EXHIBIT 10.26
FORM OF PURCHASE AGREEMENT FOR THE SERIES A 2%
CONVERTIBLE PREFERRED STOCK
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
By and Among
Incomnet Inc.
and
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Purchaser
Dated as of September 27, 1996
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TABLES OF CONTENTS
Page
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ARTICLE I CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Certain Definitions. . . . . . . . . . . . . . . . . . . 1
ARTICLE II PURCHASE OF SHARES . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1. Purchase of Shares; Closing. . . . . . . . . . . . . . . 3
ARTICLE III REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 4
Section 3.1. Representations and Warranties of the Company. . . . . . 4
Section 3.2. Representations and Warranties of the Purchaser. . . . . 8
ARTICLE IV OTHER AGREEMENTS OF THE PARTIES. . . . . . . . . . . . . . . . 10
Section 4.1. Transfer Restrictions . . . . . . . . . . . . . . . . . 10
Section 4.2. Stop Transfer Instruction . . . . . . . . . . . . . . . 11
Section 4.3. Furnishing of Information . . . . . . . . . . . . . . . 11
Section 4.4. Notice of Certain Events. . . . . . . . . . . . . . . . 11
Section 4.5. Copies and Use of Disclosure Materials. . . . . . . . . 12
Section 4.6. Modifications to Disclosure Materials . . . . . . . . . 12
Section 4.7. Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . 12
Section 4.8. Integration . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.9. Furnishing of Rule 144A Materials . . . . . . . . . . . 13
Section 4.10. Solicitation Materials. . . . . . . . . . . . . . . . . 13
Section 4.11. Subsequent Financial Statements . . . . . . . . . . . . 13
Section 4.12. Right of First Refusal. . . . . . . . . . . . . . . . . 13
Section 4.13. Purchaser Ownership of Common Stock . . . . . . . . . . 14
Section 4.14. Listing of Underlying Shares. . . . . . . . . . . . . . 15
Section 4.15. Conversion Procedures . . . . . . . . . . . . . . . . . 15
ARTICLE V CONDITIONS PRECEDENT TO CLOSING. . . . . . . . . . . . . . . 15
Section 5.1. Conditions Precedent to Obligations of the Purchaser. . 15
Section 5.2. Conditions Precedent to Obligations of the Company. . . 17
ARTICLE VI TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 17
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Section 6.1. Termination by Mutual Consent . . . . . . . . . . . . . 17
Section 6.2. Termination by the Company or the Purchaser . . . . . . 18
Section 6.3. Termination by the Company. . . . . . . . . . . . . . . 18
Section 6.4. Termination by the Purchaser. . . . . . . . . . . . . . 18
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.1. Fees and Expenses . . . . . . . . . . . . . . . . . . . 19
Section 7.2. Entire Agreement; Amendments. . . . . . . . . . . . . . 19
Section 7.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.4. Amendments, Waivers . . . . . . . . . . . . . . . . . . 20
Section 7.5. Headings. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.6. Successors and Assigns. . . . . . . . . . . . . . . . . 21
Section 7.7. No Third Party Beneficiaries. . . . . . . . . . . . . . 21
Section 7.8. Governing Law . . . . . . . . . . . . . . . . . . . . . 21
Section 7.9. Survival. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.10. Counterpart Signatures. . . . . . . . . . . . . . . . . 21
Section 7.11. Publicity . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.12. Severability. . . . . . . . . . . . . . . . . . . . . . 22
Section 7.13. Remedies. . . . . . . . . . . . . . . . . . . . . . . . 22
Exhibit A Certificate of Designation
Exhibit B Registration Rights Agreement
Exhibit C Form of Opinion of Mark J. Richardson, counsel for the Company
Exhibit D Conversion Procedures
Exhibit E Certificate of Officers of Incomnet, Inc.
Schedule 3.1(a) Subsidiaries
Schedule 3.1(c) Capitalization
Schedule 3.1(f) Required Consents and Approvals
Schedule 3.1(g) Litigation
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated as of September
27, 1996 (this "AGREEMENT"), by and among Incomnet Inc., a California
corporation (the "COMPANY"),and ________________________ (the "PURCHASER").
WHEREAS, the Company desires to issue and sell to the Purchaser and
the Purchaser desires to acquire shares of the Company's Series A Convertible
Preferred Stock, no par value per share (the "PREFERRED STOCK").
IN CONSIDERATION of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
CERTAIN DEFINITIONS
Section 1.1 CERTAIN DEFINITIONS. As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated:
"AFFILIATE" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "CONTROL" (including,
with correlative meaning, the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a 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.
"CLOSING" shall have the meaning set forth in SECTION 2.1(b).
"CLOSING DATE" shall have the meaning set forth in SECTION 2.1(b).
"CERTIFICATE OF DESIGNATION" shall have the meaning set forth in
SECTION 2.1(a).
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder as in effect on the date hereof.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's common stock par value [$. ] per
share.
"DISCLOSURE MATERIALS" means, collectively, the SEC Documents, the
disclosure package delivered to the Purchaser in connection with the offering
by the Company of the Shares and the Schedules to this Agreement furnished by
or on behalf of the Company pursuant to Section 3.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"LIEN" means, with respect to any asset, any mortgage, lien pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"MATERIAL ADVERSE EFFECT" shall have the meaning set forth in SECTION
3.1(a).
"NASD" means the National Association of Securities Dealers, Inc.
"PER SHARE CONSIDERATION" shall have the meaning set forth in SECTION
2.1(a).
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"PREFERRED STOCK" shall have the meaning set forth in the recitals
hereto.
"PURCHASE PRICE" shall have the meaning set forth in SECTION 2.1(a).
"REGISTRATION RIGHTS AGREEMENT" mean the registration rights
agreement, substantially in the form of EXHIBIT B, as the same may be amended,
supplemented or otherwise modified in accordance with its term.
"REQUIRED APPROVALS" shall have the meaning set forth in SECTION
3.1(f).
"SEC DOCUMENTS" shall have the meaning set
forth in SECTION 3.1(l).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Preferred Stock purchased by the
Purchaser pursuant to this Agreement.
"SUBSIDIARIES" shall have the meaning set forth in SECTION 3.1(a).
"UNDERLYING SHARES" means the shares of Common Stock into which the
Shares are convertible in accordance with the term hereof and the Certificate of
Designation.
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ARTICLE II
PURCHASE OF SHARES
Section 2.1 PURCHASE OF SHARES; CLOSING.
(a) Subject to the terms and conditions herein set forth, the Company
shall issue and sell to the Purchaser, and the Purchaser shall purchase from the
Company on the Closing Date ______ Shares, with a commitment by Purchaser to
purchase an additional ______ shares when Company offers them for sale, which
shall have the respective rights, preferences and privileges set forth in
EXHIBIT A (the "CERTIFICATE OF DESIGNATION"), at a price per Share of
US$1,000.00 (the "PER SHARE CONSIDERATION"). The Per Share Consideration
multiplied by the number of Shares to be purchased by the Purchaser hereunder is
hereinafter referred to as the "PURCHASE PRICE."
(b) The closing of the purchase and sale of the Shares (the
"CLOSING") shall take place at the offices of GEM Advisors, Inc., immediately
following the execution hereof, or at such other time and/or place as the
Purchaser and the Company may agree, PROVIDED, however, in no case shall the
Closing take place later than the fifth day after the last of the conditions
listed in ARTICLE V is satisfied or waived by the appropriate party. The date
of Closing is hereinafter referred to as the "CLOSING DATE".
(c) At the Closing, (i) the Company shall deliver to the Purchaser
(A) one or more stock certificates representing the Shares purchased hereunder,
registered in the name of the Purchaser and (B) all documents, instruments and
writings required to have been delivered at or prior to Closing by the Company
pursuant to this Agreement, (ii) the Purchaser shall deliver to the Company
(A) the Purchase Price as determined pursuant to this ARTICLE I in United States
dollars in immediately available funds by wire transfer to an account designated
in writing by the Company prior to the Closing and (B) all documents,
instruments and writings required to have been delivered at or prior to Closing
by the Purchaser pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
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(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company has no subsidiaries other than as set forth
in the SECURITIES EXCHANGE COMMISSION Documents or in SCHEDULE 3.1(a)
(collectively, the "SUBSIDIARIES"). Each of the Subsidiaries is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the full corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. Each of the Company and the Subsidiaries is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the results of operations, assets, prospects, or financial condition of the
Company and the Subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated hereby and by the Registration Rights Agreement and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of the Company. Each of
this Agreement and the Registration Rights Agreement had been duly executed and
delivered by the Company and constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
(c) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company and each of the Subsidiaries is set forth in the SECURITIES
EXCHANGE COMMISSION Documents (as defined in paragraph 3.1(l) herein). No shares
of Common Stock are entitled to preemptive or similar rights. Except as
specifically disclosed in the SECURITIES EXCHANGE COMMISSION Documents, there
are no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a result of
the purchase and sale of the Shares hereunder, securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire any shares of Common STOCK, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. Neither the Company
nor any Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, bylaws or other charter documents.
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(d) ISSUANCE OF SHARES. The Shares are duly authorized and, when
paid for in accordance with the terms hereof, shall be validly issued, fully
paid and nonassessable. The Company has and at all times while the Shares are
outstanding will maintain an adequate reserve of shares of Common STOCK to
enable it to perform its obligations under this agreement and the Certificate of
Designation. When issued in accordance with the terms hereof, the Underlying
Shares will be duly authorized, validly issued, fully paid and nonassessable.
(e) NO CONFLICTS. The execution, delivery and performance of this
AGREEMENT and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of its
certificate of incorporation or bylaws or (ii) subject to obtaining the consents
referred to in SECTION 3.1(f), conflict with, or constitute a default (or an
event which 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, indenture or instrument to which the Company is
a party, or (iii) to the knowledge of the Company result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company is subject
(including Federal and state securities laws and regulation), or by which any
property or asset of the Company is bound or affected, except in the case of
each of clauses (ii) and (iii), such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The business
of the Company is not being conducted in violation of any law, ordinance or
regulation of any governmental authority, except for violations which,
individually or in the aggregate, do not have a Material Adverse Effect.
(f) CONSENTS AND APPROVALS. Except as specifically set forth in
SCHEDULE 3.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement and the Registration
Rights AGREEMENT, other than the filing of the registration statement covering
the Underlying Shares with the Commission and the making of the applicable
blue-sky filings under state securities laws, each as contemplated by the
Registration Rights AGREEMENT and other than, in all cases, where the failure to
obtain such consent, waiver, authorization or order, or to give or make such
notice or filing, would not materially impair or delay the ability of the
Company to effect the Closing and deliver to the Purchaser the Shares free and
clear of all Liens (collectively, the "REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed in the
Disclosure Materials or in SCHEDULE 3.1(g), there is no action, suit, notice of
violation, proceeding or investigation pending or, to the best knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective properties before or by any court, governmental or
administrative agency or regulatory authority (Federal, State, county, local or
foreign) which (i) relates to or challenges the legality, validity or
enforceability of this Agree-
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ment, the Registration Rights Agreement or the Shares (ii) could, individually
or in the aggregate, have a Material Adverse Effect or (iii) could, individually
or in the aggregate, materially impair the ability of the Company to perform
fully on a timely basis its obligations under this Agreement or the
Registration Rights Agreement.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any Subsidiary
(i) is in default under or in violation of any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound, except such conflicts or defaults as
do not have a Material Adverse Effect, (ii) is in violation of any order of any
court, arbitrator or governmental body, except for such violations as do not
have a Material Adverse Effect, or (iii) is in violation of any statute, rule or
regulation of any governmental authority which could (individually or in the
aggregate) (x) adversely affect the legality, validity or enforceability of this
Agreement or the Registration Rights Agreement, (y) have a Material Adverse
Effect or (z) adversely impair the Company's ability or obligation to perform
fully on a timely basis its obligations under this Agreement or the Registration
Rights Agreement.
(i) CERTAIN FEES. No fees or commission will be payable by the
Company to any broker, finder, investment banker or bank with respect to the
consummation of the transactions contemplated hereby.
(j) DISCLOSURE MATERIALS. The Disclosure Materials do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(k) PRIVATE OFFERING. Neither the Company nor any Person acting on
its behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Shares under
the Securities Act) which might subject the offering, issuance or sale of the
Shares to the registration requirements of Section 5 of the Securities Act.
(l) SEC DOCUMENTS. The Company has filed
all reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law to file such
material) (the foregoing materials being collectively referred to herein as the
"SEC DOCUMENTS") on a timely basis, or has received a
valid extension of such time of filing. As of their respective dates, the
SEC Documents complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Documents, when filed, contained any untrue statement of a
material fact or omitted 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
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Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission 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 as may be otherwise indicated in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal year-end audit
adjustments. Since the date of the financial statements included in the
Company's last filed Quarterly Report on Form 10-Q, there has been no event,
occurrence or development that has had a Material Adverse Effect which is not
specifically disclosed in any of the Disclosure Materials.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser hereby represents and warrants to the Company as follows:
(a) ORGANIZATION; AUTHORITY. The Purchaser is a corporation duly and
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. The Purchaser has the requisite power and authority to enter
into and to consummate the transactions contemplated hereby and by the
Registration Rights Agreement and otherwise to carry out its obligations
hereunder and thereunder. The purchase of the Shares by the Purchaser hereunder
has been duly authorized by all necessary action on the part of the Purchaser.
Each of this Agreement and the Registration Rights Agreement has been duly
executed and delivered by the Purchaser or on its behalf and constitutes the
valid and legally binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
(b) INVESTMENT INTENT. The Purchaser is acquiring the Shares and the
Underlying Shares for its own account (and/or on behalf of managed accounts who
are purchasing solely for their own accounts for investment) for investment
purposes only and not with a view to or for distributing or reselling such
Shares or Underlying Shares or any part thereof or interest therein, without
prejudice, however, to the Purchaser's right, subject to the provisions of this
Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Shares or Underlying Shares under
an effective registration statement under the Securities Act and in compliance
with applicable State securities laws or under an exemption from such
registration.
(c) PURCHASER STATUS. At the time the Purchaser (and any account for
which it is purchasing) was offered the Shares, it (and any account for which it
is purchasing) was, and at the date hereof, it (and any account for which it is
purchasing) is, and at the Closing Date, it (and any account for which it is
purchasing) will be, an "accredited investor" as defined in Rule 501(a) under
the Securities Act.
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(d) EXPERIENCE OF PURCHASER. The Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Shares, and has so evaluated the
merits and risks of such investment.
(e) ABILITY OF PURCHASER TO BEAR RISK OF INVESTMENT. The Purchaser
is able to bear the economic risk of an investment in the Shares and, at the
present time, is able to afford a complete loss of such investment.
(f) PROHIBITED TRANSACTIONS. The Shares to be purchased by the
Purchaser are not being acquired, directly or indirectly, with the assets of any
"employee benefit plan", within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
(g) ACCESS TO INFORMATION. The Purchaser acknowledges receipt of
the Disclosure Materials and further acknowledges that it has been afforded (i)
the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Shares and the merits and risks of investing
in the Shares; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment in the Common
Stock; and (iii) the opportunity to obtain such additional information which the
Company possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the Shares and
to verify the accuracy and completeness of the information contained in the
Disclosure Materials.
(h) RELIANCE. The Purchaser understands and acknowledges that (i)
the Shares are being offered and sold, and the Underlying Shares are being
offered, to it without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the Securities
Act and (ii) the availability of such exemption, depends in part on, and that
the Company will rely upon the accuracy and truthfulness of, the foregoing
representations and the Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchaser makes no
representation or warranty with respect to the transactions contemplated hereby
other than those specifically set forth in ARTICLE III herein.
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ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
Section 4.1 TRANSFER RESTRICTIONS. If the Purchaser should decide to
dispose of any of the Shares to be purchased by it hereunder (and upon
conversion thereof, any Underlying Shares), the Purchaser understands and
agrees that it may do so only (i) pursuant to an effective registration
statement under the Securities Act, (ii) to the Company or (iii) pursuant to
an available exemption from registration under the Securities Act. In
connection with any transfer of any Shares other than pursuant to an
effective registration statement or to the Company, the Company may require
that the transferor of such Shares provide to the Company an opinion of
counsel experienced in the area of United States securities laws selected by
the transferor, the form and substance of which opinion shall be, reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such Shares under the Securities Act or any State
securities laws.
The Purchaser agrees to the imprinting, so long as
appropriate, of the following legend on certificates representing the Shares:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, THEY MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THESE SECURITIES
AGREES THAT IT WILL NOT RESELL, PLEDGE OR OTHERWISE TRANSFER THESE SECURITIES
OR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE, EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR
(B) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT. IF THE PROPOSED TRANSFER IS TO BE MADE OTHER THAN PURSUANT TO CLAUSE (A)
OR (B) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY
AND THE TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 PROMULGATED UNDER THE SECURITIES ACT.
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The legend set forth above may be removed if and when the
Shares represented by such certificate or the Underlying Shares, as the case
may be, are disposed of pursuant to an effective registration statement under
the Securities Act or in the opinion of counsel to the Company experienced in
the area of United States securities laws such legend is no longer required
under applicable requirements of the Securities Act. The stock certificates
representing the Shares and the Underlying Shares shall also bear any other
legends required by applicable Federal or state securities laws, which
legends may be removed when, in the opinion of counsel to the Company
experienced in the applicable securities laws, such legends are no longer
required under the applicable requirements of such securities laws. The
Company agrees that it will provide the Purchaser, upon request, with a
substitute stock certificate or certificates, free from such legend at such
time as such legend is no longer applicable. The Purchaser agrees that, in
connection with any transfer of Shares or Underlying Shares by it pursuant to
an effective registration statement under the Securities Act, it Purchaser
will comply with all prospectus delivery requirements of the Securities Act.
The Company makes no representation, warranty or agreement as to the
availability of any exemption from registration under the Securities Act with
respect to any resale of Shares or Underlying Shares.
Section 4.2 STOP TRANSFER INSTRUCTION. The Purchaser agrees that the
Company shall be entitled to make a notation on its records and give
instructions to any transfer agent of the Company in order to implement the
restrictions on transfer set forth in this Agreement.
Section 4.3 FURNISHING OF INFORMATION. As long as the Purchaser owns
Shares or Underlying Shares, the Company will promptly furnish to it all
reports filed by the Company pursuant to Section 13(a) or 15(d) of the
Exchange Act (of if the Company is not at the time required to file reports
pursuant to such sections, annual and quarterly reports comparable to those
required by Section 13(a) or 15(d) of the Exchange Act).
Section 4.4 NOTICE OF CERTAIN EVENTS. The Company shall (i) advise the
Purchaser promptly after obtaining knowledge thereof, and, if requested by
the Purchaser, confirm such advice in writing, of (A) the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of the Shares or the Common Stock for offering
or sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or other regulatory authority, or
(B) any event that makes any statement of a material fact made in the
Disclosure Materials untrue or that requires the making of any additions to
or changes in the Disclosure Materials in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, (ii) use its best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption from qualification
of the Shares or the Common Stock under any state securities or Blue Sky
laws, and (iii) if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Shares or the Common Stock under any such
laws, use its best efforts to obtain the withdrawal or lifting of such order
at the earliest possible time.
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Section 4.5 COPIES AND USE OF DISCLOSURE MATERIALS. The Company shall
furnish the Purchaser, without charge, as many copies of the Disclosure
Materials, and any amendments or supplements thereto, as the Purchaser may
reasonably request. The Company consents to the use of the Disclosure
Materials, and any amendments and supplements thereto, by the Purchaser in
connection with resales of the Shares or the Underlying Shares other than
pursuant to an effective registration statement.
Section 4.6 MODIFICATIONS TO DISCLOSURE MATERIALS. If any event shall
occur as a result of which, in the reasonable judgment of the Company or the
Purchaser, it becomes necessary or advisable to amend or supplement the
Disclosure Materials in order to make the statements therein, in the light of
the circumstances at the time the Disclosure Materials were delivered to the
Purchaser, not misleading, or if it is necessary to amend or supplement the
Disclosure Materials to comply with applicable law, the Company shall
promptly prepare an appropriate amendment or supplement to the Disclosure
Materials (in form and substance reasonably satisfactory to the Purchaser) so
that (i) as so amended or supplemented the Disclosure Materials will not
include an untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to Purchaser, not
misleading and (ii) the Disclosure Materials will comply with applicable law.
Section 4.7 BLUE SKY LAWS. The Company shall cooperate with the
Purchaser in connection with the qualification of the Shares and the
Underlying Shares under the securities or Blue Sky laws of such jurisdictions
as the Purchaser may request and to continue such qualification at all times
through the third anniversary of the Closing Date; PROVIDED, HOWEVER, that
neither the Company nor its Subsidiaries shall be required in connection
therewith to qualify as a foreign corporation where they are not now so
qualified.
Section 4.8 INTEGRATION. The Company shall not and shall use its best
efforts to ensure that no Affiliate shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer
or sale of the Shares or the Underlying Shares in a manner that would require
the registration under the Securities Act of the sale of the Shares or
Underlying Shares to the Purchaser.
Section 4.9 FURNISHING OF RULE 144A MATERIALS. The Company shall, for
so long as any of the Shares or Underlying Shares remain outstanding and
during any period in which it is not subject to Section 13 or 15(d) of the
Exchange Act, make available to any registered holder of Shares or Underlying
Shares in connection with any sale thereof and any prospective purchaser of
such Shares or Underlying Shares from such Person, the following information
in accordance with Rule 144A(d)(4) under the Securities Act: a brief
statement of the nature of the business of the Company and the products and
services it offers and the Company's most recent audited balance sheet and
profit and loss and retained earnings statements, and similar audited
financial statements for such part of the two preceding fiscal years as the
Company has been in operation.
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Section 4.10 SOLICITATION MATERIALS. The Company shall not (i)
distribute any offering materials in connection with the offering and sale of
the Shares or Underlying Shares other than the Disclosure Materials and any
amendments and supplements thereto prepared in compliance herewith or (ii)
solicit any offer to buy or sell the Shares or Underlying Shares by means of
any form of general solicitation or advertising.
Section 4.11 SUBSEQUENT FINANCIAL STATEMENTS. The Company shall
furnish to the Purchaser, promptly after they are filed with the Commission,
a copy of all financial statements for any period subsequent to the period
covered by the financial statements included in the Disclosure Materials.
Section 4.12 RIGHT OF FIRST REFUSAL. The Company shall not directly or
indirectly, without the prior consent of the Purchaser, offer, sell, grant
any option to purchase, or otherwise dispose (or announce any offer, sale,
grant or any option to purchase or other disposition) of any of its or its
Affiliates' equity or equity-equivalent securities (a "Subsequent Sale") for
a period of 90 days after Closing Date, except (i) the granting of options to
employees, officers and directors under, and the issuance of shares upon
exercise of options granted under, any stock option plan heretofore or
hereinafter adopted by the Company, (ii) shares issued upon exercise of any
currently outstanding warrants and upon conversion of any currently
outstanding convertible preferred stock, and (iii) up to 150,000 shares to be
issued pursuant to settlement obligations evidenced by existing signed
Settlement Agreements; shares of Common Stock issued upon conversion of
Shares in accordance herewith, unless (A) the Company provides the Purchaser
a written notice (the "Subsequent Financing Notice") of its intention to
effect such Subsequent Financing, which Subsequent Financing Notice shall
describe in reasonable detail the proposed terms of such Subsequent Financing
and the amount of proceeds intended to be raised thereunder and (B) the
Purchaser shall not have notified the Company within forty-eight (48) hours
of its receipt of the Subsequent Financing Notice of its willingness to enter
into good faith negotiations to provide (or to cause its sole designee to
provide) financing to the Company on substantially the terms set forth in the
Subsequent Financing Notice. If the Purchaser shall fail to notify the
Company of its intention to enter into such negotiations within such
forty-eight (48) hour period, the Company may effect the Subsequent Financing
substantially upon the terms set forth in the Subsequent Financing Notice;
PROVIDED, that the Company shall provide the Purchaser with a second
Subsequent Financing Notice, and the Purchaser shall again have the right of
first refusal set forth above in this paragraph (a), if the Subsequent
Financing subject to the initial Subsequent Financing Notice shall not have
been consummated for any reason on the terms set forth in such Subsequent
Financing Notice within 30 days after the date of the initial Subsequent
Financing Notice.
(b) From the date hereof through the Closing Date, the Company shall
not and shall cause the Subsidiaries not to, without the consent of the
Purchaser, (i) amend its Certificate of Incorporation, bylaws or other
charter documents so as to adversely affect any rights of the
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Purchaser; (ii) split, combine or reclassify its outstanding capital stock;
(iii) declare, authorize, set aside or pay any dividend or other
distribution with respect to the Common Stock; (iv) redeem, repurchase or
offer to repurchase or otherwise acquire shares of its Common Stock other than
in payment of short swing profits owed to the Company pursuant to Section 16(b)
of the Exchange Act; or (v) enter into any agreement with respect to
any of the foregoing.
Section 4.13 LISTING OF UNDERLYING SHARES. The Company shall take all
steps necessary to cause the Underlying Shares to be approved for listing in
The NASDAQ national market (or other national securities exchange or market
on which the Common Stock is listed) no later than the first day after which
shares may be converted hereunder by the Purchaser, and shall provide to the
Purchaser evidence of such listing.
Section 4.14 CONVERSION PROCEDURES. EXHIBIT D attached hereto sets
forth the procedures with respect to the conversion of the Shares, including
the forms of conversion notice to be provided upon conversion, instructions
as to the procedures for conversion, the form of legal opinion, if necessary,
that shall be rendered to the Company's transfer agent and such other
information and instructions as may be reasonably necessary to enable the
Purchaser to exercise its right of conversion smoothly and expeditiously.
Section 4.15 NO SHORT SELLING. Prior to 120 days following the
Original Issue Date or during the five-day trading period in which the
conversion price is calculated, as defined in the Certificate of Designation
for The Series A Convertible Preferred Stock, Purchaser convenants that
neither it nor its advisors nor any of its affiliates will sell short any
shares of the Company's stock at any time.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER. The
obligation of the Purchaser to purchase the Shares is subject to the
satisfaction or waiver by the Purchaser, at or prior to the Closing, of each
of the following conditions:
(a) LEGAL OPINION. The Purchaser shall have received the legal
opinion, addressed to it and dated the Closing Date, of Mark J. Richardson,
Esq., counsel for the Company, substantially in the form of EXHIBIT C;
(b) ACCURACY OF THE COMPANY'S REPRESENTATION AND WARRANTIES. The
representations and warranties of the Company contained herein and in the
Registration Rights
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Agreement shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time (except that
representations and warranties that are made as of a specific date need to be
true in all material respects as of such date);
(c) PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Registration
Rights Agreement to be performed, satisfied or complied with by the Company
at or prior to the Closing;
(d) NO MATERIAL ADVERSE EFFECT. Since the date of the financial
statements included in the Company's last filed Quarterly Report on Form
10-Q, no event which had a Material Adverse Effect shall have occurred which
is not disclosed in the Disclosure Materials;
(e) NO PROHIBITIONS. The purchase of and payment for the Shares
(and upon conversion thereof, the Underlying Shares) hereunder (i) shall not
be prohibited or enjoined (temporarily or permanently) by any appliable law
or governmental regulation and (ii) shall not subject the Purchaser to any
penalty, or in its reasonable judgment, other onerous condition under or
pursuant to any applicable law or governmental regulation that would
materially reduce the benefits to the Purchaser of the purchase of the Shares
or the Underlying Shares (provided, however, that such regulation, law or
onerous condition was not in effect in such form at the date of this
Agreement);
(f) COMPANY CERTIFICATES. The Purchaser shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company and certifying (i) that attached thereto is a true,
correct and complete copy of (A) the Company's Certificate of Incorporation,
as amended to the date thereof, (B) the Company's By-Laws, as amended to the
date thereof, and (C) resolutions duly adopted by the Board of Directors of
the Company authorizing the execution and delivery of this Agreement and the
Registration Rights Agreement and the issuance and sale of the Shares and the
Underlying Shares and (ii) the incumbency of officers executing this
Agreement and the Registration Rights Agreement;
(g) REGISTRATION RIGHTS AGREEMENT. The Company shall have executed
the Registration Rights Agreement;
(h) NO SUSPENSIONS OF TRADING IN COMMON STOCK. Trading in the
Common Stock shall not have been suspended by the Commission or the NASD or
other exchange or market on which the Common Stock is listed or quoted
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company);
(i) REQUIRED APPROVALS. All Required Approvals shall have been
obtained; and
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(j) DELIVERY OF STOCK CERTIFICATES. The Company shall have delivered
to the Purchaser the stock certificate(s) representing the Shares,
registered in the name of the Purchaser, each in form satisfactory to the
Purchaser.
Section 5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to issue and sell the Shares hereunder is subject
to the satisfaction or waiver by the Company, at or to the Closing, of each
of the following conditions:
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchaser shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except that representations and warranties that
are made as of a specific date need be true in all material respects only as
of such date);
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Registration
Rights Agreement to be performed, satisfied or complied with by it at or
prior to the Closing; and
(c) NO PROHIBITIONS. The sale of the Shares (and upon conversion
thereof, the Underlying Shares) hereunder (i) shall not be prohibited or
enjoined (temporarily or permanently) by any applicable law or governmental
regulation and (ii) shall not subject the Company to any penalty, or in its
reasonable judgment, any other onerous condition under or pursuant to any
applicable law or governmental regulation that would materially reduce the
benefits to the Company of the sale of Shares or the Underlying Shares to the
Purchaser (provided, however, that such regulation, law or onerous condition
was not in effect in such form at the date of this Agreement).
ARTICLE V
TERMINATION
Section 6.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to Closing by the mutual consent of the Company
and the Purchaser.
Section 6.2 TERMINATION BY THE COMPANY OR THE PURCHASER. This
Agreement may be terminated prior to Closing by the Company or the Purchaser,
by giving written notice of such termination to the other party, if:
15
(a) the Closing shall not have occurred by September_, 1996; PROVIDED
THAT the terminating party is not then in material breach of its obligations
under this Agreement in any manner that shall have caused the failure
referred to this paragraph (a);
(b) there shall be in effect any statute, rule, law or regulation that
prohibits the consummation of the Closing or if the consummation of the
Closing would violate any non-appealable final judgment, order, decree,
ruling or injunction of any court of or governmental authority having
competent jurisdiction; or
(c) there shall have been an amendment to Regulation D or an
interpretive release promulgated or issued thereunder, which, in the
reasonable judgment of the terminating party, would materially adversely
affect the transactions contemplated hereby and by the Registration Rights
Agreement.
Section 6.3 TERMINATION BY THE COMPANY. This Agreement may be
terminated prior to Closing by the Company, by giving notice of such
termination to the Purchaser, if the Purchaser has materially breached any
representation, warranty, covenant or agreement contained in this Agreement or
the Registration Rights Agreement and such breach is not cured within five
business days following receipt by the Purchaser of notice of such breach.
Section 6.4 TERMINATION BY THE PURCHASER. This Agreement may be
terminated prior to Closing by the Purchaser, by giving notice of such
termination to the Company, if:
(a) the Company has breached any representation, warranty, covenant or
agreement contained in this Agreement or the Registration Rights Agreement
and such breach is not cured within five business days following receipt by
the Company of notice of such breach;
(b) there has occurred an event since the date of the financial
statements included in the Company's last filed Quarterly Report on Form 10-Q
which could reasonably be expected to have a Material Adverse Effect and
which is not disclosed in the Disclosure Materials; or
(c) trading in the Common Stock has been suspended by the Commission or
the NASD or other exchange or market on which the Common Stock is listed or
quoted (except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company).
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ARTICLE VII
MISCELLANEOUS
Section 7.1 FEES AND EXPENSES. Each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The
Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Shares (and upon conversion thereof, the Underlying
Shares) pursuant hereto. The Purchaser shall be responsible for its own tax
liability that may arise as a result of the investment hereunder or the
transactions contemplated by this Agreement. Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is
terminated, the Company shall pay (i) all costs, expenses, fees and all taxes
incident to and in connection with: (A) the preparation, printing and
distribution of the Disclosure Materials and all amendments and supplements
thereto (including, without limitation, financial statements and exhibits),
and all preliminary and final Blue Sky memoranda and all other agreements,
memoranda, correspondence and other documents prepared and delivered in
connection herewith (B) the issuance and delivery of the Shares and, upon
conversion thereof, the Underlying Shares, (C) the qualification of the
Shares and, upon conversion thereof, the Underlying Shares for offer and
sale under the securities or Blue Sky laws of the several states (including,
without limitation, the fees and disbursements of the Purchasers' counsel
relating to such registration or qualification, not to exceed a total of
$5,000), (D) furnishing such copies of the Disclosure Materials and all
amendments and supplements thereto, as may reasonably be requested for use in
connection, with resales of the Shares and, upon conversion thereof, the
Underlying Shares, and (E) the preparation of certificates for the Shares
and, upon conversion thereof, the Underlying Shares (including, without
limitation, printing and engraving thereof), (ii) all fees and expenses of
the counsel and accountants of the Company and (iii) all expenses and listing
fees in connection with the application for quotation of the underlying Shares
in the NASDAQ National Market.
Section 7.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together
with the Exhibits, Annexes and Schedules hereto, and the Registration Rights
Agreement contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters.
Section 7.3 NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed
to have been received (a) upon hand delivery (receipt acknowledged) or
delivery by telex (with correct answer back received), telecopy or facsimile
(with transmission confirmation report) 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
17
business day following the date of mailing by express 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: Incomnet Inc.
21031 Ventura Blvd., Suite 1100
Woodland Hills, CA 91364
Attn: Melvyn Reznick, President
With copies to: Mark J. Richardson, Esq.
Wilshire Palisades Bldg.
1299 Ocean Ave. #900
Santa Monica, CA 90401
If to the Purchaser:
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
Section 7.4 AMENDMENTS; WAIVERS. No provision of this Agreement may
be waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser, or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it
thereafter.
Section 7.5 HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and
permitted assigns. Neither the Company nor the Purchaser may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other. The assignment by a party of this Agreement or any
rights hereunder shall not affect the obligations of such party under this
Agreement.
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Section 7.7 NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section 7.8 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York without regard to the principles of conflicts of law thereof.
Section 7.9 SURVIVAL. The representatives and warranties of the
Company and the Purchaser contained in ARTICLE III and the agreements and
covenants of the parties contained in ARTICLE IV and this ARTICLE VII shall
survive the Closing (or any earlier termination of this Agreement) and any
conversion of Shares hereunder.
Section 7.10 COUNTERPART SIGNATURES. This Agreement may be executed in
two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature page were an original thereof.
Section 7.11 PUBLICITY. The Company and the Purchaser shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and neither
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed.
Section 7.12 SEVERABILITY. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affecting or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision which
shall be a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.
Section 7.13 REMEDIES. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchaser will be entitled to specific performance of the obligations of the
Company under this Agreement and the Company will be entitled to specific
performance of the obligations of the Purchaser hereunder with respect to the
subsequent transfer of Shares and the Underlying Shares. Each of the Company
and the Purchaser agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of any breach of its obligations
described in the foregoing sentence
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and hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first indicated above.
Company:
Incomnet, Inc.
By: /s/ Melvyn Reznick
------------------------------------
Name: Melvyn Reznick
Title: President & CEO
Purchaser:
By: /s/
------------------------------------
Name:
Title:
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