UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) FEBRUARY 7, 2000
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TAM RESTAURANTS, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 0-23757 13-3905598
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1163 FOREST AVENUE, STATEN ISLAND, NEW YORK 10310
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (718) 720-5959
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N/A
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(Former name or former address, if changed since last report.)
Item 5. Other Events.
On February 7, 2000, and February 9, 2000, the Registrant issued and
sold an aggregate of 1,000,000 shares of its common stock (the "Common Stock")
to three accredited investors (the "Purchasers") for a total purchase price of
$2,000,000 under a Common Stock Purchase Agreement dated as of February 1, 2000
(the "Purchase Agreement").
The shares of Common Stock were issued pursuant to the exemption from
the registration requirements of the Securities Act provided by Section 4(2) of
the Securities Act and Rule 506 of Regulation D promulgated by the SEC under
that Section. The Company has agreed to file a registration statement for the
resale of the shares of the Common Stock.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4.1 Form of Common Stock Purchase Agreement dated as of
February 1, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TAM RESTAURANTS, INC.
Dated: February 15, 2000 By: S/ FRANK CRETELLA
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Frank Cretella
President and
Chief Executive Officer
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================================================================================
COMMON STOCK PURCHASE AGREEMENT
BETWEEN
TAM RESTAURANTS, INC.
AND
LUKE JOHNSON
DATED AS OF FEBRUARY 1, 2000
================================================================================
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COMMON STOCK PURCHASE AGREEMENT
-------------------------------
THIS COMMON STOCK PURCHASE AGREEMENT, dated as of February 1, 2000,
between Luke Johnson (referred to as the "INVESTOR"), and Tam Restaurants, Inc.,
a corporation organized and existing under the laws of the State of Delaware
(the "COMPANY", Nasdaq Small Cap Market Symbol "TAMR").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
and the Investor shall purchase an aggregate of 366,960 shares of Common Stock
as set forth in Section 2.3 below; and
WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) ("SECTION 4(2)") and Regulation D ("REGULATION D") of
the United States Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the "SECURITIES ACT"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Common Stock to be made
hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
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CERTAIN DEFINITIONS
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Section 1.1 "BUSINESS DAY" means any day except Saturday, Sunday and
any day which shall be a Federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
government actions to close.
Section 1.2 "CAPITAL SHARES" shall mean the Common Stock and any
shares of any other class of Common Stock whether now or hereafter authorized,
having the right to participate in the distribution of earnings and assets of
the Company.
Section 1.3 "CAPITAL SHARES EQUIVALENTS" shall mean any securities,
rights, or obligations that are convertible into or exchangeable for, or giving
any right to, subscribe for any Capital Shares of the Company or any warrants,
options or other rights to subscribe for or purchase Capital Shares or any such
convertible or exchangeable securities.
Section 1.4 "CLOSING" shall mean the closing of the purchase and sale
of the Securities pursuant to Article II below.
Section 1.5 "CLOSING DATE" shall mean the date the closing of the
purchase and sale of the Securities occurs pursuant to Article II below.
Section 1.6 "COMMON STOCK" shall mean the Company's common stock,
$.0001 par value per share.
Section 1.7 "DAMAGES" shall mean any loss, claim, damage, liability,
costs and expenses which shall include, but not be limited to, reasonable
attorney's fees, disbursements, costs and expenses of expert witnesses and
investigation.
Section 1.8 "ESCROW AGENT" shall mean the law firm of The Goldstein
Law Group, P.C., pursuant to the terms of the Escrow Agreement.
Section 1.9 "ESCROW AGREEMENT" shall mean the agreement regarding the
escrow of the Purchase Price and Securities entered into between the Company,
the Escrow Agent and the Investor on the Subscription Date annexed hereto as
Exhibit A.
Section 1.10 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.11 "ISSUANCE PRICE" shall mean $2.00.
Section 1.12 "LEGEND" shall have the meaning set forth in Article VII
below.
Section 1.13 "MATERIAL ADVERSE EFFECT" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise in any material respect interfere with the
ability of the Company to enter into and perform any of its obligations under
this Purchase Agreement (or any Exhibit annexed hereto) in any material respect.
Section 1.14 "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.15 "OUTSTANDING" when used with reference to shares of
Common Stock, or Capital Shares (collectively the "SHARES"), shall mean, at any
date as of which the number of such Shares is to be determined, all issued and
outstanding Shares, and shall include all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in such
Shares; PROVIDED, HOWEVER, that Outstanding shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.16 "PERSON" shall mean an individual, a corporation, a
partnership, an association, a limited liability company, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Section 1.17 "PRINCIPAL MARKET" shall mean the OTC Bulletin Board,
Nasdaq National Market, the Nasdaq Small Cap Market, the American Stock
Exchange, or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
Section 1.18 "PURCHASE AGREEMENT" shall refer to this Common Stock
Purchase Agreement and include all Exhibits annexed hereto.
Section 1.19 "PURCHASE PRICE" shall mean $2.00.
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Section 1.20 "REGULATION D" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.21 "SEC" shall mean the Securities and Exchange Commission.
Section 1.22 "SECTION 4(2)" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.23 "SECURITIES" shall mean 366,960 shares of Common Stock
issuable upon the Closing Date as contained in Section 2.3 below.
Section 1.24 "SECURITIES ACT" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.25 "SEC DOCUMENTS" shall mean the Company's latest Form
10-KSB and Form 10-QSB's (and all amendments thereto), all Form 8-Ks, and the
Proxy Statement for its latest fiscal year as of the time in question.
Section 1.26 "SUBSCRIPTION DATE" shall mean the date on which this
Purchase Agreement is executed and delivered by the parties hereto and all of
the conditions relating to the issuance of the Securities shall have been
fulfilled.
Section 1.27 "TRADING DAY" shall mean any day during which the then
Principal Market shall be open for business.
ARTICLE II
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PURCHASE AND SALE OF THE SECURITIES
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Section 2.1 TRANSACTION. The Company will sell, and the Investor will
buy, on the Closing Dates, the Securities in exchange for the Purchase Price,
provided each of the conditions set forth in Section 2.3 below have been
satisfied or waived in writing.
Section 2.2 FORM OF PAYMENT. The Investor shall pay the Purchase
Price by delivering good funds in United States Dollars by wire transfer to the
Escrow Agent, against delivery of the original shares of Common Stock as per the
terms of the Escrow Agreement.
Section 2.3 CLOSING. On the Closing Date, the Company will sell and
the Investor will buy the Securities, in reliance upon the representations and
warranties contained in this Purchase Agreement, and upon the terms and
satisfaction of each of the conditions set forth below.
The conditions precedent to the sale of the Securities are as
follows:
(A) Acceptance by the Investor of this Purchase Agreement and
due execution by all parties of this Purchase Agreement;
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(B) Delivery into escrow by the Company of the original
Securities as more fully set forth in the Escrow Agreement;
(C) All representations and warranties of the Company
contained herein shall remain true and correct in all material
respects as of the Closing Date;
(D) The Investor shall have received an opinion of counsel
substantially in the form of Exhibit B annexed hereto; and
(E) At the Closing Date, the sale and issuance of the
Securities shall be legally permitted by all laws and regulations to
which the Company and the Investor are subject.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
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The Investor represents and warrants to the Company that:
Section 3.1 INTENT. Without limiting its ability to resell the
Securities pursuant to an effective registration statement or an exemption from
registration, the Investor is entering into this Purchase Agreement for its own
account and has no present arrangement (whether or not legally binding) at any
time to sell the Securities to or through any person or entity; provided,
however, that by making the representations herein, the Investor reserves the
right to dispose of the Securities at any time in accordance with federal and
state securities laws applicable to such disposition. Without limiting its
ability to resell the Securities, the Investor represents that the Securities
are being purchased for the Investor's own account, for investment purposes only
and not for distribution or resale to others. The Investor agrees that it will
not sell the Securities unless they are registered under the Securities Act or
unless an exemption from such registration is available.
Section 3.2 ACCREDITED INVESTOR/INVESTMENT EXPERIENCE. The Investor
is an accredited investor (as defined in Rule 501 of Regulation D), and has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Company. As of the Closing Date,
the Investor (i) has adequate means of providing for its current needs and
possible personal contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risk of an investment
in the Securities for an indefinite period, and (iv) can afford the complete
loss of its investment. The Investor recognizes the highly speculative nature of
this investment. The Investor acknowledges that it has carefully read the SEC
Documents and the terms and conditions herein and fully understands the contents
thereof.
Section 3.3 AUTHORITY. This Purchase Agreement has been duly
authorized and validly executed and delivered by the Investor, and the board of
directors of the Investor, if applicable . The decision to invest and the
execution and delivery of this Purchase Agreement by the Investor, the
performance by the Investor of its obligations hereunder and the consummation by
the Investor of the transactions contemplated hereby have been duly authorized
and requires no other proceedings on the part of the Investor. This Purchase
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Agreement has been duly executed and delivered by the Investor and, assuming the
due execution and delivery hereof and acceptance thereof by the Company, will
constitute the legal, valid and binding obligations of the Investor, enforceable
against the Investor in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
Section 3.4 NOT AN AFFILIATE. Until the closing, the Investor is
neither an officer, director or "affiliate" (as that term is defined in Rule 405
of the Securities Act) of the Company.
Section 3.5 DISCLOSURE; ACCESS TO INFORMATION. The Investor has
received all documents, records, books and other information pertaining to
Investor's investment in the Company that has been requested by the Investor.
The Investor has had the opportunity to ask questions of, and receive answers
from, the Company, and has not relied on any material or representations of the
Company except as contained in this Purchase Agreement.
Section 3.6 MANNER OF SALE. At no time was the Investor presented
with or solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising in connection with the offer and sale of the Securities.
Section 3.7 NO LEGAL, TAX OR INVESTMENT ADVICE. The Investor
understands that nothing in this Purchase Agreement or any other materials
presented to the Investor in connection with the purchase and sale of the
Securities constitutes legal, tax or investment advice. The Investor has relied
on, and has consulted with, such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities.
Section 3.8 NO ADVERTISEMENTS. The Investor is not purchasing the
Securities as a result of, or subsequent to, any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants that:
Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted except as described in the SEC
Documents. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those (individually or in the aggregate) in which the failure so to
qualify would not reasonably be expected to have a Material Adverse Effect. The
Company is not in violation of any material term of its Certificate of
Incorporation (as defined below) or Bylaws (as defined below).
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Section 4.2 AUTHORITY. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Purchase Agreement, and all Exhibits annexed hereto, and to issue the
Securities, (ii) the execution, issuance and delivery of this Purchase Agreement
by the Company, the consummation by it of the transactions contemplated hereby
and thereby, and the performance of its obligations hereunder have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company, its shareholders, or its Board of Directors is
necessary, and (iii) this Purchase Agreement has been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Upon their issuance and delivery pursuant to this Purchase Agreement, the
Securities will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances other than those created hereunder or by the
actions of the Investor; PROVIDED, HOWEVER, that the Securities are subject to
restrictions on transfer under state and/or federal securities laws.
Section 4.3 CAPITALIZATION. As of December 31, 1999, the authorized
capital stock of the Company consists of 19,000,000 shares of Common Stock,
$.0001 par value, of which 3,503,000 shares are outstanding, and 1,000,000
shares of preferred stock, $.0001 par value, of which 144,081 shares are
outstanding, and the options set forth on Schedule 4.3 annexed hereto. All of
the outstanding shares of the Company's capital stock have been duly and validly
authorized and issued and are fully paid and nonassessable. No shares of Common
Stock or preferred stock of the Company are entitled to preemptive or similar
rights. Except as disclosed in the SEC Documents and as contemplated by this
Agreement, to the knowledge of the Company, no Person or group of Persons
beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) or has the right to acquire by agreement with or by obligation
binding upon the Company beneficial ownership of in excess of five percent of
the Common Stock.
Section 4.4 COMMON STOCK. The Company has registered its Common Stock
pursuant to the Exchange Act, and such Common Stock is currently listed or
quoted, and trades, on the Nasdaq Small Cap Market.
Section 4.5 SEC DOCUMENTS. The Company has delivered or made
available to the Investor true and complete copies of the SEC Documents filed by
the Company with the SEC during the twelve months immediately preceding the date
hereof. The Company has not provided to the Investor any information that,
according to applicable law, rule or regulation, should have been disclosed
publicly prior to the date hereof by the Company, but which has not been so
disclosed. The SEC Documents comply in all material respects with the
requirements of the Securities Act and/or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder and none of the
SEC Documents contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
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applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements).
Section 4.6 VALID ISSUANCES. Neither the issuance of the Securities,
nor the Company's performance of its obligations under this Purchase Agreement
will (i) result in the creation or imposition by the Company of any liens,
charges, claims or other encumbrances upon the Securities, or any of the assets
of the Company, or (ii) entitle the holders of Outstanding Capital Shares to
preemptive or other rights to subscribe to or acquire any Capital Shares or
other securities of the Company.
Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates, nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising in connection with the offer and sale of the Securities,
or (ii) has made any offers or sales of any security or solicited any offers to
buy any security under any circumstances that would require registration of the
Securities under the Securities Act, except as contemplated by this Purchase
Agreement.
Section 4.8 NO CONFLICTS. The execution, delivery and performance of
this Purchase Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby, including without limitation
the issuance of the Securities, do not and will not (i) result in a violation of
the Company's Certificate of Incorporation or ByLaws or (ii) conflict with, or
constitute a material default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, patent, patent
license, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected, nor is the Company otherwise in violation of, in
conflict with, or in default under, any of the foregoing except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The business of the Company is not being conducted in violation
of any law, ordinance or regulation of any governmental entity, except for
possible violations that either singly or in the aggregate would not reasonably
be expected to have a Material Adverse Effect. Except for the filing of a Form D
within 15 days after the Closing Date (which the Company agrees it will file),
and such other form(s) required by "blue sky" laws, the Company is not required
under federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Purchase Agreement or issue and sell the Securities, in
accordance with the terms hereof; provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investor
herein.
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Section 4.9 NO UNDISCLOSED LIABILITIES. The Company has no
liabilities or obligations, known or unknown, absolute or otherwise, which are
not disclosed in the SEC Documents or otherwise publicly announced, or as
incurred in the ordinary course of the Company's businesses since January 1,
1999, or which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.
Section 4.10 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since January 1,
1999, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company, but which
has not been so publicly announced or disclosed in the SEC Documents.
Section 4.11 LITIGATION AND OTHER PROCEEDINGS. Except as may be set
forth in the SEC Documents, there are no lawsuits or proceedings pending or to
the knowledge of the Company threatened, against the Company, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which would reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, so far as is known by the
Company, requested of any court, arbitrator or governmental agency which would
be reasonably expected to result in a Material Adverse Effect.
Section 4.12 ACCURACY OF REPORTS AND INFORMATION. The Company is in
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the Exchange Act. The Company has
complied in all material respects and to the extent applicable with all
reporting obligations, under either Section 13(a) or 15(d) of the Exchange Act
for a period of at least twelve (12) months immediately preceding the
Subscription Date.
Section 4.13 EMPLOYEE RELATIONS. The Company is not involved in any
labor dispute, nor, to the knowledge of the Company, is any such dispute
threatened which could reasonably be expected to have a Material Adverse Effect.
The Company believes that its relations with its employees are good.
Section 4.14 INSURANCE. The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company is engaged. The Company has no reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires, or obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
Section 4.15 PATENTS AND TRADEMARKS. The Company has, or has rights
to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses, trade secrets and other
intellectual property rights which are necessary for use in connection with its
business or which the failure to so have would reasonably be expected to have a
Material Adverse Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). To
the best knowledge of the Company, none of the Intellectual Property Rights
infringe on any rights of any other Person, and the Company either owns or has
duly licensed or otherwise acquired all necessary rights with respect to the
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Intellectual Property Rights. The Company has not received any notice from any
third party of any claim of infringement by the Company of any of the
Intellectual Property Rights, and has no reason to believe there is any basis
for any such claim. To the best knowledge of the Company, there is no existing
infringement by another Person on any of the Intellectual Property Rights.
Section 4.16 USE OF PROCEEDS. Net proceeds are to be used by the
Company for general working capital and not for the repayment of any judgment.
Section 4.17 SUBSIDIARIES. Except as disclosed in the SEC Documents,
the Company does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, association or other business
entity.
Section 4.18 NO PRIVATE PLACEMENTS. Except as disclosed in the SEC
Documents, the Company has not conducted a private placement of its Common Stock
or of any debt or equity instrument convertible into Common Stock within one
year prior to the Closing Date. Except as disclosed in the SEC Documents, there
are no outstanding securities issued by the Company that are directly or
indirectly convertible into, exercisable into, or exchangeable for, shares of
Common Stock, that have anti-dilution or similar rights that would be affected
by the issuance of the Securities.
Section 4.19 PERMITS; COMPLIANCE. The Company and each of its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"), and there is no action pending or, to the knowledge of the Company,
threatened regarding the suspension or cancellation of any of the Company
Permits except for such Company Permits, the failure of which to possess, or the
cancellation, or suspension of which, would not, individually or in the
aggregate, have a Material Adverse Effect. To the Company's knowledge, neither
the Company nor any of its subsidiaries is in material conflict with, or in
material default or material violation of, any of the Company Permits. Since
January 1, 1999 neither the Company nor any of its subsidiaries has received any
notification with respect to possible material conflicts, material defaults or
material violations of applicable laws.
Section 4.20 TAXES. All federal, state, city and other tax returns,
reports and declarations required to be filed by or on behalf of the Company
have been filed and such returns are complete and accurate and disclose all
taxes (whether based upon income, operations, purchases, sales, payroll,
licenses, compensation, business, capital, properties or assets or otherwise)
required to be paid in the periods covered thereby.
Section 4.21 NO DEFAULT. The Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it is or its property
is bound, and neither the execution, nor the delivery by the Company, nor the
performance by the Company of its obligations under this Purchase Agreement will
conflict with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or imposition
of any lien or charge on any assets or properties of the Company under, any
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indenture, mortgage, deed of trust or other material agreement applicable to the
Company or instrument to which the Company is a party or by which it is bound or
any statute or the Certificate of Incorporation or ByLaws of the Company, or any
decree, judgment, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or its properties, or the Company's
listing agreement for its Common Stock.
Section 4.22 ABSENCE OF EVENTS OF DEFAULT. Except as set forth in the
SEC Documents and this Purchase Agreement, no Event of Default, as defined in
the respective agreement to which the Company is a party, and no event which,
with the giving of notice or the passage of time or both, would become an Event
of Default (as so defined), has occurred and is continuing, which would have a
Material Adverse Effect.
Section 4.23 GOVERNMENTAL AND CONTRACTUAL CONSENT, ETC. No consent,
approval or authorization of, or designation, declaration or filing with any
governmental authority or any contract counterpart on the part of the Company is
required in connection with the valid execution and delivery of this Purchase
Agreement, or the offer, sale or issuance of the Securities, or the consummation
of any other transaction contemplated hereby.
Section 4.24 INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in the
SEC Documents, the Company has sufficient trademarks, trade names, patent
rights, copyrights and licenses to conduct its business. To the Company's
knowledge, neither the Company nor its products is infringing or will infringe
any trademark, trade name, patent right, copyright, license, trade secret or
other similar right of others currently in existence; and there is no claim
being made against the Company regarding any trademark, trade name, patent,
copyright, license, trade secret or other intellectual property right which
could have a Material Adverse Effect.
Section 4.25 MATERIAL CONTRACTS. Except as set forth in the SEC
Documents, the agreements to which the Company is a party described in the SEC
Documents are valid agreements, in full force and effect the Company is not in
material breach or material default (with or without notice or lapse of time, or
both) under any of such agreements and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements.
Section 4.26 TITLE TO ASSETS. Except as set forth in SEC Documents,
the Company has good and marketable title to all properties and material assets
described in the SEC Documents as owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company.
Section 4.27 REQUIRED GOVERNMENTAL PERMITS. The Company is in
possession of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities that are material to the conduct of its business, all of
which are valid and in full force and effect.
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Section 4.28 FULL DISCLOSURE. There is no fact known to the Company
(other than general economic conditions known to the public generally) that has
not been publicly disclosed by the Company or disclosed in writing to the
Investor which could reasonably be expected to have a Material Adverse Effect,
or could reasonably be expected to materially and adversely affect the ability
of the Company to perform its obligations pursuant to this Purchase Agreement.
Section 4.29 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
material liabilities or obligations, absolute or contingent (individually or in
the aggregate), except as set forth in the SEC Documents or as incurred in the
ordinary course of business after the date of the SEC Documents.
ARTICLE V
---------
COVENANTS OF THE COMPANY
------------------------
Section 5.1 LISTING OF COMMON STOCK. The Company shall (a) not later
than the twentieth Business Day following the Closing Date prepare and file with
the Principal Market (as well as any other national securities exchange, market
or trading facility on which the Common Stock is then listed) an additional
shares listing application covering the number of Securities, (b) use best
efforts to take all reasonable steps necessary to cause such shares to be
approved for listing on the Principal Market (as well as on any other national
securities exchange, market or trading facility on which the Common Stock is
then listed) as soon as possible thereafter, and (c) the Company shall use its
best efforts to maintain the listing of its Common Stock on such exchange or
market for so long as the Investor holds at least fifty percent (50%) of the
Securities. The Company warrants that it has not received any notice, oral or
written, affecting it's continued listing on the Nasdaq Small Cap Market. The
Company will use its best efforts to comply with the listing and trading
requirements of its Common Stock on the Principal Market and will use its best
efforts to comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market. If the Company
receives notification from Nasdaq or any other controlling entity stating that
the Company is not in compliance with the listing qualifications of such
Principal Market, the Company will use its best efforts to take all reasonable
action to bring the Company into compliance with all applicable listing
standards of the Principal Market.
Section 5.2 EXCHANGE ACT REGISTRATION. The Company will use its best
efforts to maintain the registration of its Common Stock under the Exchange Act,
will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act.
Section 5.3 LEGENDS. The securities to be sold by the Company
pursuant to this Purchase Agreement shall be free of restrictive legends, except
as set forth in Article VII.
Section 5.4 LEGAL OPINION. The Company's independent counsel shall
deliver to the Investor upon execution of this Purchase Agreement, an opinion in
the form of Exhibit B annexed hereto.
Section 5.5 NOTICES. The Company agrees to provide the Investor with
copies of all notices and information, including without limitation notices and
proxy statements in connection with any meetings that are provided to the
holders of shares of Common Stock, contemporaneously with the delivery of such
notices or information to such Common Stock holders.
11
Section 5.6 RULE 144 COMPLIANCE. The Company will take all action as
may be required as a condition to the availability of Rule 144, and the Company
will upon request supply written confirmation that it is in compliance with the
reporting requirements of Rule 144. The Company agrees to use its best efforts
to facilitate and expedite transfers of the Securities pursuant to Rule 144,
which efforts shall include, but not be limited to, timely notice to its
transfer agent to expedite such transfers. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Securities to the public without registration, the
Company agrees to use its reasonable best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934
Act; and
(iii) not take any action or file any document (whether or not
permitted by Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said Act.
Section 5.7 REGISTRATION. The Company agrees to use its best efforts
to file a registration statement including the Securities with the SEC within 90
days after the Closing Date. The Company agrees to use its reasonable best
efforts to cause such registration statement to become and remain effective for
a period of at least nine months or the date all of the Securities may be sold
by the Investor under the provisions of Rule 144, without volume limitation.
Such filing shall be completed at the expense of the Company.
Section 5.8 BOARD SEAT. The Board of Directors has appointed the
Investor to serve as a member of the Board of Directors until the next annual
meeting of its shareholders, contingent upon the closing of this transaction.
The Company agrees that it shall recommend the appointment of Luke Johnson to
serve as a member of the Board of Directors to its shareholders at the next
shareholders meeting and the Company further agrees to use its best efforts to
cause Luke Johnson to be elected to the Board of Directors at such meeting and
re-elected at each annual meeting thereafter so long as Luke Johnson, Ergun Kaya
and Cassell Holdings Limited, collectively, own at least fifty percent (50%) of
the Securities purchased as of this date.
ARTICLE VI
----------
NON-DISCLOSURE OF NON-PUBLIC INFORMATION
----------------------------------------
Section 6.1 NON-DISCLOSURE OF NON-PUBLIC INFORMATION
(a) The Company has not disclosed to the Investor, advisors to,
or representatives of, the Investor unless prior to disclosure of such
information the Company identifies such information as being non-public
information and provides the Investor, and its advisors and representatives with
the opportunity to accept or refuse to accept such non-public information for
review. The Company may, as a condition to disclosing any non-public information
hereunder, require the Investor's advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.
12
(b) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or representatives.
Nothing contained in this Section shall be construed to mean that such persons
or entities other than the Investor (without the written consent of the Investor
prior to disclosure of such information) may not obtain non-public information
in the course of conducting due diligence in accordance with the terms of this
Purchase Agreement.
ARTICLE VII
-----------
LEGENDS
-------
Section 7.1 LEGENDS. The Investor agrees to the imprinting, so long
as is required by this Section, of the following legend (or such substantially
similar legend as is acceptable to the Investor and its counsel, the parties
agreeing that any unacceptable legended securities shall be replaced promptly by
and at the Company's cost) on the Securities:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
of transfer set forth in this Section.
Section 7.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend
other than the one specified in this Article has been or shall be placed on the
share certificates representing the Common Stock, and no instructions or "stop
transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article.
Section 7.3 INVESTOR'S COMPLIANCE. Nothing in this Article shall
affect in any way the Investor's obligations to comply with all applicable
securities laws upon the resale of the Common Stock.
13
ARTICLE VIII
------------
CHOICE OF LAW
-------------
Section 8.1 CHOICE OF LAW; VENUE; JURISDICTION. This Purchase
Agreement will be exclusively construed and enforced in accordance with and
exclusively governed by the laws of the State of New York, except for matters
arising under the Securities Act and Exchange Act, without reference to
principles of conflicts of law. Each of the parties consents to the exclusive
jurisdiction of the U.S. District Court sitting in the Southern District of the
State of New York sitting in Manhattan in connection with any dispute arising
under this Purchase Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on FORUM NON CONVENIENS, to
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Purchase Agreement obtains a judgment
against it in such a proceeding, the party which obtained such judgment may
enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Purchase Agreement
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law. Each
party waives its right to a trial by jury.
ARTICLE IX
----------
ASSIGNMENT; TERMINATION
-----------------------
Section 9.1 ASSIGNMENT. The Investor's interest in this Purchase
Agreement and its ownership of the Securities may be assigned or transferred at
any time, in whole or in part, to any other person or entity (including any
affiliate of the Investor) provided that the Company must consent to such
assignment or transfer (which consent shall not be unreasonably withheld), and
such assignee or transferee must agree to, and truthfully, make the
representations and warranties contained in Article III. The provisions of this
Purchase Agreement shall inure to the benefit of, and be enforceable by, any
transferee of any of the shares of Securities purchased or acquired by the
Investor hereunder with respect to the Common Stock held by such person. In the
event the Investor transfers or assigns any of the Securities as set forth
herein, the Investor shall remain liable under this Purchase Agreement up until
the time such transfer or assignment is completed, and shall remain liable after
the transfer or assignment is completed for its actions taken prior to such
assignment or transfer.
Section 9.2 TERMINATION. This Purchase Agreement shall terminate upon
the earliest of (i) the date that all the Securities have been sold by the
Investor; (ii) the date that all of the Securities may be sold by the Investor
under the provisions of Rule 144, without volume limitation; or (iii) two years
after the expiration of the Closing Date.
ARTICLE X
---------
NOTICES
-------
Section 10.1 NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
14
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day during normal business hours where such notice is to
be received), or the first Business Day following such delivery (if delivered
other than on a Business Day during normal business hours where such notice is
to be received), or (b) on the second Business Day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company:
Tam Restaurants, Inc.
1163 Forest Avenue
Staten Island, NY 10310
Attention: Frank Cretella
Facsimile: (718) 720-5959
Telephone: (718) 448-3872
with a copy to:
The Goldstein Law Group, P.C.
65 Broadway, 10th Floor
New York, NY 10006
Attention: Scott H. Goldstein, Esq.
Telephone: (212) 809-4220
Facsimile: (212) 809-4228
If to the Investor:
Luke Johnson
32 Clarendon Gardens
London W9 1AZ, UK
Facsimile:
With a copy to: Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: J. Watkins
Facsimile: (202) 663-6363
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 10.1 by giving at least ten
calendar days' prior written notice of such changed address or facsimile number
to the other party hereto.
15
Section 10.2 INDEMNIFICATION. The Company agrees to indemnify and
hold harmless the Investor and each officer, and director of the Investor or
person, if any, who controls the Investor within the meaning of the Securities
Act against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Purchase Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), to which
the Investor may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the breach of any term of this Purchase Agreement
by the Company. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action (including any
impleaded parties) include both the Investor and the indemnifying party and the
Investor shall have been advised by such counsel that there may be one or more
legal defenses available to the indemnifying party in conflict with any legal
defenses which may be available to the Investor (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the Investor, it being understood, however, that the indemnifying party shall,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable only for the reasonable fees and
expenses of one separate firm of attorneys for the Investor, which firm shall be
designated in writing by the Investor). No settlement of any action against an
indemnified party shall be made without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld.
Section 10.3 CONTRIBUTION. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 10.2 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 10.2 hereof
16
provide for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any indemnified party, then the
Company and the Investor shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Purchase Agreement, include, but not be limited to, all costs
of defense and investigation and all attorneys' fees), in either such case
(after contribution from others) on the basis of relative fault as well as any
other relevant equitable considerations. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in Section 10.2 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contributions from any person
who was not guilty of such fraudulent misrepresentation.
ARTICLE XI
----------
MISCELLANEOUS
-------------
Section 11.1 COUNTERPARTS; FACSIMILE; AMENDMENTS. This Purchase
Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument. Except as otherwise stated herein, in lieu of the original
documents, a facsimile transmission or copy of the original documents shall be
as effective and enforceable as the original. This Purchase Agreement may be
amended only by a writing executed by the Company on the one hand, and the
Investor, on the other hand.
Section 11.2 ENTIRE AGREEMENT. This Purchase Agreement sets forth the
entire agreement and understanding of the parties relating to the subject matter
hereof and supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof.
Section 11.3 SURVIVAL; SEVERABILITY. The representations, warranties,
covenants and agreements of the parties hereto shall survive the Closing
hereunder. In the event that any provision of this Purchase Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Purchase Agreement shall continue in full force and effect without
said provision; provided that such severability shall be ineffective if it
materially changes the economic benefit of this Purchase Agreement to any party.
Section 11.4 TITLE AND SUBTITLES. The titles and subtitles used in
this Purchase Agreement are used for convenience only and are not to be
considered in construing or interpreting this Purchase Agreement.
Section 11.5 REPLACEMENT OF CERTIFICATES. Upon (i) receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of a certificate representing the Securities, and (ii) in the case
of any such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company, or (iii) in the case of any such mutilation, on surrender and
cancellation of such certificate, the Company at its expense will execute and
deliver, in lieu thereof, a new certificate of like tenor.
17
Section 11.6 PUBLICITY. The Company and the Investor shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such public statement
without the prior written consent of the other parties, which consent shall not
be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other parties with prior notice of such
public statement. Notwithstanding the foregoing, the Company shall not publicly
disclose the names of the Investor without the prior written consent of the
Investor, except to the extent required by law or in response to a written SEC
request, in which case the Company shall provide the Investor with prior written
notice of such public disclosure.
Section 11.7 CURRENCY. All references to currency in this Purchase
Agreement and all Exhibits annexed hereto shall be in United States currency.
Section 11.8 FEES AND EXPENSES. Each of the parties shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby, except that the Company agrees to pay the
Investor's legal expenses up to $2,500 in connection with this transaction,
promptly after the Closing upon the submission to the Company of a written
invoice for such legal expenses.
EXHIBITS
A: Escrow Agreement
B: Legal Opinion
18
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Purchase Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
TAM RESTAURANTS, Inc.
By _________________________
Name: Frank Cretella
Title: President
LUKE JOHNSON
----------------------------
================================================================================
COMMON STOCK PURCHASE AGREEMENT
BETWEEN
TAM RESTAURANTS, INC.
AND
CASSELL HOLDINGS LIMITED
DATED AS OF FEBRUARY 1, 2000
================================================================================
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
THIS COMMON STOCK PURCHASE AGREEMENT, dated as of February 1, 2000,
between CASSELL HOLDINGS LIMITED (referred to as the "INVESTOR"), and Tam
Restaurants, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "COMPANY", Nasdaq Small Cap Market Symbol "TAMR").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
and the Investor shall purchase an aggregate of 550,540 shares of Common Stock
as set forth in Section 2.3 below; and
WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) ("SECTION 4(2)") and Regulation D ("REGULATION D") of
the United States Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the "SECURITIES ACT"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Common Stock to be made
hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
---------
CERTAIN DEFINITIONS
-------------------
Section 1.1 "BUSINESS DAY" means any day except Saturday, Sunday and
any day which shall be a Federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
government actions to close.
Section 1.2 "CAPITAL SHARES" shall mean the Common Stock and any
shares of any other class of Common Stock whether now or hereafter authorized,
having the right to participate in the distribution of earnings and assets of
the Company.
Section 1.3 "CAPITAL SHARES EQUIVALENTS" shall mean any securities,
rights, or obligations that are convertible into or exchangeable for, or giving
any right to, subscribe for any Capital Shares of the Company or any warrants,
options or other rights to subscribe for or purchase Capital Shares or any such
convertible or exchangeable securities.
Section 1.4 "CLOSING" shall mean the closing of the purchase and sale
of the Securities pursuant to Article II below.
Section 1.5 "CLOSING DATE" shall mean the date the closing of the
purchase and sale of the Securities occurs pursuant to Article II below.
Section 1.6 "COMMON STOCK" shall mean the Company's common stock,
$.0001 par value per share.
Section 1.7 "DAMAGES" shall mean any loss, claim, damage, liability,
costs and expenses which shall include, but not be limited to, reasonable
attorney's fees, disbursements, costs and expenses of expert witnesses and
investigation.
Section 1.8 "ESCROW AGENT" shall mean the law firm of The Goldstein
Law Group, P.C., pursuant to the terms of the Escrow Agreement.
Section 1.9 "ESCROW AGREEMENT" shall mean the agreement regarding the
escrow of the Purchase Price and Securities entered into between the Company,
the Escrow Agent and the Investor on the Subscription Date annexed hereto as
Exhibit A.
Section 1.10 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.11 "ISSUANCE PRICE" shall mean $2.00.
Section 1.12 "LEGEND" shall have the meaning set forth in Article VII
below.
Section 1.13 "MATERIAL ADVERSE EFFECT" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise in any material respect interfere with the
ability of the Company to enter into and perform any of its obligations under
this Purchase Agreement (or any Exhibit annexed hereto) in any material respect.
Section 1.14 "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.15 "OUTSTANDING" when used with reference to shares of
Common Stock, or Capital Shares (collectively the "SHARES"), shall mean, at any
date as of which the number of such Shares is to be determined, all issued and
outstanding Shares, and shall include all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in such
Shares; PROVIDED, HOWEVER, that Outstanding shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.16 "PERSON" shall mean an individual, a corporation, a
partnership, an association, a limited liability company, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Section 1.17 "PRINCIPAL MARKET" shall mean the OTC Bulletin Board,
Nasdaq National Market, the Nasdaq Small Cap Market, the American Stock
Exchange, or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
Section 1.18 "PURCHASE AGREEMENT" shall refer to this Common Stock
Purchase Agreement and include all Exhibits annexed hereto.
Section 1.19 "PURCHASE PRICE" shall mean $2.00.
2
Section 1.20 "REGULATION D" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.21 "SEC" shall mean the Securities and Exchange Commission.
Section 1.22 "SECTION 4(2)" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.23 "SECURITIES" shall mean 550,540 shares of Common Stock
issuable upon the Closing Date as contained in Section 2.3 below.
Section 1.24 "SECURITIES ACT" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.25 "SEC DOCUMENTS" shall mean the Company's latest Form
10-KSB and Form 10-QSB's (and all amendments thereto), all Form 8-Ks, and the
Proxy Statement for its latest fiscal year as of the time in question.
Section 1.26 "SUBSCRIPTION DATE" shall mean the date on which this
Purchase Agreement is executed and delivered by the parties hereto and all of
the conditions relating to the issuance of the Securities shall have been
fulfilled.
Section 1.27 "TRADING DAY" shall mean any day during which the then
Principal Market shall be open for business.
ARTICLE II
----------
PURCHASE AND SALE OF THE SECURITIES
-----------------------------------
Section 2.1 TRANSACTION. The Company will sell, and the Investor will
buy, on the Closing Dates, the Securities in exchange for the Purchase Price,
provided each of the conditions set forth in Section 2.3 below have been
satisfied or waived in writing.
Section 2.2 FORM OF PAYMENT. The Investor shall pay the Purchase
Price by delivering good funds in United States Dollars by wire transfer to the
Escrow Agent, against delivery of the original shares of Common Stock as per the
terms of the Escrow Agreement.
Section 2.3 CLOSING. On the Closing Date, the Company will sell and
the Investor will buy the Securities, in reliance upon the representations and
warranties contained in this Purchase Agreement, and upon the terms and
satisfaction of each of the conditions set forth below.
The conditions precedent to the sale of the Securities are as
follows:
(A) Acceptance by the Investor of this Purchase Agreement and
due execution by all parties of this Purchase Agreement;
3
(B) Delivery into escrow by the Company of the original
Securities as more fully set forth in the Escrow Agreement;
(C) All representations and warranties of the Company
contained herein shall remain true and correct in all material
respects as of the Closing Date;
(D) The Investor shall have received an opinion of counsel
substantially in the form of Exhibit B annexed hereto; and
(E) At the Closing Date, the sale and issuance of the
Securities shall be legally permitted by all laws and regulations to
which the Company and the Investor are subject.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
----------------------------------------------
The Investor represents and warrants to the Company that:
Section 3.1 INTENT. Without limiting its ability to resell the
Securities pursuant to an effective registration statement or an exemption from
registration, the Investor is entering into this Purchase Agreement for its own
account and has no present arrangement (whether or not legally binding) at any
time to sell the Securities to or through any person or entity; provided,
however, that by making the representations herein, the Investor reserves the
right to dispose of the Securities at any time in accordance with federal and
state securities laws applicable to such disposition. Without limiting its
ability to resell the Securities, the Investor represents that the Securities
are being purchased for the Investor's own account, for investment purposes only
and not for distribution or resale to others. The Investor agrees that it will
not sell the Securities unless they are registered under the Securities Act or
unless an exemption from such registration is available.
Section 3.2 ACCREDITED INVESTOR/INVESTMENT EXPERIENCE. The Investor
is an accredited investor (as defined in Rule 501 of Regulation D), and has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Company. As of the Closing Date,
the Investor (i) has adequate means of providing for its current needs and
possible personal contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risk of an investment
in the Securities for an indefinite period, and (iv) can afford the complete
loss of its investment. The Investor recognizes the highly speculative nature of
this investment. The Investor acknowledges that it has carefully read the SEC
Documents and the terms and conditions herein and fully understands the contents
thereof.
Section 3.3 AUTHORITY. This Purchase Agreement has been duly
authorized and validly executed and delivered by the Investor, and the board of
directors of the Investor, if applicable . The decision to invest and the
execution and delivery of this Purchase Agreement by the Investor, the
performance by the Investor of its obligations hereunder and the consummation by
the Investor of the transactions contemplated hereby have been duly authorized
and requires no other proceedings on the part of the Investor. This Purchase
Agreement has been duly executed and delivered by the Investor and, assuming the
4
due execution and delivery hereof and acceptance thereof by the Company, will
constitute the legal, valid and binding obligations of the Investor, enforceable
against the Investor in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
Section 3.4 NOT AN AFFILIATE. Until the closing, the Investor is
neither an officer, director or "affiliate" (as that term is defined in Rule 405
of the Securities Act) of the Company.
Section 3.5 DISCLOSURE; ACCESS TO INFORMATION. The Investor has
received all documents, records, books and other information pertaining to
Investor's investment in the Company that has been requested by the Investor.
The Investor has had the opportunity to ask questions of, and receive answers
from, the Company, and has not relied on any material or representations of the
Company except as contained in this Purchase Agreement.
Section 3.6 MANNER OF SALE. At no time was the Investor presented
with or solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising in connection with the offer and sale of the Securities.
Section 3.7 NO LEGAL, TAX OR INVESTMENT ADVICE. The Investor
understands that nothing in this Purchase Agreement or any other materials
presented to the Investor in connection with the purchase and sale of the
Securities constitutes legal, tax or investment advice. The Investor has relied
on, and has consulted with, such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities.
Section 3.8 NO ADVERTISEMENTS. The Investor is not purchasing the
Securities as a result of, or subsequent to, any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants that:
Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted except as described in the SEC
Documents. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those (individually or in the aggregate) in which the failure so to
qualify would not reasonably be expected to have a Material Adverse Effect. The
Company is not in violation of any material term of its Certificate of
Incorporation (as defined below) or Bylaws (as defined below).
5
Section 4.2 AUTHORITY. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Purchase Agreement, and all Exhibits annexed hereto, and to issue the
Securities, (ii) the execution, issuance and delivery of this Purchase Agreement
by the Company, the consummation by it of the transactions contemplated hereby
and thereby, and the performance of its obligations hereunder have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company, its shareholders, or its Board of Directors is
necessary, and (iii) this Purchase Agreement has been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Upon their issuance and delivery pursuant to this Purchase Agreement, the
Securities will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances other than those created hereunder or by the
actions of the Investor; PROVIDED, HOWEVER, that the Securities are subject to
restrictions on transfer under state and/or federal securities laws.
Section 4.3 CAPITALIZATION. As of December 31, 1999, the authorized
capital stock of the Company consists of 19,000,000 shares of Common Stock,
$.0001 par value, of which 3,503,000 shares are outstanding, and 1,000,000
shares of preferred stock, $.0001 par value, of which 144,081 shares are
outstanding, and the options set forth on Schedule 4.3 annexed hereto. All of
the outstanding shares of the Company's capital stock have been duly and validly
authorized and issued and are fully paid and nonassessable. No shares of Common
Stock or preferred stock of the Company are entitled to preemptive or similar
rights. Except as disclosed in the SEC Documents and as contemplated by this
Agreement, to the knowledge of the Company, no Person or group of Persons
beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) or has the right to acquire by agreement with or by obligation
binding upon the Company beneficial ownership of in excess of five percent of
the Common Stock.
Section 4.4 COMMON STOCK. The Company has registered its Common Stock
pursuant to the Exchange Act, and such Common Stock is currently listed or
quoted, and trades, on the Nasdaq Small Cap Market.
Section 4.5 SEC DOCUMENTS. The Company has delivered or made
available to the Investor true and complete copies of the SEC Documents filed by
the Company with the SEC during the twelve months immediately preceding the date
hereof. The Company has not provided to the Investor any information that,
according to applicable law, rule or regulation, should have been disclosed
publicly prior to the date hereof by the Company, but which has not been so
disclosed. The SEC Documents comply in all material respects with the
requirements of the Securities Act and/or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder and none of the
SEC Documents contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
6
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements).
Section 4.6 VALID ISSUANCES. Neither the issuance of the Securities,
nor the Company's performance of its obligations under this Purchase Agreement
will (i) result in the creation or imposition by the Company of any liens,
charges, claims or other encumbrances upon the Securities, or any of the assets
of the Company, or (ii) entitle the holders of Outstanding Capital Shares to
preemptive or other rights to subscribe to or acquire any Capital Shares or
other securities of the Company.
Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates, nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising in connection with the offer and sale of the Securities,
or (ii) has made any offers or sales of any security or solicited any offers to
buy any security under any circumstances that would require registration of the
Securities under the Securities Act, except as contemplated by this Purchase
Agreement.
Section 4.8 NO CONFLICTS. The execution, delivery and performance of
this Purchase Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby, including without limitation
the issuance of the Securities, do not and will not (i) result in a violation of
the Company's Certificate of Incorporation or ByLaws or (ii) conflict with, or
constitute a material default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, patent, patent
license, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected, nor is the Company otherwise in violation of, in
conflict with, or in default under, any of the foregoing except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The business of the Company is not being conducted in violation
of any law, ordinance or regulation of any governmental entity, except for
possible violations that either singly or in the aggregate would not reasonably
be expected to have a Material Adverse Effect. Except for the filing of a Form D
within 15 days after the Closing Date (which the Company agrees it will file),
and such other form(s) required by "blue sky" laws, the Company is not required
under federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Purchase Agreement or issue and sell the Securities, in
accordance with the terms hereof; provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investor
herein.
7
Section 4.9 NO UNDISCLOSED LIABILITIES. The Company has no
liabilities or obligations, known or unknown, absolute or otherwise, which are
not disclosed in the SEC Documents or otherwise publicly announced, or as
incurred in the ordinary course of the Company's businesses since January 1,
1999, or which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.
Section 4.10 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since January 1,
1999, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company, but which
has not been so publicly announced or disclosed in the SEC Documents.
Section 4.11 LITIGATION AND OTHER PROCEEDINGS. Except as may be set
forth in the SEC Documents, there are no lawsuits or proceedings pending or to
the knowledge of the Company threatened, against the Company, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which would reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, so far as is known by the
Company, requested of any court, arbitrator or governmental agency which would
be reasonably expected to result in a Material Adverse Effect.
Section 4.12 ACCURACY OF REPORTS AND INFORMATION. The Company is in
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the Exchange Act. The Company has
complied in all material respects and to the extent applicable with all
reporting obligations, under either Section 13(a) or 15(d) of the Exchange Act
for a period of at least twelve (12) months immediately preceding the
Subscription Date.
Section 4.13 EMPLOYEE RELATIONS. The Company is not involved in any
labor dispute, nor, to the knowledge of the Company, is any such dispute
threatened which could reasonably be expected to have a Material Adverse Effect.
The Company believes that its relations with its employees are good.
Section 4.14 INSURANCE. The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company is engaged. The Company has no reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires, or obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
Section 4.15 PATENTS AND TRADEMARKS. The Company has, or has rights
to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses, trade secrets and other
intellectual property rights which are necessary for use in connection with its
business or which the failure to so have would reasonably be expected to have a
Material Adverse Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). To
the best knowledge of the Company, none of the Intellectual Property Rights
infringe on any rights of any other Person, and the Company either owns or has
duly licensed or otherwise acquired all necessary rights with respect to the
8
Intellectual Property Rights. The Company has not received any notice from any
third party of any claim of infringement by the Company of any of the
Intellectual Property Rights, and has no reason to believe there is any basis
for any such claim. To the best knowledge of the Company, there is no existing
infringement by another Person on any of the Intellectual Property Rights.
Section 4.16 USE OF PROCEEDS. Net proceeds are to be used by the
Company for general working capital and not for the repayment of any judgment.
Section 4.17 SUBSIDIARIES. Except as disclosed in the SEC Documents,
the Company does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, association or other business
entity.
Section 4.18 NO PRIVATE PLACEMENTS. Except as disclosed in the SEC
Documents, the Company has not conducted a private placement of its Common Stock
or of any debt or equity instrument convertible into Common Stock within one
year prior to the Closing Date. Except as disclosed in the SEC Documents, there
are no outstanding securities issued by the Company that are directly or
indirectly convertible into, exercisable into, or exchangeable for, shares of
Common Stock, that have anti-dilution or similar rights that would be affected
by the issuance of the Securities.
Section 4.19 PERMITS; COMPLIANCE. The Company and each of its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"), and there is no action pending or, to the knowledge of the Company,
threatened regarding the suspension or cancellation of any of the Company
Permits except for such Company Permits, the failure of which to possess, or the
cancellation, or suspension of which, would not, individually or in the
aggregate, have a Material Adverse Effect. To the Company's knowledge, neither
the Company nor any of its subsidiaries is in material conflict with, or in
material default or material violation of, any of the Company Permits. Since
January 1, 1999 neither the Company nor any of its subsidiaries has received any
notification with respect to possible material conflicts, material defaults or
material violations of applicable laws.
Section 4.20 TAXES. All federal, state, city and other tax returns,
reports and declarations required to be filed by or on behalf of the Company
have been filed and such returns are complete and accurate and disclose all
taxes (whether based upon income, operations, purchases, sales, payroll,
licenses, compensation, business, capital, properties or assets or otherwise)
required to be paid in the periods covered thereby.
Section 4.21 NO DEFAULT. The Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it is or its property
is bound, and neither the execution, nor the delivery by the Company, nor the
performance by the Company of its obligations under this Purchase Agreement will
conflict with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or imposition
9
of any lien or charge on any assets or properties of the Company under, any
indenture, mortgage, deed of trust or other material agreement applicable to the
Company or instrument to which the Company is a party or by which it is bound or
any statute or the Certificate of Incorporation or ByLaws of the Company, or any
decree, judgment, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or its properties, or the Company's
listing agreement for its Common Stock.
Section 4.22 ABSENCE OF EVENTS OF DEFAULT. Except as set forth in the
SEC Documents and this Purchase Agreement, no Event of Default, as defined in
the respective agreement to which the Company is a party, and no event which,
with the giving of notice or the passage of time or both, would become an Event
of Default (as so defined), has occurred and is continuing, which would have a
Material Adverse Effect.
Section 4.23 GOVERNMENTAL AND CONTRACTUAL CONSENT, ETC. No consent,
approval or authorization of, or designation, declaration or filing with any
governmental authority or any contract counterpart on the part of the Company is
required in connection with the valid execution and delivery of this Purchase
Agreement, or the offer, sale or issuance of the Securities, or the consummation
of any other transaction contemplated hereby.
Section 4.24 INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in the
SEC Documents, the Company has sufficient trademarks, trade names, patent
rights, copyrights and licenses to conduct its business. To the Company's
knowledge, neither the Company nor its products is infringing or will infringe
any trademark, trade name, patent right, copyright, license, trade secret or
other similar right of others currently in existence; and there is no claim
being made against the Company regarding any trademark, trade name, patent,
copyright, license, trade secret or other intellectual property right which
could have a Material Adverse Effect.
Section 4.25 MATERIAL CONTRACTS. Except as set forth in the SEC
Documents, the agreements to which the Company is a party described in the SEC
Documents are valid agreements, in full force and effect the Company is not in
material breach or material default (with or without notice or lapse of time, or
both) under any of such agreements and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements.
Section 4.26 TITLE TO ASSETS. Except as set forth in SEC Documents,
the Company has good and marketable title to all properties and material assets
described in the SEC Documents as owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company.
Section 4.27 REQUIRED GOVERNMENTAL PERMITS. The Company is in
possession of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities that are material to the conduct of its business, all of
which are valid and in full force and effect.
Section 4.28 FULL DISCLOSURE. There is no fact known to the Company
(other than general economic conditions known to the public generally) that has
not been publicly disclosed by the Company or disclosed in writing to the
Investor which could reasonably be expected to have a Material Adverse Effect,
or could reasonably be expected to materially and adversely affect the ability
of the Company to perform its obligations pursuant to this Purchase Agreement.
10
Section 4.29 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
material liabilities or obligations, absolute or contingent (individually or in
the aggregate), except as set forth in the SEC Documents or as incurred in the
ordinary course of business after the date of the SEC Documents.
ARTICLE V
---------
COVENANTS OF THE COMPANY
------------------------
Section 5.1 LISTING OF COMMON STOCK. The Company shall (a) not later
than the twentieth Business Day following the Closing Date prepare and file with
the Principal Market (as well as any other national securities exchange, market
or trading facility on which the Common Stock is then listed) an additional
shares listing application covering the number of Securities, (b) use best
efforts to take all reasonable steps necessary to cause such shares to be
approved for listing on the Principal Market (as well as on any other national
securities exchange, market or trading facility on which the Common Stock is
then listed) as soon as possible thereafter, and (c) the Company shall use its
best efforts to maintain the listing of its Common Stock on such exchange or
market for so long as the Investor holds at least fifty percent (50%) of the
Securities. The Company warrants that it has not received any notice, oral or
written, affecting it's continued listing on the Nasdaq Small Cap Market. The
Company will use its best efforts to comply with the listing and trading
requirements of its Common Stock on the Principal Market and will use its best
efforts to comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market. If the Company
receives notification from Nasdaq or any other controlling entity stating that
the Company is not in compliance with the listing qualifications of such
Principal Market, the Company will use its best efforts to take all reasonable
action to bring the Company into compliance with all applicable listing
standards of the Principal Market.
Section 5.2 EXCHANGE ACT REGISTRATION. The Company will use its best
efforts to maintain the registration of its Common Stock under the Exchange Act,
will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act.
Section 5.3 LEGENDS. The securities to be sold by the Company
pursuant to this Purchase Agreement shall be free of restrictive legends, except
as set forth in Article VII.
Section 5.4 LEGAL OPINION. The Company's independent counsel shall
deliver to the Investor upon execution of this Purchase Agreement, an opinion in
the form of Exhibit B annexed hereto.
Section 5.5 NOTICES. The Company agrees to provide the Investor with
copies of all notices and information, including without limitation notices and
proxy statements in connection with any meetings that are provided to the
holders of shares of Common Stock, contemporaneously with the delivery of such
notices or information to such Common Stock holders.
11
Section 5.6 RULE 144 COMPLIANCE. The Company will take all action as
may be required as a condition to the availability of Rule 144, and the Company
will upon request supply written confirmation that it is in compliance with the
reporting requirements of Rule 144. The Company agrees to use its best efforts
to facilitate and expedite transfers of the Securities pursuant to Rule 144,
which efforts shall include, but not be limited to, timely notice to its
transfer agent to expedite such transfers. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Securities to the public without registration, the
Company agrees to use its reasonable best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934
Act; and
(iii) not take any action or file any document (whether or not
permitted by Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said Act.
Section 5.7 Registration. The Company agrees to use its best efforts
to file a registration statement including the Securities with the SEC within 90
days after the Closing Date. The Company agrees to use its reasonable best
efforts to cause such registration statement to become and remain effective for
a period of at least nine months or the date all of the Securities may be sold
by the Investor under the provisions of Rule 144, without volume limitation.
Such filing shall be completed at the expense of the Company.
12
ARTICLE VI
----------
NON-DISCLOSURE OF NON-PUBLIC INFORMATION
----------------------------------------
Section 6.1 NON-DISCLOSURE OF NON-PUBLIC INFORMATION
(a) The Company has not disclosed to the Investor, advisors
to, or representatives of, the Investor unless prior to disclosure of such
information the Company identifies such information as being non-public
information and provides the Investor, and its advisors and representatives with
the opportunity to accept or refuse to accept such non-public information for
review. The Company may, as a condition to disclosing any non-public information
hereunder, require the Investor's advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.
(b) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or representatives.
Nothing contained in this Section shall be construed to mean that such persons
or entities other than the Investor (without the written consent of the Investor
prior to disclosure of such information) may not obtain non-public information
in the course of conducting due diligence in accordance with the terms of this
Purchase Agreement.
ARTICLE VII
-----------
LEGENDS
-------
Section 7.1 LEGENDS. The Investor agrees to the imprinting, so long
as is required by this Section, of the following legend (or such substantially
similar legend as is acceptable to the Investor and its counsel, the parties
agreeing that any unacceptable legended securities shall be replaced promptly by
and at the Company's cost) on the Securities:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
of transfer set forth in this Section.
Section 7.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend
other than the one specified in this Article has been or shall be placed on the
share certificates representing the Common Stock, and no instructions or "stop
transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article.
13
Section 7.3 INVESTOR'S COMPLIANCE. Nothing in this Article shall
affect in any way the Investor's obligations to comply with all applicable
securities laws upon the resale of the Common Stock.
ARTICLE VIII
------------
CHOICE OF LAW
-------------
Section 8.1 CHOICE OF LAW; VENUE; JURISDICTION. This Purchase
Agreement will be exclusively construed and enforced in accordance with and
exclusively governed by the laws of the State of New York, except for matters
arising under the Securities Act and Exchange Act, without reference to
principles of conflicts of law. Each of the parties consents to the exclusive
jurisdiction of the U.S. District Court sitting in the Southern District of the
State of New York sitting in Manhattan in connection with any dispute arising
under this Purchase Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on FORUM NON CONVENIENS, to
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Purchase Agreement obtains a judgment
against it in such a proceeding, the party which obtained such judgment may
enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Purchase Agreement
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law. Each
party waives its right to a trial by jury.
ARTICLE IX
----------
ASSIGNMENT; TERMINATION
-----------------------
Section 9.1 ASSIGNMENT. The Investor's interest in this Purchase
Agreement and its ownership of the Securities may be assigned or transferred at
any time, in whole or in part, to any other person or entity (including any
affiliate of the Investor) provided that the Company must consent to such
assignment or transfer (which consent shall not be unreasonably withheld), and
such assignee or transferee must agree to, and truthfully, make the
representations and warranties contained in Article III. The provisions of this
Purchase Agreement shall inure to the benefit of, and be enforceable by, any
transferee of any of the shares of Securities purchased or acquired by the
Investor hereunder with respect to the Common Stock held by such person. In the
event the Investor transfers or assigns any of the Securities as set forth
herein, the Investor shall remain liable under this Purchase Agreement up until
the time such transfer or assignment is completed, and shall remain liable after
the transfer or assignment is completed for its actions taken prior to such
assignment or transfer.
14
Section 9.2 TERMINATION. This Purchase Agreement shall terminate upon
the earliest of (i) the date that all the Securities have been sold by the
Investor; (ii) the date that all of the Securities may be sold by the Investor
under the provisions of Rule 144, without volume limitation; or (iii) two years
after the expiration of the Closing Date.
ARTICLE X
---------
NOTICES
-------
Section 10.1 NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day during normal business hours where such notice is to
be received), or the first Business Day following such delivery (if delivered
other than on a Business Day during normal business hours where such notice is
to be received), or (b) on the second Business Day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company:
Tam Restaurants, Inc.
1163 Forest Avenue
Staten Island, NY 10310
Attention: Frank Cretella
Facsimile: (718) 720-5959
Telephone: (718) 448-3872
with a copy to:
The Goldstein Law Group, P.C.
65 Broadway, 10th Floor
New York, NY 10006
Attention: Scott H. Goldstein, Esq.
Telephone: (212) 809-4220
Facsimile: (212) 809-4228
15
If to the Investor:
Cassell Holdings Limited
P.O. Box 182
Channel House
Forest Lane
St. Peter Port
Guernsey
Channel Islands
FAO Anne Ward
Facsimile: 44 1481 712634
With a copy to: Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: J. Watkins
Facsimile: (202) 663-6363
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 10.1 by giving at least ten
calendar days' prior written notice of such changed address or facsimile number
to the other party hereto.
Section 10.2 INDEMNIFICATION. The Company agrees to indemnify and
hold harmless the Investor and each officer, and director of the Investor or
person, if any, who controls the Investor within the meaning of the Securities
Act against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Purchase Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), to which
the Investor may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the breach of any term of this Purchase Agreement
by the Company. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
16
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action (including any
impleaded parties) include both the Investor and the indemnifying party and the
Investor shall have been advised by such counsel that there may be one or more
legal defenses available to the indemnifying party in conflict with any legal
defenses which may be available to the Investor (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the Investor, it being understood, however, that the indemnifying party shall,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable only for the reasonable fees and
expenses of one separate firm of attorneys for the Investor, which firm shall be
designated in writing by the Investor). No settlement of any action against an
indemnified party shall be made without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld.
Section 10.3 CONTRIBUTION. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 10.2 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 10.2 hereof
provide for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any indemnified party, then the
Company and the Investor shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Purchase Agreement, include, but not be limited to, all costs
of defense and investigation and all attorneys' fees), in either such case
(after contribution from others) on the basis of relative fault as well as any
other relevant equitable considerations. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in Section 10.2 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contributions from any person
who was not guilty of such fraudulent misrepresentation.
17
ARTICLE XI
----------
MISCELLANEOUS
-------------
Section 11.1 COUNTERPARTS; FACSIMILE; AMENDMENTS. This Purchase
Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument. Except as otherwise stated herein, in lieu of the original
documents, a facsimile transmission or copy of the original documents shall be
as effective and enforceable as the original. This Purchase Agreement may be
amended only by a writing executed by the Company on the one hand, and the
Investor, on the other hand.
Section 11.2 ENTIRE AGREEMENT. This Purchase Agreement sets forth the
entire agreement and understanding of the parties relating to the subject matter
hereof and supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof.
Section 11.3 SURVIVAL; SEVERABILITY. The representations, warranties,
covenants and agreements of the parties hereto shall survive the Closing
hereunder. In the event that any provision of this Purchase Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Purchase Agreement shall continue in full force and effect without
said provision; provided that such severability shall be ineffective if it
materially changes the economic benefit of this Purchase Agreement to any party.
Section 11.4 TITLE AND SUBTITLES. The titles and subtitles used in
this Purchase Agreement are used for convenience only and are not to be
considered in construing or interpreting this Purchase Agreement.
Section 11.5 REPLACEMENT OF CERTIFICATES. Upon (i) receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of a certificate representing the Securities, and (ii) in the case
of any such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company, or (iii) in the case of any such mutilation, on surrender and
cancellation of such certificate, the Company at its expense will execute and
deliver, in lieu thereof, a new certificate of like tenor.
Section 11.6 PUBLICITY. The Company and the Investor shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such public statement
without the prior written consent of the other parties, which consent shall not
be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other parties with prior notice of such
public statement. Notwithstanding the foregoing, the Company shall not publicly
disclose the names of the Investor without the prior written consent of the
Investor, except to the extent required by law or in response to a written SEC
request, in which case the Company shall provide the Investor with prior written
notice of such public disclosure.
18
Section 11.7 CURRENCY. All references to currency in this Purchase
Agreement and all Exhibits annexed hereto shall be in United States currency.
Section 11.8 FEES AND EXPENSES. Each of the parties shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby, except that the Company agrees to pay the
Investor's legal expenses up to $2,500 in connection with this transaction,
promptly after the Closing upon the submission to the Company of a written
invoice for such legal expenses.
EXHIBITS
A: Escrow Agreement
B: Legal Opinion
19
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Purchase Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
TAM RESTAURANTS, Inc.
By __________________________
Name: Frank Cretella
Title: President
CASSELL HOLDINGS LIMITED
By___________________________
Name:
Title:
================================================================================
COMMON STOCK PURCHASE AGREEMENT
BETWEEN
TAM RESTAURANTS, INC.
AND
ERGUN KAYA
DATED AS OF FEBRUARY 1, 2000
================================================================================
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
THIS COMMON STOCK PURCHASE AGREEMENT, dated as of February 1, 2000,
between ERGUN KAYA (referred to as the "INVESTOR"), and Tam Restaurants, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"COMPANY", Nasdaq Small Cap Market Symbol "TAMR").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
and the Investor shall purchase an aggregate of 82,500 shares of Common Stock as
set forth in Section 2.3 below; and
WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) ("SECTION 4(2)") and Regulation D ("REGULATION D") of
the United States Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the "SECURITIES ACT"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Common Stock to be made
hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
---------
CERTAIN DEFINITIONS
-------------------
Section 1.1 "BUSINESS DAY" means any day except Saturday, Sunday and
any day which shall be a Federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
government actions to close.
Section 1.2 "CAPITAL SHARES" shall mean the Common Stock and any
shares of any other class of Common Stock whether now or hereafter authorized,
having the right to participate in the distribution of earnings and assets of
the Company.
Section 1.3 "CAPITAL SHARES EQUIVALENTS" shall mean any securities,
rights, or obligations that are convertible into or exchangeable for, or giving
any right to, subscribe for any Capital Shares of the Company or any warrants,
options or other rights to subscribe for or purchase Capital Shares or any such
convertible or exchangeable securities.
Section 1.4 "CLOSING" shall mean the closing of the purchase and sale
of the Securities pursuant to Article II below.
Section 1.5 "CLOSING DATE" shall mean the date the closing of the
purchase and sale of the Securities occurs pursuant to Article II below.
Section 1.6 "COMMON STOCK" shall mean the Company's common stock,
$.0001 par value per share.
Section 1.7 "DAMAGES" shall mean any loss, claim, damage, liability,
costs and expenses which shall include, but not be limited to, reasonable
attorney's fees, disbursements, costs and expenses of expert witnesses and
investigation.
Section 1.8 "ESCROW AGENT" shall mean the law firm of The Goldstein
Law Group, P.C., pursuant to the terms of the Escrow Agreement.
Section 1.9 "ESCROW AGREEMENT" shall mean the agreement regarding the
escrow of the Purchase Price and Securities entered into between the Company,
the Escrow Agent and the Investor on the Subscription Date annexed hereto as
Exhibit A.
Section 1.10 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.11 "ISSUANCE PRICE" shall mean $2.00.
Section 1.12 "LEGEND" shall have the meaning set forth in Article VII
below.
Section 1.13 "MATERIAL ADVERSE EFFECT" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise in any material respect interfere with the
ability of the Company to enter into and perform any of its obligations under
this Purchase Agreement (or any Exhibit annexed hereto) in any material respect.
Section 1.14 "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.15 "OUTSTANDING" when used with reference to shares of
Common Stock, or Capital Shares (collectively the "SHARES"), shall mean, at any
date as of which the number of such Shares is to be determined, all issued and
outstanding Shares, and shall include all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in such
Shares; PROVIDED, HOWEVER, that Outstanding shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.16 "PERSON" shall mean an individual, a corporation, a
partnership, an association, a limited liability company, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Section 1.17 "PRINCIPAL MARKET" shall mean the OTC Bulletin Board,
Nasdaq National Market, the Nasdaq Small Cap Market, the American Stock
Exchange, or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
Section 1.18 "PURCHASE AGREEMENT" shall refer to this Common Stock
Purchase Agreement and include all Exhibits annexed hereto.
Section 1.19 "PURCHASE PRICE" shall mean $2.00.
2
Section 1.20 "REGULATION D" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.21 "SEC" shall mean the Securities and Exchange Commission.
Section 1.22 "SECTION 4(2)" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.23 "SECURITIES" shall mean 82,500 shares of Common Stock
issuable upon the Closing Date as contained in Section 2.3 below.
Section 1.24 "SECURITIES ACT" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.25 "SEC DOCUMENTS" shall mean the Company's latest Form
10-KSB and Form 10-QSB's (and all amendments thereto), all Form 8-Ks, and the
Proxy Statement for its latest fiscal year as of the time in question.
Section 1.26 "SUBSCRIPTION DATE" shall mean the date on which this
Purchase Agreement is executed and delivered by the parties hereto and all of
the conditions relating to the issuance of the Securities shall have been
fulfilled.
Section 1.27 "TRADING DAY" shall mean any day during which the then
Principal Market shall be open for business.
ARTICLE II
----------
PURCHASE AND SALE OF THE SECURITIES
-----------------------------------
Section 2.1 TRANSACTION. The Company will sell, and the Investor will
buy, on the Closing Dates, the Securities in exchange for the Purchase Price,
provided each of the conditions set forth in Section 2.3 below have been
satisfied or waived in writing.
Section 2.2 FORM OF PAYMENT. The Investor shall pay the Purchase
Price by delivering good funds in United States Dollars by wire transfer to the
Escrow Agent, against delivery of the original shares of Common Stock as per the
terms of the Escrow Agreement.
Section 2.3 CLOSING. On the Closing Date, the Company will sell and
the Investor will buy the Securities, in reliance upon the representations and
warranties contained in this Purchase Agreement, and upon the terms and
satisfaction of each of the conditions set forth below.
The conditions precedent to the sale of the Securities are as
follows:
(A) Acceptance by the Investor of this Purchase Agreement and
due execution by all parties of this Purchase Agreement;
3
(B) Delivery into escrow by the Company of the original
Securities as more fully set forth in the Escrow Agreement;
(C) All representations and warranties of the Company
contained herein shall remain true and correct in all material
respects as of the Closing Date;
(D) The Investor shall have received an opinion of counsel
substantially in the form of Exhibit B annexed hereto; and
(E) At the Closing Date, the sale and issuance of the
Securities shall be legally permitted by all laws and regulations to
which the Company and the Investor are subject.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
----------------------------------------------
The Investor represents and warrants to the Company that:
Section 3.1 INTENT. Without limiting its ability to resell the
Securities pursuant to an effective registration statement or an exemption from
registration, the Investor is entering into this Purchase Agreement for its own
account and has no present arrangement (whether or not legally binding) at any
time to sell the Securities to or through any person or entity; provided,
however, that by making the representations herein, the Investor reserves the
right to dispose of the Securities at any time in accordance with federal and
state securities laws applicable to such disposition. Without limiting its
ability to resell the Securities, the Investor represents that the Securities
are being purchased for the Investor's own account, for investment purposes only
and not for distribution or resale to others. The Investor agrees that it will
not sell the Securities unless they are registered under the Securities Act or
unless an exemption from such registration is available.
Section 3.2 ACCREDITED INVESTOR/INVESTMENT EXPERIENCE. The Investor
is an accredited investor (as defined in Rule 501 of Regulation D), and has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Company. As of the Closing Date,
the Investor (i) has adequate means of providing for its current needs and
possible personal contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risk of an investment
in the Securities for an indefinite period, and (iv) can afford the complete
loss of its investment. The Investor recognizes the highly speculative nature of
this investment. The Investor acknowledges that it has carefully read the SEC
Documents and the terms and conditions herein and fully understands the contents
thereof.
Section 3.3 AUTHORITY. This Purchase Agreement has been duly
authorized and validly executed and delivered by the Investor, and the board of
directors of the Investor, if applicable . The decision to invest and the
execution and delivery of this Purchase Agreement by the Investor, the
performance by the Investor of its obligations hereunder and the consummation by
the Investor of the transactions contemplated hereby have been duly authorized
and requires no other proceedings on the part of the Investor. This Purchase
Agreement has been duly executed and delivered by the Investor and, assuming the
4
due execution and delivery hereof and acceptance thereof by the Company, will
constitute the legal, valid and binding obligations of the Investor, enforceable
against the Investor in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
Section 3.4 NOT AN AFFILIATE. Until the closing, the Investor is
neither an officer, director or "affiliate" (as that term is defined in Rule 405
of the Securities Act) of the Company.
Section 3.5 DISCLOSURE; ACCESS TO INFORMATION. The Investor has
received all documents, records, books and other information pertaining to
Investor's investment in the Company that has been requested by the Investor.
The Investor has had the opportunity to ask questions of, and receive answers
from, the Company, and has not relied on any material or representations of the
Company except as contained in this Purchase Agreement.
Section 3.6 MANNER OF SALE. At no time was the Investor presented
with or solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising in connection with the offer and sale of the Securities.
Section 3.7 NO LEGAL, TAX OR INVESTMENT ADVICE. The Investor
understands that nothing in this Purchase Agreement or any other materials
presented to the Investor in connection with the purchase and sale of the
Securities constitutes legal, tax or investment advice. The Investor has relied
on, and has consulted with, such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities.
Section 3.8 NO ADVERTISEMENTS. The Investor is not purchasing the
Securities as a result of, or subsequent to, any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants that:
Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted except as described in the SEC
Documents. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those (individually or in the aggregate) in which the failure so to
qualify would not reasonably be expected to have a Material Adverse Effect. The
Company is not in violation of any material term of its Certificate of
Incorporation (as defined below) or Bylaws (as defined below).
5
Section 4.2 AUTHORITY. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Purchase Agreement, and all Exhibits annexed hereto, and to issue the
Securities, (ii) the execution, issuance and delivery of this Purchase Agreement
by the Company, the consummation by it of the transactions contemplated hereby
and thereby, and the performance of its obligations hereunder have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company, its shareholders, or its Board of Directors is
necessary, and (iii) this Purchase Agreement has been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Upon their issuance and delivery pursuant to this Purchase Agreement, the
Securities will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances other than those created hereunder or by the
actions of the Investor; PROVIDED, HOWEVER, that the Securities are subject to
restrictions on transfer under state and/or federal securities laws.
Section 4.3 CAPITALIZATION. As of December 31, 1999, the authorized
capital stock of the Company consists of 19,000,000 shares of Common Stock,
$.0001 par value, of which 3,503,000 shares are outstanding, and 1,000,000
shares of preferred stock, $.0001 par value, of which 144,081 shares are
outstanding, and the options set forth on Schedule 4.3 annexed hereto. All of
the outstanding shares of the Company's capital stock have been duly and validly
authorized and issued and are fully paid and nonassessable. No shares of Common
Stock or preferred stock of the Company are entitled to preemptive or similar
rights. Except as disclosed in the SEC Documents and as contemplated by this
Agreement, to the knowledge of the Company, no Person or group of Persons
beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) or has the right to acquire by agreement with or by obligation
binding upon the Company beneficial ownership of in excess of five percent of
the Common Stock.
Section 4.4 COMMON STOCK. The Company has registered its Common Stock
pursuant to the Exchange Act, and such Common Stock is currently listed or
quoted, and trades, on the Nasdaq Small Cap Market.
Section 4.5 SEC DOCUMENTS. The Company has delivered or made
available to the Investor true and complete copies of the SEC Documents filed by
the Company with the SEC during the twelve months immediately preceding the date
hereof. The Company has not provided to the Investor any information that,
according to applicable law, rule or regulation, should have been disclosed
publicly prior to the date hereof by the Company, but which has not been so
disclosed. The SEC Documents comply in all material respects with the
requirements of the Securities Act and/or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder and none of the
SEC Documents contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements).
6
Section 4.6 VALID ISSUANCES. Neither the issuance of the Securities,
nor the Company's performance of its obligations under this Purchase Agreement
will (i) result in the creation or imposition by the Company of any liens,
charges, claims or other encumbrances upon the Securities, or any of the assets
of the Company, or (ii) entitle the holders of Outstanding Capital Shares to
preemptive or other rights to subscribe to or acquire any Capital Shares or
other securities of the Company.
Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates, nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising in connection with the offer and sale of the Securities,
or (ii) has made any offers or sales of any security or solicited any offers to
buy any security under any circumstances that would require registration of the
Securities under the Securities Act, except as contemplated by this Purchase
Agreement.
Section 4.8 NO CONFLICTS. The execution, delivery and performance of
this Purchase Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby, including without limitation
the issuance of the Securities, do not and will not (i) result in a violation of
the Company's Certificate of Incorporation or ByLaws or (ii) conflict with, or
constitute a material default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, patent, patent
license, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected, nor is the Company otherwise in violation of, in
conflict with, or in default under, any of the foregoing except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The business of the Company is not being conducted in violation
of any law, ordinance or regulation of any governmental entity, except for
possible violations that either singly or in the aggregate would not reasonably
be expected to have a Material Adverse Effect. Except for the filing of a Form D
within 15 days after the Closing Date (which the Company agrees it will file),
and such other form(s) required by "blue sky" laws, the Company is not required
under federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Purchase Agreement or issue and sell the Securities, in
accordance with the terms hereof; provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investor
herein.
7
Section 4.9 NO UNDISCLOSED LIABILITIES. The Company has no
liabilities or obligations, known or unknown, absolute or otherwise, which are
not disclosed in the SEC Documents or otherwise publicly announced, or as
incurred in the ordinary course of the Company's businesses since January 1,
1999, or which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.
Section 4.10 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since January 1,
1999, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company, but which
has not been so publicly announced or disclosed in the SEC Documents.
Section 4.11 LITIGATION AND OTHER PROCEEDINGS. Except as may be set
forth in the SEC Documents, there are no lawsuits or proceedings pending or to
the knowledge of the Company threatened, against the Company, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which would reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, so far as is known by the
Company, requested of any court, arbitrator or governmental agency which would
be reasonably expected to result in a Material Adverse Effect.
Section 4.12 ACCURACY OF REPORTS AND INFORMATION. The Company is in
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the Exchange Act. The Company has
complied in all material respects and to the extent applicable with all
reporting obligations, under either Section 13(a) or 15(d) of the Exchange Act
for a period of at least twelve (12) months immediately preceding the
Subscription Date.
Section 4.13 EMPLOYEE RELATIONS. The Company is not involved in any
labor dispute, nor, to the knowledge of the Company, is any such dispute
threatened which could reasonably be expected to have a Material Adverse Effect.
The Company believes that its relations with its employees are good.
Section 4.14 INSURANCE. The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company is engaged. The Company has no reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires, or obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
Section 4.15 PATENTS AND TRADEMARKS. The Company has, or has rights
to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses, trade secrets and other
intellectual property rights which are necessary for use in connection with its
business or which the failure to so have would reasonably be expected to have a
Material Adverse Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). To
the best knowledge of the Company, none of the Intellectual Property Rights
infringe on any rights of any other Person, and the Company either owns or has
duly licensed or otherwise acquired all necessary rights with respect to the
Intellectual Property Rights. The Company has not received any notice from any
third party of any claim of infringement by the Company of any of the
Intellectual Property Rights, and has no reason to believe there is any basis
for any such claim. To the best knowledge of the Company, there is no existing
infringement by another Person on any of the Intellectual Property Rights.
8
Section 4.16 USE OF PROCEEDS. Net proceeds are to be used by the
Company for general working capital and not for the repayment of any judgment.
Section 4.17 SUBSIDIARIES. Except as disclosed in the SEC Documents,
the Company does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, association or other business
entity.
Section 4.18 NO PRIVATE PLACEMENTS. Except as disclosed in the SEC
Documents, the Company has not conducted a private placement of its Common Stock
or of any debt or equity instrument convertible into Common Stock within one
year prior to the Closing Date. Except as disclosed in the SEC Documents, there
are no outstanding securities issued by the Company that are directly or
indirectly convertible into, exercisable into, or exchangeable for, shares of
Common Stock, that have anti-dilution or similar rights that would be affected
by the issuance of the Securities.
Section 4.19 PERMITS; COMPLIANCE. The Company and each of its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"), and there is no action pending or, to the knowledge of the Company,
threatened regarding the suspension or cancellation of any of the Company
Permits except for such Company Permits, the failure of which to possess, or the
cancellation, or suspension of which, would not, individually or in the
aggregate, have a Material Adverse Effect. To the Company's knowledge, neither
the Company nor any of its subsidiaries is in material conflict with, or in
material default or material violation of, any of the Company Permits. Since
January 1, 1999 neither the Company nor any of its subsidiaries has received any
notification with respect to possible material conflicts, material defaults or
material violations of applicable laws.
Section 4.20 TAXES. All federal, state, city and other tax returns,
reports and declarations required to be filed by or on behalf of the Company
have been filed and such returns are complete and accurate and disclose all
taxes (whether based upon income, operations, purchases, sales, payroll,
licenses, compensation, business, capital, properties or assets or otherwise)
required to be paid in the periods covered thereby.
Section 4.21 NO DEFAULT. The Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it is or its property
is bound, and neither the execution, nor the delivery by the Company, nor the
performance by the Company of its obligations under this Purchase Agreement will
conflict with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or imposition
9
of any lien or charge on any assets or properties of the Company under, any
indenture, mortgage, deed of trust or other material agreement applicable to the
Company or instrument to which the Company is a party or by which it is bound or
any statute or the Certificate of Incorporation or ByLaws of the Company, or any
decree, judgment, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or its properties, or the Company's
listing agreement for its Common Stock.
Section 4.22 ABSENCE OF EVENTS OF DEFAULT. Except as set forth in the
SEC Documents and this Purchase Agreement, no Event of Default, as defined in
the respective agreement to which the Company is a party, and no event which,
with the giving of notice or the passage of time or both, would become an Event
of Default (as so defined), has occurred and is continuing, which would have a
Material Adverse Effect.
Section 4.23 GOVERNMENTAL AND CONTRACTUAL CONSENT, ETC. No consent,
approval or authorization of, or designation, declaration or filing with any
governmental authority or any contract counterpart on the part of the Company is
required in connection with the valid execution and delivery of this Purchase
Agreement, or the offer, sale or issuance of the Securities, or the consummation
of any other transaction contemplated hereby.
Section 4.24 INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in the
SEC Documents, the Company has sufficient trademarks, trade names, patent
rights, copyrights and licenses to conduct its business. To the Company's
knowledge, neither the Company nor its products is infringing or will infringe
any trademark, trade name, patent right, copyright, license, trade secret or
other similar right of others currently in existence; and there is no claim
being made against the Company regarding any trademark, trade name, patent,
copyright, license, trade secret or other intellectual property right which
could have a Material Adverse Effect.
Section 4.25 MATERIAL CONTRACTS. Except as set forth in the SEC
Documents, the agreements to which the Company is a party described in the SEC
Documents are valid agreements, in full force and effect the Company is not in
material breach or material default (with or without notice or lapse of time, or
both) under any of such agreements and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements.
Section 4.26 TITLE TO ASSETS. Except as set forth in SEC Documents,
the Company has good and marketable title to all properties and material assets
described in the SEC Documents as owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company.
Section 4.27 REQUIRED GOVERNMENTAL PERMITS. The Company is in
possession of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities that are material to the conduct of its business, all of
which are valid and in full force and effect.
10
Section 4.28 FULL DISCLOSURE. There is no fact known to the Company
(other than general economic conditions known to the public generally) that has
not been publicly disclosed by the Company or disclosed in writing to the
Investor which could reasonably be expected to have a Material Adverse Effect,
or could reasonably be expected to materially and adversely affect the ability
of the Company to perform its obligations pursuant to this Purchase Agreement.
Section 4.29 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
material liabilities or obligations, absolute or contingent (individually or in
the aggregate), except as set forth in the SEC Documents or as incurred in the
ordinary course of business after the date of the SEC Documents.
ARTICLE V
---------
COVENANTS OF THE COMPANY
------------------------
Section 5.1 LISTING OF COMMON STOCK. The Company shall (a) not later
than the twentieth Business Day following the Closing Date prepare and file with
the Principal Market (as well as any other national securities exchange, market
or trading facility on which the Common Stock is then listed) an additional
shares listing application covering the number of Securities, (b) use best
efforts to take all reasonable steps necessary to cause such shares to be
approved for listing on the Principal Market (as well as on any other national
securities exchange, market or trading facility on which the Common Stock is
then listed) as soon as possible thereafter, and (c) the Company shall use its
best efforts to maintain the listing of its Common Stock on such exchange or
market for so long as the Investor holds at least fifty percent (50%) of the
Securities. The Company warrants that it has not received any notice, oral or
written, affecting it's continued listing on the Nasdaq Small Cap Market. The
Company will use its best efforts to comply with the listing and trading
requirements of its Common Stock on the Principal Market and will use its best
efforts to comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market. If the Company
receives notification from Nasdaq or any other controlling entity stating that
the Company is not in compliance with the listing qualifications of such
Principal Market, the Company will use its best efforts to take all reasonable
action to bring the Company into compliance with all applicable listing
standards of the Principal Market.
Section 5.2 EXCHANGE ACT REGISTRATION. The Company will use its best
efforts to maintain the registration of its Common Stock under the Exchange Act,
will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act.
Section 5.3 LEGENDS. The securities to be sold by the Company
pursuant to this Purchase Agreement shall be free of restrictive legends, except
as set forth in Article VII.
Section 5.4 LEGAL OPINION. The Company's independent counsel shall
deliver to the Investor upon execution of this Purchase Agreement, an opinion in
the form of Exhibit B annexed hereto.
Section 5.5 NOTICES. The Company agrees to provide the Investor with
copies of all notices and information, including without limitation notices and
proxy statements in connection with any meetings that are provided to the
holders of shares of Common Stock, contemporaneously with the delivery of such
notices or information to such Common Stock holders.
11
Section 5.6 RULE 144 COMPLIANCE. The Company will take all action as
may be required as a condition to the availability of Rule 144, and the Company
will upon request supply written confirmation that it is in compliance with the
reporting requirements of Rule 144. The Company agrees to use its best efforts
to facilitate and expedite transfers of the Securities pursuant to Rule 144,
which efforts shall include, but not be limited to, timely notice to its
transfer agent to expedite such transfers. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Securities to the public without registration, the
Company agrees to use its reasonable best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934
Act; and
(iii) not take any action or file any document (whether or not
permitted by Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said Act.
Section 5.7 REGISTRATION. The Company agrees to use its best efforts
to file a registration statement including the Securities with the SEC within 90
days after the Closing Date. The Company agrees to use its reasonable best
efforts to cause such registration statement to become and remain effective for
a period of at least nine months or the date all of the Securities may be sold
by the Investor under the provisions of Rule 144, without volume limitation.
Such filing shall be completed at the expense of the Company.
12
ARTICLE VI
----------
NON-DISCLOSURE OF NON-PUBLIC INFORMATION
----------------------------------------
Section 6.1 NON-DISCLOSURE OF NON-PUBLIC INFORMATION
(a) The Company has not disclosed to the Investor, advisors
to, or representatives of, the Investor unless prior to disclosure of such
information the Company identifies such information as being non-public
information and provides the Investor, and its advisors and representatives with
the opportunity to accept or refuse to accept such non-public information for
review. The Company may, as a condition to disclosing any non-public information
hereunder, require the Investor's advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.
(b) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or representatives.
Nothing contained in this Section shall be construed to mean that such persons
or entities other than the Investor (without the written consent of the Investor
prior to disclosure of such information) may not obtain non-public information
in the course of conducting due diligence in accordance with the terms of this
Purchase Agreement.
ARTICLE VII
-----------
LEGENDS
-------
Section 7.1 LEGENDS. The Investor agrees to the imprinting, so long
as is required by this Section, of the following legend (or such substantially
similar legend as is acceptable to the Investor and its counsel, the parties
agreeing that any unacceptable legended securities shall be replaced promptly by
and at the Company's cost) on the Securities:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
of transfer set forth in this Section.
Section 7.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend
other than the one specified in this Article has been or shall be placed on the
share certificates representing the Common Stock, and no instructions or "stop
transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article.
13
Section 7.3 INVESTOR'S COMPLIANCE. Nothing in this Article shall
affect in any way the Investor's obligations to comply with all applicable
securities laws upon the resale of the Common Stock.
ARTICLE VIII
------------
CHOICE OF LAW
-------------
Section 8.1 CHOICE OF LAW; VENUE; JURISDICTION. This Purchase
Agreement will be exclusively construed and enforced in accordance with and
exclusively governed by the laws of the State of New York, except for matters
arising under the Securities Act and Exchange Act, without reference to
principles of conflicts of law. Each of the parties consents to the exclusive
jurisdiction of the U.S. District Court sitting in the Southern District of the
State of New York sitting in Manhattan in connection with any dispute arising
under this Purchase Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on FORUM NON CONVENIENS, to
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Purchase Agreement obtains a judgment
against it in such a proceeding, the party which obtained such judgment may
enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Purchase Agreement
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law. Each
party waives its right to a trial by jury.
ARTICLE IX
----------
ASSIGNMENT; TERMINATION
-----------------------
Section 9.1 ASSIGNMENT. The Investor's interest in this Purchase
Agreement and its ownership of the Securities may be assigned or transferred at
any time, in whole or in part, to any other person or entity (including any
affiliate of the Investor) provided that the Company must consent to such
assignment or transfer (which consent shall not be unreasonably withheld), and
such assignee or transferee must agree to, and truthfully, make the
representations and warranties contained in Article III. The provisions of this
Purchase Agreement shall inure to the benefit of, and be enforceable by, any
transferee of any of the shares of Securities purchased or acquired by the
Investor hereunder with respect to the Common Stock held by such person. In the
event the Investor transfers or assigns any of the Securities as set forth
herein, the Investor shall remain liable under this Purchase Agreement up until
the time such transfer or assignment is completed, and shall remain liable after
the transfer or assignment is completed for its actions taken prior to such
assignment or transfer.
14
Section 9.2 TERMINATION. This Purchase Agreement shall terminate upon
the earliest of (i) the date that all the Securities have been sold by the
Investor; (ii) the date that all of the Securities may be sold by the Investor
under the provisions of Rule 144, without volume limitation; or (iii) two years
after the expiration of the Closing Date.
ARTICLE X
---------
NOTICES
-------
Section 10.1 NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day during normal business hours where such notice is to
be received), or the first Business Day following such delivery (if delivered
other than on a Business Day during normal business hours where such notice is
to be received), or (b) on the second Business Day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company:
Tam Restaurants, Inc.
1163 Forest Avenue
Staten Island, NY 10310
Attention: Frank Cretella
Facsimile: (718) 720-5959
Telephone: (718) 448-3872
with a copy to:
The Goldstein Law Group, P.C.
65 Broadway, 10th Floor
New York, NY 10006
Attention: Scott H. Goldstein, Esq.
Telephone: (212) 809-4220
Facsimile: (212) 809-4228
15
If to the Investor:
Ergun Kaya, Esq.
16, Alvanley Gardens
London NW6 1JD, UK
Facsimile: 44 171 431 4485
With a copy to: Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: J. Watkins
Facsimile: (202) 663-6363
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 10.1 by giving at least ten
calendar days' prior written notice of such changed address or facsimile number
to the other party hereto.
Section 10.2 INDEMNIFICATION. The Company agrees to indemnify and
hold harmless the Investor and each officer, and director of the Investor or
person, if any, who controls the Investor within the meaning of the Securities
Act against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Purchase Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), to which
the Investor may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the breach of any term of this Purchase Agreement
by the Company. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
16
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action (including any
impleaded parties) include both the Investor and the indemnifying party and the
Investor shall have been advised by such counsel that there may be one or more
legal defenses available to the indemnifying party in conflict with any legal
defenses which may be available to the Investor (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the Investor, it being understood, however, that the indemnifying party shall,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable only for the reasonable fees and
expenses of one separate firm of attorneys for the Investor, which firm shall be
designated in writing by the Investor). No settlement of any action against an
indemnified party shall be made without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld.
Section 10.3 CONTRIBUTION. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 10.2 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 10.2 hereof
provide for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any indemnified party, then the
Company and the Investor shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Purchase Agreement, include, but not be limited to, all costs
of defense and investigation and all attorneys' fees), in either such case
(after contribution from others) on the basis of relative fault as well as any
other relevant equitable considerations. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in Section 10.2 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contributions from any person
who was not guilty of such fraudulent misrepresentation.
ARTICLE XI
----------
MISCELLANEOUS
-------------
Section 11.1 COUNTERPARTS; FACSIMILE; AMENDMENTS. This Purchase
Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument. Except as otherwise stated herein, in lieu of the original
documents, a facsimile transmission or copy of the original documents shall be
as effective and enforceable as the original. This Purchase Agreement may be
amended only by a writing executed by the Company on the one hand, and the
Investor, on the other hand.
Section 11.2 ENTIRE AGREEMENT. This Purchase Agreement sets forth the
entire agreement and understanding of the parties relating to the subject matter
hereof and supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof.
17
Section 11.3 SURVIVAL; SEVERABILITY. The representations, warranties,
covenants and agreements of the parties hereto shall survive the Closing
hereunder. In the event that any provision of this Purchase Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Purchase Agreement shall continue in full force and effect without
said provision; provided that such severability shall be ineffective if it
materially changes the economic benefit of this Purchase Agreement to any party.
Section 11.4 TITLE AND SUBTITLES. The titles and subtitles used in
this Purchase Agreement are used for convenience only and are not to be
considered in construing or interpreting this Purchase Agreement.
Section 11.5 REPLACEMENT OF CERTIFICATES. Upon (i) receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of a certificate representing the Securities, and (ii) in the case
of any such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company, or (iii) in the case of any such mutilation, on surrender and
cancellation of such certificate, the Company at its expense will execute and
deliver, in lieu thereof, a new certificate of like tenor.
Section 11.6 PUBLICITY. The Company and the Investor shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such public statement
without the prior written consent of the other parties, which consent shall not
be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other parties with prior notice of such
public statement. Notwithstanding the foregoing, the Company shall not publicly
disclose the names of the Investor without the prior written consent of the
Investor, except to the extent required by law or in response to a written SEC
request, in which case the Company shall provide the Investor with prior written
notice of such public disclosure.
Section 11.7 CURRENCY. All references to currency in this Purchase
Agreement and all Exhibits annexed hereto shall be in United States currency.
Section 11.8 FEES AND EXPENSES. Each of the parties shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby, except that the Company agrees to pay the
Investor's legal expenses up to $2,500 in connection with this transaction,
promptly after the Closing upon the submission to the Company of a written
invoice for such legal expenses.
EXHIBITS
A: Escrow Agreement
B: Legal Opinion
18
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Purchase Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
TAM RESTAURANTS, Inc.
By ________________________
Name: Frank Cretella
Title: President
ERGUN KAYA
--------------------------
19