Exhibit 10.4
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SHARE SUBSCRIPTION AGREEMENT
BETWEEN
COPYTELE INC.
AND
MARS OVERSEAS LIMITED
Dated
2nd NOVEMBER 2007
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION...........................................1
2. SUBSCRIPTION OF SHARES...................................................3
3. CLOSING OBLIGATIONS......................................................4
4. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS.............................4
5. CONFIDENTIALITY..........................................................5
6. INDEMNIFICATION..........................................................6
7. NOTICES..................................................................6
8. GOVERNING LAW AND DISPUTE RESOLUTION.....................................7
9. MISCELLANEOUS............................................................8
SCHEDULE 1...............................................
SCHEDULE 2...............................................
This Share Subscription Agreement (this "Agreement") has been entered into on
this 2nd day of November, 2007 between:
1. COPYTELE INC., a Delaware corporation having its principal office at
000 Xxxx Xxxxxxx Xxxx, Xxxxxxxx, XX 00000 (hereinafter referred to as
the "Company");
AND
2. MARS OVERSEAS LIMITED, a company incorporated under the laws of the
Cayman Islands and having its registered office at XX Xxx 000 XX,
Xxxxxx House, South Church Street, Xxxxxx Town, Grand Cayman, Cayman
Islands,) (hereinafter referred to as "Investor" which expression
includes its successors and permitted assigns).
The Company and the Investor are hereinafter collectively referred to as
"Parties" and individually as a "Party".
WHEREAS:
A. The Company is currently engaged in the development, production and
marketing of thin, flat low-voltage phosphor display technology and the
development, production and marketing of multi-functional encryption
products;
B. The Investor is a trading Company;
C. The Investor has agreed to subscribe to and the Company has agreed to
issue and sell to the Investor the Subscription Shares (as defined
below), on the terms and conditions set out in this Agreement; and
D. The Parties now desire to enter into this Agreement to record the terms
and conditions for subscribing to the Subscription Shares.
NOW THEREFORE, in consideration of the premises and the mutual covenants set
forth herein, the Parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS AND INTERPRETATION
1.1. Definitions
In this Agreement the following words and expressions set out below
shall have the following meanings:
1.1.1. "Affiliate" of a Party means (i) in the case of any Party other
than a natural person, any other Person that, either directly or
indirectly through one or more intermediate Persons, controls, is
controlled by or is under common control with such Party; (ii) in
the case of any Party that is a natural person, any other Person
who is a relative of such Party. For purposes of this definition,
"control" means possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of
any entity, whether through the ownership of voting securities,
by contract or otherwise;
1.1.2. "Applicable Law" shall mean all applicable statutes,
enactments, acts of legislature or Parliament, laws, ordinances,
rules, by-laws, regulations, notifications, guidelines, policies,
directions, directives and orders of any Government Authority,
tribunal, board, court or recognised stock exchange;
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1.1.3. "Approvals" shall mean any permission, approval, consent,
license, order, decree, authorization, authentication of, or
registration, qualification, designation, declaration or filing
with or notification, exemption or ruling to or from any
Governmental Authority required under any statute or regulation
for the completion of the transactions contemplated under this
Agreement;
1.1.4. "Board" shall mean the Board of Directors of the Company;
1.1.5. "Business Day" shall mean a day other than Saturday and Sunday
on which banks are open for normal banking business in London;
1.1.6. "Closing" shall have the meaning as ascribed to it in Clause
3.1;
1.1.7. "Closing Documents" shall have the meaning as ascribed to them
in Clause 3.3;
1.1.8. "Designated Account" shall mean the account of the Company
designated in accordance with Section 3.1.2;
1.1.9. "Effective Date" shall mean the date of execution of this
Agreement by the Parties;
1.1.10. "Encumbrance" shall mean (i) any mortgage, charge (whether
fixed or floating), pledge, lien, hypothecation, assignment, deed
of trust, title retention, security interest or other encumbrance
of any kind securing, or conferring any priority of payment in
respect of, any obligation of any Person, including any right
granted by a transaction which, in legal terms, is not the
granting of security but which has an economic or financial
effect similar to the granting of security under Applicable Law,
(ii) any proxy, power of attorney, voting trust agreement,
interest, option, right of first offer, refusal or transfer
restriction in favour of any Person, and (iii) any adverse claim
as to title, possession or use;
1.1.11. "Governmental Authority" shall mean any governmental or
statutory authority, government department, agency, commission,
board, tribunal or court or other entity authorized to make laws,
rules or regulations or pass directions having or purporting to
have jurisdiction pursuant to the laws of any country as maybe
applicable;
1.1.12. "Loan Agreement" means those certain Loan and Pledge Agreement
dated the date hereof between Investor and CopyTele International
Ltd.
1.1.13. "Person" shall mean any natural person, firm, company,
Governmental Authority, joint venture, association, partnership
or other entity (whether or not having separate legal
personality);
1.1.14. "Subscription Amount" shall have the meaning ascribed to it in
Clause 2.2;
1.1.15. "Subscription Shares" shall mean 20,000,000 shares of
Company's Common Stock to be issued to the Investor by the
Company comprising 15.76% of the issued and outstanding shares of
common stock of the Company after issuance of the Subscription
Shares, in accordance with the terms of this Agreement;
1.1.16. "Transaction" shall mean the issue and sale of the
Subscription Shares to the Investor;
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1.1.17. "Transfer" shall mean and include any direct or indirect sale,
assignment, lease, transfer, pledge, gift, Encumbrance or other
disposition of or the subjecting to an Encumbrance of, any
property, asset, right or privilege or any interest therein or
thereto;
1.2. Interpretation
1.2.1. Any reference herein to any Clause or Schedule is to such
Clause or Schedule to this Agreement unless the context otherwise
requires. The Schedules to this Agreement shall be deemed to form
part of this Agreement.
1.2.2. References to a Party shall, where the context permits, include
such Party's respective successors, legal representatives and
permitted assigns and in the case of individuals will include
their legal representatives, heirs and permitted assigns.
1.2.3. The headings or interpretation are inserted for convenience
only and shall not affect the construction of this Agreement.
1.2.4. Unless the context otherwise requires, words importing the
singular include the plural and vice versa, and pronouns
importing a gender include each of the masculine, feminine and
neuter genders.
1.2.5. The terms "hereof", "herein", "hereby", "hereto" and derivative
or similar words refer to this entire Agreement or specified
Clauses of this Agreement, as the case may be.
1.2.6. Reference to statutory provisions shall be construed as meaning
and including references also to any amendment or re-enactment
(whether before or after the date of this Agreement) for the time
being in force and to all statutory instruments or orders made
pursuant to such statutory provisions.
1.2.7. Reference to the word "include" shall be construed without
limitation.
1.2.8. Time is of the essence in the performance of the Parties'
respective obligations. If any time period specified herein is
extended by mutual agreement between the Parties, such extended
time shall also be of the essence.
1.2.9. The words "directly or indirectly" mean directly or indirectly
through one or more intermediary Persons or through contractual
or other legal arrangements, and "direct or indirect" shall have
the correlative meanings.
1.2.10. References to the knowledge, information, belief or awareness
of any Person shall be deemed to include the knowledge,
information, belief or awareness of such Person after examining
all information and making all due diligence inquiries and
investigations which would be expected or required from a person
of ordinary prudence.
2. SUBSCRIPTION OF SHARES
2.1. On the basis of the representations, warranties, covenants, and
agreements contained in this Agreement and subject to the terms and
conditions of this Agreement, the Investor hereby agrees to subscribe
to and pay for, and the Company hereby agrees to issue and sell to the
Investor, on the Closing Date, the Subscription Shares at a
subscription price of US$ 0.81 per Subscription Share.
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2.2. The aggregate subscription amount payable by the Investor to the
Company on the Closing Date on the issue of the Subscription Shares
shall be US$ 16,200,000 (Sixteen Million Two Hundred Thousand US
Dollars) ("Subscription Amount").
2.3. As of September 20, 2007, 106,911,315 shares of the common stock of the
Company were issued and outstanding.
3. CLOSING OBLIGATIONS
3.1. The closing of the subscription of the Subscription Shares ("Closing")
shall take place, on November 6, 2007 (the "Closing Date") subject to
the fulfillment of the following conditions and subject to the
Warranties set forth on the Schedules being true, correct and complete
as of the Closing Date:
3.1.1. The Company shall deliver to the Investor a copy of the
instructions provided by the Company to the Company's transfer
agent instructing such transfer agent to issue the Subscription
Shares.
3.1.2. The Investor shall deliver to the Company a copy of wire
instructions for the Transfer of Subscription Amount to the
Designated Account, the details whereof have been reproduced in
Schedule 3 attached herewith.
3.1.3. The Company shall deliver to the Investor all documents or
instruments as may be reasonably requested by, and in form and
substance reasonably satisfactory to, the Investor to record and
confirm the issuance of the Subscription Shares such that the
Transaction is deemed to have been effectuated on the Closing
Date.
3.1.4. The Parties shall have obtained all the necessary corporate,
shareholders, and Governmental Approvals required for the
consummation of the Transaction.
3.1.5. The Company shall deliver to the Investor a copy of the
resolutions of the Board dated September 14, 2007 authorizing the
Company to issue the Subscription Shares and an officer of the
Company to enter into this Agreement.
3.2. Within 10 (ten) Business Days after the Closing Date, the Company shall
deliver to the Investor a copy of records of the Company maintained by
the Company and Company's transfer agent stating the issuance of the
Subscription Shares together with the share certificate(s) representing
the Subscription Shares. Such delivery of copies of records of the
Company together with the share certificate(s) representing the
Subscription Shares shall be considered to be a formality for
completing the Transaction.
3.3. The documents referred to in Clauses 3.1.1, 3.1.3, and 3.1.4 shall be
collectively referred to as "Closing Documents".
4. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
4.1. The Company warrants to the Investor the representations and warranties
as set out in Schedule 1 ("Company Warranties").
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4.2. The Investor warrants to the Company the representations and warranties
as set out in Schedule 2 ("Investors' Warranties").
4.3. The Company Warranties and Investor Warranties are collectively
referred to as "Warranties".
4.4. Each of the Warranties shall be separate and independent and save as
expressly provided shall not be limited by reference to any other
paragraph or anything in this Agreement or the Schedules.
4.5. The Investor agrees as follows:
4.5.1. The Investor understands that the Subscription Shares are not
registered under the U.S. Securities Act of 1933, as amended (the
"Act"), or any foreign or state securities laws. The Investor
agrees that the Subscription Shares will not be sold, offered for
sale, transferred, pledged, hypothecated, or otherwise disposed
of (collectively, "Disposed Of") except in compliance with the
Act and applicable foreign and state securities laws. Purchasers
of Subscription Shares can only Dispose Of the Subscription
Shares pursuant to registration under the Act or pursuant to an
exemption therefrom.
4.5.2. The Investor agrees that the Subscription Shares will not be
Disposed Of (other than in an open market broker's or
underwritten transaction, whether pursuant to an offering
registered under the Act or pursuant to Rule 144) unless the
transferee agrees to abide by the provisions of this Section 4.5.
4.5.3. To enable the Company to enforce the transfer restrictions
contained in Sections 4.5.1 and 4.5.2, the Investor hereby
consents to the placing of legends upon, and stop-transfer orders
with respect to the and with the transfer agent of, the
Subscription Shares.
5. CONFIDENTIALITY
5.1. Each Party and its Affiliates shall keep all information relating to
the other Party and its Affiliates relating to the Transaction
(collectively referred to as the "Information") confidential. Neither
Party shall issue any public release or public announcement or
otherwise make any disclosure concerning this Agreement and/or the
Transaction, without the prior approval of the other Party, provided
however, that nothing in this Agreement shall restrict either Party
from disclosing any information as may be required under Applicable Law
subject to providing a prior written notice to the other Party.
5.2. Nothing in this Clause 5 shall restrict either Party or its Affiliates
from disclosing Information:
5.2.1. to the extent that such Information is in the public domain
other than by breach of this Agreement;
5.2.2. to the extent that such Information is required to be disclosed
by any Applicable Law or required to be disclosed to any
Governmental Authority to whose jurisdiction such Party and/or
its Affiliate(s) is subject or with whose instructions it is
customary to comply;
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5.2.3. to its or its Affiliates' employees, officer, directors or
professional advisers, provided that such Party shall require
that such persons treat such Information as confidential;
5.2.4. to the extent that any of such Information is/are later
acquired by such Party from a source not obligated to the other
Party hereto, or to the other Party's Affiliates, to keep such
Information confidential;
5.2.5. to the extent that any of such Information was previously known
or already in the lawful possession of such Party and/or its
Affiliates, prior to disclosure by the other Party hereto; and
5.2.6. to the extent that any information, materially similar to the
Information, shall have been independently developed by such
Party and/or its Affiliates without reference to any Information
furnished by the other Party hereto.
6. INDEMNIFICATION
6.1. Each Party (the "Indemnifying Party") hereby agrees to indemnify,
defend and hold harmless the other Party, its Affiliates, and their
respective directors, officers, representatives, employees and agents
(collectively, the "Indemnified Persons") from and against any and all
claims asserted against or incurred by the Indemnified Persons, as a
result of, arising from, or in connection with or relating to any
matter inconsistent with, or any breach or inaccuracy of any of the
Indemnifying Party's Warranties, or any covenant or agreement made by
the Indemnifying Party or failure by the Indemnifying Party to perform
(whether in whole or part) any obligation required to be performed by
it, pursuant to this Agreement.
6.2. The knowledge of the Indemnified Persons or the conduct of any
investigation by the Indemnified Persons shall not in any manner affect
or limit the right to indemnification, payment of claims or other
remedies with respect to the accuracy, or inaccuracy of or compliance
or non-compliance with, any representation, warranty, covenant,
obligation or arrangement set forth hereinabove and the Indemnifying
Party shall not invoke the Indemnified Persons' knowledge (actual,
constructive or imputed) of a fact or circumstance that might make a
statement untrue, inaccurate, incomplete or misleading as a defense to
a claim for breach of the representations and warranties or covenant or
obligation of the Indemnifying Party.
6.3. The indemnification rights of the Indemnified Persons under this
Agreement are independent of, and in addition to, such other rights and
remedies as the Parties may have at law or in equity or otherwise,
including the right to seek specific performance, rescission or other
injunctive relief, none of which rights or remedies shall be affected
or diminished thereby.
7. NOTICES
7.1. Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant
Party at its address or fax number set out below (or such other
address or fax number as the addressee has by seven (7) Business Days'
prior written notice specified to the other Parties). Any notice,
demand or other communication given or made by letter between
countries shall be delivered by registered airmail or international
courier service. Any notice, demand or other communication so
addressed to the relevant Party shall be deemed to have been delivered
(a) if delivered in person or by messenger, when proof of delivery is
obtained by the delivering Party, (b) if sent by post within the same
country, on the fifth day following posting, and if sent by post to
another country, on the tenth day following posting, and (c) if given
or made by fax, upon dispatch and the receipt of a transmission report
confirming dispatch.
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7.2. The initial address and facsimile for the Parties for the purposes of
the Agreement are:
If to the Company:
Name : CopyTele, Inc.
Address : 000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention : Xx. Xxxxx X. Xxxxxx
Fax : 000-000-0000
Telephone : 631-549-5900
If to the Investor:
Name : MARS OVERSEAS LIMITED
Address : XX Xxx 000 XX, Xxxxxx House, South Church
Street, Xxxxxx Town, Grand Cayman,
Cayman Islands
Attention : Xx. Xxxxxxxxx X. Xxxxx
Fax : x00 00 0000 0000
Telephone : + 91 22 6611 3500
8. GOVERNING LAW AND DISPUTE RESOLUTION
8.1. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of England, except that matters relating to the issuance of
the Subscription Shares shall be governed by and construed in
accordance with the laws of the State of Delaware.
8.2. Dispute Resolution
8.2.1. In the event any Party is in breach of any of the terms of this
Agreement, another Party may serve written notice to require the
Party in breach to cure such breach within thirty (30) days of
the receipt of such written notice thereof.
8.2.2. In the case of any dispute or claim arising out of or in
connection with or relating to this Agreement, or the breach
(where such breach has not been cured by the Party in breach
within thirty (30) days of a written notice thereof), termination
or invalidity hereof, the Parties shall attempt to first resolve
such dispute or claim through discussions between senior
executives of the Investor.
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8.2.3. If the dispute is not resolved through such discussions within
thirty (30) days after one Party has served a written notice on
the other Party requesting the commencement of discussions,
dispute or claim shall be finally settled by arbitration under
the United Nations Commission on International Trade Law
Arbitration Rules (the "UNCITRAL Rules") as are in force at the
time of any such arbitration. For the purpose of such
arbitration, there shall be one arbitrator jointly appointed by
the Parties, failing which there shall be three (3) arbitrators
in accordance with the UNCITRAL Rules (the "Arbitration Board").
The Company shall appoint one arbitrator, and the Investor shall
appoint one arbitrator. The two arbitrators shall then jointly
appoint a third arbitrator, who shall serve as Chairman of the
Arbitration Board.
8.2.4. All arbitration proceedings shall be conducted in the English
language and the place of arbitration shall be in London,
England, United Kingdom.
8.2.5. Each Party shall co-operate in good faith to expedite (to the
maximum extent practicable) the conduct of any arbitral
proceedings commenced under this Agreement.
8.2.6. The costs and expenses of the arbitration, including, the fees
of the third arbitrator on the Arbitration Board, shall be borne
equally by each Party to the dispute or claim and each Party
shall pay its own fees, disbursements and other charges of its
counsel and the arbitrators nominated by it, except as may be
otherwise determined by the Arbitration Board. The Arbitration
Board would have the power to award interest on any sum awarded
pursuant to the arbitration proceedings and such sum would carry
interest, if awarded, until the actual payment of such amounts.
8.2.7. Any award made by the Arbitration Board shall be final and
binding on each of the Parties that were parties to the dispute.
9. MISCELLANEOUS
9.1. No Partnership
The Parties expressly do not intend hereby to form a partnership,
either general or limited, under any jurisdiction's partnership law.
The Parties do not intend to be partners to one another or partners as
to any third party, or create any fiduciary relationship among
themselves, solely by virtue of their status as shareholders of the
Company. To the extent that any Party, by word or action, represents to
another Person that any other Party is a partner or that the Company is
a partnership, the Party making such representation shall be liable to
any other Parties that incur any losses, claims, damages, liabilities,
judgments, fines, obligations, expenses and liabilities of any kind or
nature whatsoever (including to any investigative, legal or other
expenses incurred in connection with, and any amount paid in settlement
of, any pending or threatened legal action or proceeding) arising out
of or relating to such representation.
9.2. No Agency
No Party, acting solely in its capacity as a shareholder of the
Company, shall act as an agent of the other Parties or have any
authority to act for or to bind the other Parties.
9.3. Amendment
This Agreement may not be amended, modified or supplemented except by a
written instrument executed by each of the Parties.
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9.4. Waiver
No waiver of any provision of this Agreement shall be effective unless
set forth in a written instrument signed by the Party waiving such
provision. No failure or delay by a Party in exercising any right,
power or remedy under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of the same preclude any
further exercise thereof or the exercise of any other right, power or
remedy. Without limiting the foregoing, no waiver by a Party of any
breach by any other Party of any provision hereof shall be deemed to be
a waiver of any prior, concurrent or subsequent breach of that or any
other provision hereof.
9.5. Entire Agreement
This Agreement constitutes the whole agreement between the Parties
relating to the subject matter hereof and supersedes any prior
agreements or understandings relating to such subject matter.
9.6. Severability
Each and every obligation under this Agreement shall be treated as a
separate obligation and shall be severally enforceable as such and in
the event of any obligation or obligations being or becoming
unenforceable in whole or in part. To the extent that any provision or
provisions of this Agreement are unenforceable they shall be deemed to
be deleted from this Agreement, and any such deletion shall not affect
the enforceability of the remainder of this Agreement not so deleted
provided the fundamental terms of the Agreement are not altered.
9.7. Counterparts
This Agreement may be executed in one or more counterparts including
counterparts transmitted by facsimile, each of which shall be deemed to
be an original, but all of which signed and taken together, shall
constitute one document.
9.8. Specific Performance
Each Party shall be entitled to an injunction, restraining order, right
for recovery, suit for specific performance or such other equitable
relief as a court of competent jurisdiction may deem necessary or
appropriate to restrain the other Party from committing any violation
or to enforce the performance of the covenants, representations and
obligations contained in this Agreement. These injunctive remedies are
cumulative and are in addition to any other rights and remedies the
Parties may have at law or in equity.
9.9. Independent Rights
Each of the rights of the Parties are independent, cumulative and
without prejudice to all other rights available to them, and the
exercise or non-exercise of any such rights shall not prejudice or
constitute a waiver of any other right of the Party, whether under this
Agreement or otherwise.
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9.10. No Assignment
Subject to the provisions of this Agreement, this Agreement is personal
to the Company and shall not be capable of assignment. Notwithstanding
the aforesaid, the Investor may together with the Transfer of any of
the Subscription Shares assign any of its rights under this Agreement
to any Person who is an Affiliate of the Investor, provided such
Transfer of such Subscription Shares complies with the Loan Agreements
and the Escrow Agreement (as defined in the Loan Agreements).
9.11. Costs and Expenses
Each Party agrees that it shall bear by itself all costs and expenses
incurred by it in connection with any discussions, negotiations and
investigations undertaken in connection with the subject matter hereof,
including costs and expenses associated with retention of financial,
legal, tax and other professional advisers.
9.12. No Third Party Beneficiaries
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement
(except as provided in Clause 6) under the Contracts (Rights of Third
Parties) Xxx 0000 or otherwise.
9.13. Counterparts
This Agreement may be executed in one or more counterparts, including
counterparts transmitted by facsimile, each of which shall be deemed an
original, but all of which signed and taken together shall constitute 1
(one) document.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement on the day
and year first above written.
Signed and delivered for and on behalf of COPYTELE, INC.
By : /s/ Xxxxx X. Xxxxxx
Name : Xxxxx X. Xxxxxx
Title : Chairman and Chief Executive Officer
Signed and delivered for and on behalf of
MARS OVERSEAS LIMITED
By : /s/Xxxxxxxxx X. Xxxxx
Name : Xxxxxxxxx X. Xxxxx
Title : Director
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