Shares issuable upon exercise of the Warrants immediately prior
to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
2.7.3 The definition of the term "OFW Rachet Clause" contained in
Section 2.1.18 of the Prior Purchase Agreement shall be changed to read as
follows:
"2.1.18 OFW Rachet Clause shall mean the entirety of
Section 7 of the form of Warrant annexed hereto as Exhibit B and made a
part hereof and shall include the addition to Section 7 thereof of the new
subsection (e) referred to in Section 2.7.2 of the Purchase Agreement
th
dated as of the 18 day of June 1998 by and among Ultra Pacific Holdings
S.A. ("Ultra"), it being understood that the OFW Rachet Clause as
hereinabove modified shall also be applied to modify and adjust the
Conversion Rate as well as the Warrant Exercise Price."
2.7.4 It is understood that no Warrants have heretofore been issued
under or pursuant to the Prior Purchase Agreement but that in accordance
with the terms of the Prior Purchase Agreement and the Note referred to
therein, Warrants shall become issuable by the Company to Ultra and
Sundial upon the occurrence of one or more of certain events described in
the Prior Purchase Agreement and the Note such that it is a certainty that
Warrants will be issued by the Company to Ultra and Sundial thereunder
because it is a certainty that one or more of the events referred to
therein will occur. It is further agreed that concurrently with the first
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issuance by the Company to Ultra and Sundial of Warrants in accordance
with the terms of the Prior Purchase Agreement and the Note referred to
therein, an additional 400,000 Warrants in the form of the Warrant annexed
to the Prior Purchase Agreement as Exhibit B as modified pursuant to this
Section 2.7., shall also then be issued to Ultra and Sundial in the
following proportions: a Warrant to Sundial to purchase 266,667 shares
of Common Stock and a Warrant to Ultra to purchase 133,333 shares of
Common Stock.
Section 3. Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser as
follows:
3.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority
to own and lease its properties and to conduct its business as presently
conducted and as described in the Confidential Private Placement
Memorandum dated as of May 27, 1998 respecting the proposed issuance by
the Company of up to $5,000,000 principal amount of its 10% Convertible
Subordinated Debentures due 2001 ("Debentures"). The Company and its
subsidiaries are duly qualified to do business as foreign corporations and
are in good standing in every jurisdiction where such qualification is
required by controlling law and where the failure so to qualify would have
a material adverse effect on the Company and its subsidiaries taken as a
whole.
3.2 MIC Shares. The MIC Shares consist of 1,000 shares of Common
Stock, no par value, representing all of the issued shares of capital
stock of MIC, have been duly and validly authorized and issued, and are
fully paid and nonassessable. The MIC Shares are owned directly by the
Company and are free and clear of any claim, lien, security interest,
mortgage, pledge, charge or other encumbrance of any nature whatsoever
other than the lien of the Prior Pledge and the Pledge Agreement.
3.3 Due Execution, Delivery and Performance of the Purchase
Agreement
The execution, delivery and performance of this Purchase
Agreement, the Note, the Pledge Agreement, the Assignment and all other
documents delivered or to be delivered by the Company in connection with
this Purchase Agreement including the Warrant to be dated and delivered
the Maturity Date (together the "transaction documents") (a) have been
duly authorized by all requisite corporate action of the Company, and (b)
will not violate (i) the Certificate of Incorporation or Bylaws of the
Company or (ii) any law applicable to the Company, MIC, or any of its
other subsidiaries or any rule, regulation or order of any court or
governmental agency or body having jurisdiction over the Company, MIC, or
any of its other subsidiaries or (iii) any provision of any indenture,
mortgage, debenture, agreement, contract or other instrument by which the
Company or its property is bound or affected.
3.4 Issuance and Delivery of the Warrant Shares. The offer,
9
issuance, sale and delivery of the Warrant Shares, in accordance with the
Purchase Agreement, have been duly authorized by all requisite corporate
action of the Company. The Warrant Shares, when issued, will conform to
the terms of the Common Stock set forth in the Company s Certificate of
Incorporation. The Warrant Shares, when issued upon exercise of the
Warrants therefor, will be duly and validly issued and outstanding, fully
paid and non-assessable, will not be subject to any pre-emptive or similar
right, and Purchaser will receive good and valid record title to the
Warrant Shares, free and clear of any claim, lien, security interest,
mortgage, pledge, charge or other encumbrance of any nature whatsoever,
except such as may have been created by the Purchaser. No consent or
approval by the stockholders of the Company or of any other person is
required to be obtained by the Company for the consummation of the
issuance, sale and delivery of the Warrant Shares pursuant to the terms of
this Purchase Agreement. The Warrant Shares have been duly and validly
authorized and reserved for issuance.
3.5 Note and Warrant Authorized. At the Closing, the Note, and on
the Maturity Date, the Warrant, will be duly and validly executed and
delivered by the Company and will constitute the valid and legally binding
obligations of the Company, enforceable against the Company in accordance
with their respective terms, except as the enforceability thereof may be
limited by any applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting enforcement of creditors rights
generally and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
3.6 Compliance with Regulation S. The Company is a "reporting
issuer" (as defined in Regulation S promulgated by the SEC). The Company,
its affiliates, and any person acting on behalf of, or as agent of, any of
the foregoing, whether as principal or agent, (a) has offered and sold the
securities which are the subject of this Purchase Agreement, including the
Note, the Warrants and the Warrant Shares (the "Securities") to the
Purchaser only in an "offshore transaction" (as defined in Regulation S),
(b) has not engaged with respect to the Securities in any "directed
selling efforts" (as defined in Regulation S) in or directed toward the
United States, and (c) has complied with all "offering restrictions" (as
defined in Regulation S) in respect of the Securities.
Section 4. Representations, Warranties and Covenants of Purchaser.
The Purchaser hereby represents, warrants and covenants to the
Company as follows:
4.1 Compliance with United States Securities Laws. The Purchaser
understands and acknowledges that (a) the Securities have not been and
will not be registered under the Securities Act, and may not be offered or
sold in the United States or to, or for the account or benefit of, any
"U.S. person" (as defined in Regulation S), unless such securities are
registered under the Securities Act and any applicable state securities or
blue sky laws or such offer or sale is made pursuant to exemptions from
the registration requirements of such laws, (b) the Warrant may not be
exercised in the United States or by or on behalf of a "U.S. Person" (as
defined in Regulation S) unless the Warrant and the Warrant Shares are
10
registered under the Securities Act and any applicable state securities or
blue sky laws or exemptions from the registration requirements of such
laws are available, and (c) the Securities are being offered and sold
pursuant to the terms of Regulation S under the Securities Act, which
permits securities to be sold to non-"U.S. persons" in "offshore
transactions" (as defined in Regulation S), subject to certain terms and
conditions.
4.2 Status of Purchaser.
(a) Purchaser is purchasing the Securities for its own account
or for persons or accounts as to which it exercises investment discretion.
Neither Purchaser nor such person or account is a "U.S. person" (as
defined in Regulation S). Purchaser has executed this Purchase Agreement
outside the United States. The offer to Purchaser and sale of the
Securities has occurred outside the United States.
(b) Purchaser (and any person or account on whose behalf
Purchaser is purchasing) is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments
in restricted securities such as this Purchase Agreement and the
Securities) and has requested, received, reviewed and considered all
information it deems relevant in making a decision to execute this
Purchase Agreement and to purchase the Securities. Purchaser acknowledges
that it is capable of evaluating the merits and risks of an investment in
the Securities.
(c) Purchaser acknowledges that the Company has made available
to Purchaser (i) the latest annual and quarterly reports and other public
information referred to below filed with the SEC, including all of the
filings of any nature which the Company has filed and was required to file
with the SEC from and including January 1, 1998 through and including the
date hereof, (ii) the opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of the Securities, and
(iii) the opportunity to obtain any additional information that the
Company possesses or can acquire without unreasonable effort or expense
necessary to verify the accuracy of the information furnished in
connection herewith and the transactions contemplated hereby.
(d) Purchaser has agreed to purchase the Securities for
investment purposes and not with a view to distribution. To the extent
that the Note and the Warrants comprising the Securities are registered in
the name of Purchaser s nominee, Purchaser confirms that such nominee is
acting as custodian for Purchaser of such securities.
4.3 Restrictions on Transfer or Re-Sale.
(a) For a period of one year following the Closing Date, or if
the Securities come to be issued on more than one day, the latest Closing
Date (the "Restricted Period"), Purchaser shall not engage in any activity
for the purpose of, or which may reasonably be expected to have the effect
of, conditioning the market in the United States for the Securities, or
offer, sell, transfer, pledge or otherwise dispose of the Securities, or
any interest therein in the United States to, or for the account or
11
benefit of, a "U.S. person" (as defined in Regulation S).
(b) Purchaser understands that the Warrant Shares or any
interest therein are only transferable on the books and records of the
Transfer Agent and Registrar of the Common Stock of the Company and, with
respect to the Note and the Warrants, on the books and records of the
Company. Purchaser further understands that the Transfer Agent and
Registrar and the Company will not register any transfer of the Securities
or any interest therein which the Company in good faith believes violates
the restrictions set forth herein.
(c) Unless registered under the Securities Act, any proposed
offer, sale, transfer, pledge or other disposition during the Restricted
Period of any of the Securities or any interest therein shall be subject
to the condition that Purchaser must deliver to the Company (i) a written
certification that neither record nor beneficial ownership of the
Securities has been offered or sold in the United States or to, or for the
account or benefit of, any "U.S. person" (as defined in Regulation S),
(ii) a written certification of the proposed transferee that such
transferee (or any account for which such transferee is acquiring such
Securities is not a "U.S. person" (as defined in Regulation S), that such
transferee is acquiring such Securities or such interest therein, as the
case may be, for such transferee s own account (or an account over which
it has investment discretion) and for investment and not with a view to
distribution, and that such transferee is knowledgeable of and agrees to
be bound by the restrictions on re-sale set forth in this section and
Regulation S during the Restricted Period, and (iii) a written opinion of
United States counsel, in form and substance satisfactory to the Company,
to the effect that the offer, sale, transfer, pledge or other disposition
of such Securities, or any interest therein, as the case may be, are
exempt from registration under the Securities Act and any applicable state
securities or blue sky laws.
(d) Purchaser will not, directly or indirectly, voluntarily
offer, sell, pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of) its
rights under this Purchase Agreement otherwise than in compliance with the
Securities Act, any applicable state securities or blue sky laws and any
applicable securities laws of jurisdictions outside the United States, and
the rules and regulations promulgated thereunder.
4.4 Exercise of the Warrants. Purchaser understands that the
Warrants may not be exercised by or on behalf of any "U.S. person" (as
defined in Regulation S) unless the Warrants and the Warrant Shares
issuable upon exercise thereof are registered under the Securities Act or
an exemption from such registration is available. Accordingly, Purchaser
understands that it is a condition to the exercise of the Warrants that
(a) any shares of Common Stock issuable upon such exercise will not be
delivered within the United States except in circumstances constituting an
"offshore transaction" (as defined in Regulation S) or unless such shares
of Common Stock have been registered under the Securities Act or an
exemption from such registration is available, and (b) the holder
exercising the Warrants must deliver to the Company (i) a written
certification that such holder is not a "U.S. person" (as defined in
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Regulation S) and that the Warrants are not being exercised on behalf of,
or for the account or benefit of, a "U.S. person" (as defined in
Regulation S) or (ii) a written opinion of United States counsel, in form
and substance satisfactory to the Company, to the effect that the Warrants
and the shares of Common Stock issuable upon exercise of the Warrants have
been registered under the Securities Act or are exempt from registration
under the Securities Act.
4.5 Due Execution, Delivery and Performance of the Purchase
Agreement and Other Obligations. Purchaser has full right, power,
authority and capacity to enter into this Purchase Agreement and to
consummate the transactions contemplated hereby; if Purchaser is a company
or corporation, the execution, delivery and performance of this Purchase
Agreement by Purchaser have been duly authorized by all requisite
corporate action of Purchaser. Upon the execution and delivery of this
Purchase Agreement by Purchaser, this Purchase Agreement shall constitute
the legal, valid and binding obligations of Purchaser, except as the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting
the enforcement of creditors rights generally and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
Section 5. Representations and Warranties at the Closing; Survival of
Representations, Warranties and Agreements.
5.1 Each of the parties hereto acknowledges that each of its
respective representations and warranties contained in this Purchase
Agreement is true and correct as of the date of this Purchase Agreement.
5.2 Notwithstanding any investigation made by either party to this
Purchase Agreement, all covenants, agreements, representations and
warranties made by the Company and Purchaser herein and in the Securities
delivered pursuant hereto shall survive the execution and delivery of this
Purchase Agreement and the other transaction documents, the delivery to
Purchaser of the Securities, and the receipt by the Company of payment for
the Securities.
Section 6. Certain Agreements of the Company.
The Company hereby covenants and agrees with Purchaser as follows:
6.1 The Company shall cause MIC to preserve and maintain its
corporate existence and all of its right, privileges and franchises in
every jurisdiction in which the character of the property owned or the
nature of the business transacted makes licensing of qualification
necessary relative to the conduct of MIC s business.
6.2 Except for the Prior Pledge, the Company shall not permit MIC to
encumber, mortgage, pledge, assign or grant any security in MIC s assets
to anyone other than Purchaser. The Company shall cause MIC to place
notations on MIC s books of account and financial statements to disclose
Purchaser s interest in MIC s assets.
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6.3 The Company shall cause MIC to keep and maintain MIC s assets
in good operating condition, reasonable wear and tear excepted.
6.4 The Company shall not permit MIC to make any capital
expenditures in any fiscal year in excess of $100,000 without the consent
of Purchaser.
6.5 The Company shall promptly notify Purchaser of the imposition at
any time of any lien or encumbrance upon any of the Collateral and the
Company shall defend MIC s assets against all claims and demands of all
persons at any time claiming the same or any interest therein adverse to
Purchaser.
6.6 Without the prior written consent of Purchaser, the Company
shall not sell, assign, transfer, mortgage, pledge, or otherwise dispose
of MIC s assets, other than in the ordinary course of business.
6.7 The Company shall promptly give to Purchaser notice in writing
of any proceeding before any governmental agency or court against MIC
which might, if determined adversely to MIC, materially and adversely
affect MIC s financial condition, affairs or operations.
6.8 The Company shall cause MIC to pay all taxes, assessments,
governmental charges or levies imposed upon it or upon its income or
profits, or upon any property belonging to it, prior to the date penalties
attach thereto; provided, however, that MIC shall not be required to pay
any such taxes, assessments, governmental charges or levies being
contested in good faith and by appropriate proceedings, but only so long
as such proceedings do not involve any material danger or material adverse
impact on the business of MIC.
6.9 The Company shall not permit MIC to merge or consolidate with or
into any other corporation or entity (except to the extent that MIC is the
successor, survivor or parent and, in such event, only if (i) the tangible
net worth of MIC is in the Company s reasonable judgment equal to or
greater than the tangible net worth of MIC prior to such merger or
consolidation, and (ii) MIC remains a wholly-owned subsidiary of the
Company.
6.10 The Company shall cause MIC to defend MIC s assets against the
claims and demands of all parties.
6.11 The Company shall not permit MIC to make a loan, pay a
dividend, or otherwise transfer any of MIC s assets to the Company or any
affiliate thereof.
6.12 The Company shall not permit MIC to make any loans to any
officers, directors, employees, or affiliates of the Company or MIC or any
affiliate of either thereof.
6.13 The Company shall cause MIC to provide Purchaser with unaudited
financial statements of MIC, including a balance sheet, profit and loss
statement, statement of equity, and cash flow statement, within 45 days of
the end of each fiscal quarter and 90 days after the end of the fiscal
14
year. All financial statements required hereunder shall be prepared in
accordance with GAAP, subject to year-end adjustments in the case of
quarterly statements. In addition, the Company shall cause MIC to furnish
Purchaser with a month-by-month operating budget and cash flow for each
fiscal year, including a balance sheet and income statement) no later than
30 days prior to the end of the previous fiscal year.
6.14 The Company shall cause MIC to maintain insurance on its assets
in a commercially reasonable manner in commercially reasonable amounts.
6.15 The Company shall cause MIC to remain in material compliance
with all applicable provisions of the Occupational Safety and Health Act
as at any time amended ("OSHA") and the Environmental Protection Act as at
any time amended ("EPA").
6.16 The Company shall not permit MIC materially to change the
nature of its business.
6.17 The Company shall not permit MIC to purchase or acquire
obligations or stock of, or any interest in, or make any investment in any
entity other than (i) obligations issued or guaranteed by the United
States of America or any agency thereof, (ii) commercial paper with
maturities of not more than 180 days and a published rating of not less
than A-1 or P-1 or equivalent rating, or (iii) certificates of deposit
having maturities of not more than 180 days issued by FDIC-insured
commercial banks with combined capital and surplus of at least $500
million, (iv) U.S. money market funds that invest solely in obligations
issued by the United States of America or any agency thereof, and (v)
Eurodollar time deposits with financial institutions with a published
rating of not less than A-1 or P-1 or equivalent rating.
6.18 The Company shall reimburse the Purchaser on demand for
attorneys fees, disbursements, and other out-of-pocket expenses incurred
in connection with the preparation, execution, delivery or enforcement of
the terms of any of the transaction documents.
Section 7. Events of Default.
7.1 The Company shall be deemed to be in default of this Purchase
Agreement and the Note if any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Company shall fail to pay the Principal Amount of the
Note when due in accordance with the terms thereof or hereof; or the
Company shall fail to pay any other amount or perform any other obligation
hereunder or under the Note or any other transaction document within five
Business Days after any such other amount becomes due in accordance with
the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Company or MIC or in any other transaction document or which is contained
in any certificate, document or financial or other statement furnished by
it at any time under or in connection with this Purchase Agreement or any
such other transaction document shall prove to have been incorrect in any
15
material respect on or as of the date made or deemed made; or
(c) The Company shall default in the observance or performance
of any agreement contained in Section 6 or any covenant contained in any
other transaction document; or
(d) The Company or MIC shall default in the observance or
performance of any agreement contained in this Purchase Agreement or any
other transaction document and such default shall continue unremedied for
a period of 30 days after the earlier of (i) the date upon which an
executive officer of the Company has actual knowledge thereof and (ii) the
date upon which the Agent or the Noteholder gives notice to the Company
thereof; or
(e) (I) the Company or MIC shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have any order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Company or MIC shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Company or MIC any case, proceeding or other action of a nature referred
to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Company or MIC any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) the Company or MIC shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clauses (i), (ii) , or (iii)
above; or (v) the Company or MIC shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they
become due.
7.2 Upon the occurrence of any such Event of Default, as defined in
Section 7.1, (A) if such Event of Default is specified in clause (i) or
(iv) of paragraph (e) of Section 7.1 with respect to the Company,
automatically the Note hereunder and all other amounts owing under this
Purchase Agreement, the Note or any other transaction document (including,
without limitation, all Obligations shall immediately become due and
payable, and (B) if such event is any other Event of Default, the
Noteholder may declare the Note and all other amounts owing under this
Purchase Agreement, the Note or any other transaction document, including,
without limitation, all Obligations, to be due and payable forthwith,
whereupon the same shall immediately become due and payable.
7.3 Except as expressly provided above in this Section 7, demand,
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protest and all other notices of any kind are hereby expressly waived.
Section 8. Notices
Notices and other communications provided for herein shall be in writing
and shall be delivered by hand or shall be sent by telecopy (and if sent
by telecopy, shall be confirmed by registered mail, return receipt
requested, or by overnight mail or courier, postage and delivery charges
prepaid), to the following addresses:
if to the Company: Metalclad Corporation
Attention: Xxxxx Xxxxxx, President
0 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Phone: 000 000-0000
Fax: 000 000-0000
with a copy to: Xxxxxx, Xxxxxxx & Xxxxxxx
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxx Center Irvine
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Phone: 000 000-0000
Fax: 000 000-0000 or 000 000-0000
if to the Purchaser: Ultra Pacific Holdings, S.A.
Attention: Xxxx Xxxx Xxxxxxx
c/o Xx. Xxxxxxx Xxxxxxxx
Xxxxxxxxxxxx 00
Post Xxx 00
X.X. 0000
Xxxxx, Xxxxxxxxxxxxx
Phone: 000 00 00 000-0000
Fax: 000 00 00 000-0000
with copies to: Xxxxxxxxx, Poster & Xxxxxx
Attention: Xxxxxx X. Xxxxxx, Esq.
th
Xxx Xxxxxxx Xxxxxx, 0 Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: 000 000-0000
Fax: 000 000-0000 or 000 000-0000
Xxxxx & Co. Ltd.
Attention: Mr. Xxxx Xxxxxx
00 Xx. Xxxxx x Xxxxxx
Xxxxxx XX0X 0XX Xxxxxx Xxxxxxx
Phone: 000 00 000 000-0000
Fax: 000 00 000 000 0000
Whenever any notice is required to be given hereunder, such notice shall
be deemed given and such requirement satisfied only when such notice is
delivered or, if sent by telecopy, when received. Addresses may be
changed upon notice of such change given as provided in this Section 8.
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Section 9. Amendments.
No amendment, interpretation or waiver of any of the provisions of
this Purchase Agreement shall be effective unless made in writing and
signed by the parties to this Purchase Agreement.
Section 10. Headings.
The headings of the sections and sub-sections of this Purchase
Agreement are used for convenience only and shall not affect the meaning
or interpretation of the contents of this Purchase Agreement.
Section 11. Enforcement.
The failure to enforce or to require the performance at any time of
any of the provisions of this Purchase Agreement shall in no way be
construed to be a waiver of such provisions, and shall not affect either
the validity of this Purchase Agreement or any part hereof or the right of
any party thereafter to enforce each and every position in accordance
with the terms of this Purchase Agreement.
Section 12. Governing Law.
This Agreement and the relationships of the parties in connection
with the subject matter of this Purchase Agreement shall be governed by
and determined in accordance with the substantive laws of the State of New
York, in the United States of America, applicable to agreements made and
to be performed entirely therein.
Section 13. Severability.
In case any one or more of the provisions contained in this Purchase
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein shall no in any way be affected or impaired thereby. To
the extent permitted by applicable law, the parties hereby waive any
provision of law which may render any provision hereof invalid, illegal or
unenforceable in any respect.
Section 14. Counterparts.
This Purchase Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together constitute one
and the same instrument, and all signatures need not appear on any one
counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement to be executed by their duly authorized representatives as of
the day and year first above written.
The Company: METALCLAD CORPORATION
By: /s/Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx, President
Purchaser: ULTRA PACIFIC HOLDINGS S.A.
By: /s/Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx, President
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