Exhibit 10(f)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of
January 6, 2000, by and among Capita Research Group, Inc., a Nevada corporation,
with headquarters located at 591 Skippack Pike, Suite 300, Blue Bell,
Pennsylvania 19422 (the "Company"), and the investors listed on the Schedule of
Buyers attached hereto (individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act");
B. The Company has authorized the issuance of up to 1,000,000
of the Company's units (the "Units"), each unit consisting of (i) one share of
the Company's common stock, $.001 par value per share (the "Common Stock"), (ii)
one of the Company's A Common Stock Purchase Warrants to purchase one share of
the Company's Common Stock exercisable at a purchase price of $.50 per share of
Common Stock (the "A Warrants"), in the form attached hereto as Exhibit A, and
(iii) one of the Company's B Common Stock Purchase Warrants to purchase one
share of the Company's Common Stock exercisable at a purchase price of $1.00 per
share of Common Stock, in the form attached hereto as Exhibit B (the "B
Warrants", and together with the A Warrants, the "Warrants") (such shares of
Common Stock issued upon exercise of the Warrants are hereinafter referred to as
the "Warrant Shares", and together with the Units, Common Stock and Warrants,
the "Securities");
C. The Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of $500,000.00 of Units in the respective
amounts set forth opposite each Buyer's name on the Schedule of Buyers; and
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as Exhibit C (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW, THEREFORE, the Company and the Buyers hereby agree as
follows:
1. PURCHASE AND SALE OF UNITS
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a. Purchase of Units. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to the Buyers and the Buyers shall purchase
from the Company an aggregate of 1,000,000 Units in the respective amounts set
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forth opposite each Buyer's name on the Schedule of Buyers at the Closing (the
"Closing"). The per unit purchase price (the "Purchase Price") of the Units
shall be $.50 or an aggregate purchase price of $500,000.00. On the Closing Date
(as defined below), the Company shall issue and deliver to each Buyer (i) a
stock certificate(s) representing such number of the shares of Common Stock and
(ii) certificates representing such number of A Warrants and B Warrants, which
such Buyer is then purchasing (as indicated opposite such Buyer's name on the
Schedule of Buyers), duly executed on behalf of the Company and registered in
the name of such Buyer or its designee (the "Stock Certificates").
b. Closing Date. The date and time of the
Closing (the "Closing Date") shall be 10:00 a.m. Eastern Standard Time on
January 6, 2000, subject to notification of satisfaction (or waiver) of the
conditions to the Closing set forth in Sections 6 and 7 below (or such later
date as is mutually agreed to by the Company and the Buyers). The Closing shall
occur on the Closing Date at the offices of Schulte Roth & Zabel LLP, 900 Third
Avenue, New York, New York 10022.
c. Form of Payment. On the Closing Date, each
Buyer shall pay the Purchase Price to the Company for the Units to be issued and
sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions provided in
writing to the Buyers prior to the Closing Date.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
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Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer (i) is
purchasing the Units consisting of Common Stock and Warrants and (ii) upon
exercise of the Warrants, will acquire the Warrant Shares, then issuable for its
own account for investment only and not with a present view towards or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not agree to hold any
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. Such Buyer
understands that the Units are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Units.
d. Information. Such Buyer and its advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Units which have been requested by such Buyer. Such Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations conducted by
such Buyer or its advisors, if any, or its representatives shall modify, amend
or affect such Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below.
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e. No Governmental Review. Such Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Units or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Units.
f. Transfer or Resale. Such Buyer understands
that except as provided in the Registration Rights Agreement: (i) the Securities
have not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144"); (ii)
any sale of such securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
g. Legends. Such Buyer understands that the
certificates or other instruments representing the Warrants and, until such time
as the sale of the Common Stock or Warrant Shares have been registered under the
1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates or other documents representing the Common Stock and Warrant Shares
except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
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The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped, if (i) any such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a generally acceptable form, to the effect that a
public sale, assignment or transfer of any of the Securities may be made without
registration under the 1933 Act, or (iii) any of the Securities can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold. Each Buyer
acknowledges, covenants and agrees to sell any of the Securities represented by
a certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of counsel
that such sale is exempt from registration required by Section 5 of the 1933
Act. In the event the above legend is removed from any of the Securities, the
Company may, upon reasonable advance notice to the holder, require that the
above legend be placed on any of the Securities that cannot then be sold
pursuant to an effective registration statement or Rule 144(k) under the 1933
Act (or any successor rule thereto).
h. Authorization; Enforcement. This Agreement
has been duly and validly authorized, executed and delivered on behalf of such
Buyer and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that
country specified in the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the
Buyers that:
a. Organization and Qualification. The Company
and its subsidiaries are corporations duly incorporated and validly existing in
good standing under the laws of the jurisdiction in which they are incorporated,
and have the requisite corporate power to own their properties and to carry on
their business as now being conducted. Each of the Company and its subsidiaries
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 by
it makes such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on (i) the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the
Registration Rights Agreement or under the other agreements or instruments to be
entered into or filed in connection herewith or therewith, or (iii) the
Securities.
b. Authorization; Enforcement; Compliance with
Other Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
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Warrants and the Registration Rights Agreement, (collectively, the "Closing
Agreements") to issue, sell and perform its obligations with respect to the
Units and Warrant Shares in accordance with the terms hereof and the Warrants
and to issue the Warrant Shares upon exercise of the Warrants, in accordance
with the terms and conditions of the Warrants, (ii) the execution and delivery
of the Closing Agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Common Stock and the Warrants and the reservation for issuance
and the issuance of the Warrant Shares upon exercise of the Warrants have been
duly authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
shareholders, (iii) the Closing Agreements have been duly executed and delivered
by the Company, and (iv) the Closing Agreements constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization and Indebtedness. As of the
date hereof, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, of which as of the date hereof, 20,295,946 shares are
issued and outstanding and no shares of Preferred Stock. All of such outstanding
shares have been validly issued and are fully paid and nonassessable. No shares
of Common Stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except as
disclosed in Schedule 3(c), as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities, notes, credit agreements, or other agreements, documents or
instruments evidencing indebtedness of the Company or any of its subsidiaries or
by which the Company or any of its subsidiaries is or may become bound and (iii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement). There are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of any of the Securities as described in this
Agreement. The Company has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), and the Company's By-laws, as in
effect on the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. Issuance of Securities. The Securities are
duly authorized and, upon issuance in accordance with the terms hereof shall be
(i) validly issued, fully paid and non-assessable, (ii) free from all taxes,
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liens and charges with respect to the issue thereof and are not and shall not be
subject to preemptive rights or other similar rights of stockholders of the
Company. 3,000,000 shares of Common Stock have been duly authorized and reserved
for issuance in connection with the Units.
e. No Conflicts. The execution, delivery and
performance of the Closing Agreements by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) result in a violation
of the Certificate of Incorporation or By-laws or (ii) except as disclosed in
Schedule 3(e), violate or conflict with, or result in a breach of any provision
of, 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 material agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common Stock is
traded or listed) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected. Neither the Company nor its subsidiaries are in violation of any
term of or in default under its Certificate of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or in violation of any term of
or in default under any contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its subsidiaries, except for violations or defaults
which would not, individually or in the aggregate, have a Material Adverse
Effect. The business of the Company and its subsidiaries is not being conducted
in violation of any law, ordinance or regulation of any governmental entity,
which violations, individually or in the aggregate, would have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as
required under the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement, the Registration Rights Agreement or the Warrants in accordance with
the terms hereof or thereof. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
f. SEC Documents; Financial Statements. Since
December 31, 1997, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act") (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
"SEC Documents"). The Company has delivered or made available to each Buyer or
its representative true and complete copies of the SEC Documents and agrees to
deliver or make available to each Buyer or its representatives true and complete
copies of any additional SEC Documents, upon request. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
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applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, 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. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied 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 exclude footnotes or may
be condensed or summary statements) and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).
g. Absence of Certain Changes. Except as
expressly set forth in Schedule 3(g) or as otherwise disclosed in SEC Documents
filed after December 31, 1998, since December 31, 1998, there has been no
material adverse change and no material adverse development in the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries taken as a whole. The Company has
not taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company or its
subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings.
h. Absence of Litigation. Except as set forth
in Schedule 3(h), there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company or its subsidiaries or
their respective directors or officers, or the Common Stock, wherein an
unfavorable decision, ruling or finding would individually or in the aggregate
have a Material Adverse Effect.
i. Acknowledgment Regarding Buyers' Purchase of
the Securities. The Company acknowledges and agrees that each of the Buyers is
acting solely in the capacity of arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by any of the Buyers
or any of their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into this Agreement has been based solely
on the independent evaluation by the Company and its representatives.
j. No General Solicitation. Neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 1933 Act) in connection with the
offer or sale of any of the Securities offered hereby.
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k. No Integrated Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause the offering
of any of the Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable shareholder approval provisions.
l. Employment Matters; ERISA Matters. The
Company and its subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours except where failure to
be in compliance would not have a Material Adverse Effect. There are no pending
investigations involving the Company or any of its subsidiaries by the U.S.
Department of Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and regulations. There
is no unfair labor practice charge or complaint against the Company or any of
its subsidiaries pending before the National Labor Relations Board or any
strike, picketing, boycott, dispute, slowdown or stoppage pending or, to the
Company's knowledge, threatened against or involving the Company or any of its
subsidiaries. No representation question exists respecting the employees of the
Company or any of its subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company or any of its
subsidiaries. No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of the Company or any of
its subsidiaries. No material labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is imminent.
The Company has no employee benefit plans subject to the Employee Retirement
Income Security Act of 1974, as amended.
m. Intellectual Property Rights. The Company
and its subsidiaries own or possess the requisite rights or licenses to use all
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights (collectively
"Intellectual Property Rights") necessary to conduct their respective businesses
as now conducted and as presently contemplated to be operated in the future,
except where the failure to possess the same would not have a Material Adverse
Effect. None of the Intellectual Property Rights or other material intellectual
property rights owned or possessed by the Company have expired or terminated, or
are expected to expire or terminate in the near future. The Company and its
subsidiaries do not have any knowledge of any event, fact or circumstance
relating to (i) any infringement by the Company or its subsidiaries of any
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets or other similar rights of others, or
of any such development of similar or identical trade secrets or technical
information by others or (ii) except as set forth on Schedule 3(m), any person
or entity now infringing any Intellectual Property Rights or other similar
rights or any such development of similar or identical trade secrets or
technical information owned or used by the Company or any of its subsidiaries
and, except as set forth on Schedule 3(m), there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its subsidiaries regarding any trademarks,
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trade names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others or any person or entity now infringing any Intellectual Property Rights
or other similar rights or any such development of similar or identical trade
secrets or other infringement; and the Company and its subsidiaries are unaware
of any facts or circumstances which might give rise to any of the foregoing. The
Company and its subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their Intellectual Property
Rights.
n. Environmental Laws. The Company and its subsidiaries (A)
are in compliance with any and all Environmental Laws, (B) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses, and (C) are in
compliance with all terms and conditions of any such permit, license or
approval, except where the failure to be in compliance or to receive such
permits, licenses or approvals would not have a Material Adverse Effect. With
respect to the Company and/or its subsidiaries (A) there are no past or present
releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which
may give rise to any material common law environmental liability or any material
liability under any Environmental Law and (B) neither the Company nor any of its
subsidiaries has received any notice with respect to the foregoing, nor is any
action pending or to the Company's knowledge, threatened in connection with the
foregoing. The term "Environmental Laws" means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
o. Title. The Company and its subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the
business of the Company and its subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries. Any
real property and facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
p. Insurance. The Company and each of its
subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as is prudent and customary in
the businesses in which the Company and its subsidiaries are engaged. Neither
the Company nor any such subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not individually or in the
aggregate have a Material Adverse Effect.
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q. Regulatory Permits; Compliance. The Company
and its subsidiaries possess all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals and orders necessary to
own, lease and operate their respective properties and to conduct their
respective businesses as currently being conducted (collectively, the "Company
Permits"), except for any such Company Permits the failure to possess which
would not have a Material Adverse Effect. There is no action pending, or to the
knowledge of the Company, threatened regarding the suspension or cancellation of
any of the Company Permits. Neither the Company nor any of its subsidiaries is
in conflict with, or in default or violation of, any of the Company Permits,
which conflict, default or violation would have a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any notification
with respect to possible conflicts, defaults, or violations of applicable laws.
r. Internal Accounting Controls. The Company
and each of its subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company's board of directors, and in relation
to the size and complexity of their respective businesses, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
s. No Materially Adverse Contracts, Etc.
Neither the Company nor any of its subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation which in the reasonable judgment of the Company's officers has or is
expected in the future individually or in the aggregate to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries is a party to
any contract or agreement which in the reasonable judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
t. Tax Status. Except as set forth on Schedule
3(t), the Company and each of its subsidiaries has made or filed all federal,
state and foreign income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax. The Company has not been
notified that any of its tax returns is currently being audited by any taxing
authority.
10
u. Certain Transactions. Except as set forth on
Schedule 3(u) and except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms no less
favorable than the Company could obtain from third parties and other than the
grant of stock options disclosed on Schedule 3(c), none of the officers,
directors or employees of the Company is presently a party to any material
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
v. Disclosure. All information relating to or
concerning the Company or any of its subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in
connection with the transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein, in light of
the circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any of its subsidiaries or its or their business, properties, operations or
financial condition, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the Company's
reports filed under the 1934 Act are being incorporated into an effective
registration statement filed by the Company under the 1933 Act). The Company has
not provided any Buyer with any material non-public information nor any
projections or assurance regarding the future financial performance of the
Company.
w. Investment Company Status. The Company is
not and upon consummation of the sale of the Securities will not be an
"investment company," a company controlled by an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended.
x. Foreign Corrupt Practices. Neither the
Company nor any of its subsidiaries, nor any director, officer, agent, employee
or other person acting on behalf of the Company or any subsidiary has, in the
course of his actions for, or on behalf of, the Company used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
11
y. Year 2000. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of the Company's
and its subsidiaries' (i) computer systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Company's or any of its subsidiaries' systems interface) and the
testing of such systems and equipment, as so reprogrammed were completed by
September 1, 1999. The cost to the Company and its subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of year
2000 to the Company and its subsidiaries (including without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
have a Material Adverse Effect. Except for the reprogramming referred to herein
as may be necessary, the computer and management information systems of the
Company and each of its subsidiaries are and, with ordinary course upgrading and
maintenance, will continue to be, sufficient to permit the Company and each
subsidiary to conduct its business without a Material Adverse Effect.
4. COVENANTS AND AGREEMENTS.
------------------------
a. Best Efforts. Each party shall use its best
efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for, or obtain exemption for
the Securities for, sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Buyers on
or prior to the Closing Date.
c. Reporting Status. Until the earlier of (i)
six months after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) or (ii) the date which is six months after the date on which none of
the Securities are outstanding (the "Registration Period"), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the
proceeds from the sale of the Securities for working capital and general
corporate purposes and shall not otherwise, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its direct or indirect
subsidiaries) or for the repurchase, redemption or retirement of any capital
stock of the Company.
e. Financial Information. The Company agrees to
file all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the 1934
Act. The financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied (except for any
12
required changes in such principles), and will fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries and results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). The Company agrees to send the following to each Investor (as that
term is defined in the Registration Rights Agreement) during the Registration
Period: (i) within five (5) days after the filing thereof with the SEC, a copy
of its Annual Reports on Form 10-K or Form 10-KSB, as applicable, its Quarterly
Reports on Form 10-Q or Form 10-QSB, as applicable, any Current Reports on Form
8-K and any registration statements or amendments filed pursuant to the 1933
Act; (ii) within one (1) day after release thereof, copies of all press releases
issued by the Company or any of its subsidiaries; and (iii) copies of any
notices and other information made available or given to the shareholders of the
Company generally, contemporaneously with the making available or giving thereof
to the shareholders.
f. Reservation of Shares. The Company shall
take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than 2,000,000 shares of Common Stock to provide
for the issuance of the Warrant Shares upon exercise of the Warrants in
accordance with the terms of this Agreement and the Warrants.
g. Expenses. The Company agrees to pay on
demand all reasonable costs and expenses (including, without limitation,
reasonable fees and expenses of counsel to the Buyers) incurred by the Buyers in
connection with the enforcement of the Buyers' rights and/or the collection of
all amounts due under the Closing Agreements and all other related documents.
h. Additional Issuances of Securities.
----------------------------------
(a) Right of First Refusal. For a period
of 180 days from and after the Closing Date if the Company shall desire to issue
any Common Stock or any security convertible, exchangeable or exercisable for
Common Stock or any other right to acquire any Common Stock pursuant to Section
4(2) of the 1933 Act or an offering under Regulation D or Regulation S of the
1933 Act or in any other private placement (other than Exempt Issuances under
Section 4(h)(e) below), then the Company shall comply with the terms of this
Section 4(i).
(b) Notice Requirements. The Company
shall notify, or cause to be notified, the Buyers not less than ten (10)
business days nor more than twenty (20) business days prior to the time the
Company intends to consummate such issuance (the "Issuance Notice"). The
Issuance Notice shall set forth all of the terms of such proposed issuance.
(c) Exercise of Right of First Refusal.
The right of first refusal provided for in this Section 4(i) may be exercised by
the Buyers by delivery of a written notice to the Company (the "Exercise
Notice"), within ten (10) business days following receipt of the Issuance Notice
(the "Refusal Period"). The Exercise Notice shall state that the Buyers agree to
purchase all or any specified part of the proposed issuance of such Common Stock
or Convertible Securities on terms substantially equal to the terms set forth in
the Issuance Notice.
(d) Right to Issue Securities. After
expiration of the Refusal Period, if the provisions of this Section 4(h) have
been complied with in all respects by the Company and no Exercise Notice has
13
been given, or if given, the Buyers have not agreed to purchase all of the
securities set forth in the Issuance Notice, the Company shall have the right
for forty-five (45) calendar days following the termination of the Refusal
Period to issue such securities, or any portion thereof not being purchased by
the Buyers, specified in the Issuance Notice on the terms described in the
Issuance Notice without further notice to the Buyers, but after such forty-five
(45) calendar days, no such issuance may be made without again giving notice to
the Buyers and complying with all of the requirements of this Section 4(h).
(e) Exempt Issuances. The following
issuances of Common Stock or Convertible Securities shall be "Exempt Issuances"
not subject to the right of purchase in this Section 4(h):
(a) any shares of the Company's Common
Stock issued pursuant to Approved Stock Plans (as defined in the
Warrants);
(b) any shares issued upon exercise of
options, warrants and other convertible securities outstanding as of
the date hereof; and
(c) shares issued to bonafide suppliers
or vendors in consideration for services or supplies rendered to the
Company or to a bank or other financial institution as an inducement to
enter into a financing arrangement with the Company in an amount not to
exceed 10% of the outstanding capital stock of the Company.
i. Disclosure. From and after the date hereof,
the Company will not provide to any Buyer any material non-public information
which, according to applicable law, rule or regulation should be disclosed
publicly by the Company but which has not been so disclosed.
j. Corporate Existence. So long as any Buyer
beneficially owns any Securities, the Company shall maintain its corporate
existence in good standing under the laws of the jurisdiction in which it is
incorporated and shall not sell all or substantially all of the Company's
assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company's assets, where either (i) no part of the
consideration consists of securities of the surviving or successor entity in
such transaction or (ii) the surviving or successor entity in such transaction
(A) assumes the Company's obligations hereunder and under the agreements and
instruments entered into or filed in connection herewith and (B) is a publicly
traded corporation whose common stock is registered pursuant to Section 12(b) or
(g) of the 1934 Act.
k. Solvency; Compliance with Law. The Company,
individually, and together with its subsidiaries on a consolidated basis (both
before and after giving effect to the transactions contemplated by this
Agreement) is solvent (i.e., its assets have a fair market value in excess of
the amount required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no information
that would lead it to reasonably conclude that the Company would not have, nor
does it intend to take any action that would impair, its ability to pay its
debts from time to time incurred in connection therewith as such debts mature.
The Company will conduct its business in compliance with all applicable laws,
rules, ordinances and regulations of the jurisdictions in which it is conducting
business, including, without limitation, all applicable local, state and federal
environmental laws and regulations, the failure to comply with which would have
a Material Adverse Effect.
14
l. Insurance. The Company shall maintain
liability, casualty and other insurance (subject to customary deductions and
retentions) with responsible insurance companies against such risk of the types
and in the amounts customarily maintained by companies of comparable size to the
Company.
m. No Integration. The Company will not conduct
any future offering that will be integrated with the issuance of the Securities
for purposes of the rules promulgated by the SEC.
n. Year 2000. The Company will take all actions
to assure that the Company's and its subsidiaries' computer systems and
equipment containing embedded microchips (including systems and equipment
supplied by others or with which the Company's or any of its subsidiaries'
systems interface) will operate and effectively process data including
datafields requiring references to dates on and after January 1, 2000 and the
testing of such systems and equipment.
5. TRANSFER AGENT INSTRUCTIONS.
---------------------------
The Company shall issue irrevocable instructions to its
transfer agent (in the form attached hereto as Exhibit D) to issue certificates,
or at a Buyer's request, to electronically issue if possible, such shares (e.g.,
through DWAC or DTC), registered in the name of each Buyer or its respective
nominee(s), for the Securities in such amounts as specified from time to time by
each Buyer to the Company (the "Irrevocable Transfer Agent Instructions"). Prior
to registration of the Common Stock and the Warrant Shares under the 1933 Act,
all such certificates shall bear the restrictive legend specified in Section
2(g) of this Agreement. The Company warrants that no instruction other than (i)
the Irrevocable Transfer Agent Instructions referred to in this Section 5, and
(ii) stop transfer instructions (a) to give effect to Section 2(f) hereof (in
the case of the Common Stock and the Warrant Shares prior to registration under
the 1933 Act), (b) to comply with any SEC or court order, or (c) to suspend use
of a then effective registration statement in the event an amendment or
supplement thereto is necessary, will be given by the Company to its transfer
agent and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in the Closing
Agreements. Nothing in this Section 5 shall affect in any way each Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of any of the Securities. If a Buyer provides the Company with an opinion
of counsel, reasonably satisfactory in form and substance to the Company, that
registration of a resale by such Buyer of any of the Securities is not required
under the 1933 Act, the Company shall permit the transfer, and, in the case of
the Securities, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such Buyer.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyers by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyers shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
15
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the
Units to each Buyer at the Closing is subject to the satisfaction, with respect
to each Buyer, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. Such Buyer shall have executed this
Agreement and the Registration Rights Agreement and delivered the same to the
Company.
b. Such Buyer shall have delivered to the
Company the Purchase Price for the Units being purchased by such Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
c. The representations and warranties of such
Buyer 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 for
representations and warranties that speak as of a specific date), and such Buyer
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the Closing Date.
d. The transactions contemplated hereby shall
not violate any law, regulation or order then in effect and applicable to such
Buyer or the Company.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
The obligation of each Buyer hereunder to purchase the Units
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:
a. The Company shall have executed this
Agreement, the Warrants and the Registration Rights Agreement, and delivered the
same to such Buyer.
b. Trading in the Common Stock or Warrant
Shares issuable upon the conversion of the Warrants shall not have been
suspended by the SEC.
c. The representations and warranties of the
Company shall be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case such representations and
warranties shall be true and correct without further qualification) as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date) and the
16
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date. Such Buyer shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by such Buyer
including, without limitation, an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
d. Each Buyer shall have received the opinion
of the Company's counsel dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to such Buyer and in substantially the form of
Exhibit E attached hereto.
e. The Company shall have executed and
delivered to such Buyer the Stock Certificates for the Common Stock being
purchased by such Buyer at the Closing.
f. The Company shall have executed and
delivered to each Buyer the Warrants being purchased by such Buyer at the
Closing.
g. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the exercise of the Warrants, 2,000,000 shares of Common
Stock.
h. The Board of Directors of the Company shall
have adopted the resolutions in substantially the form of Exhibit F attached
hereto.
i. The Irrevocable Transfer Agent Instructions,
in the form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
j. The transactions contemplated hereby shall
not violate any law, regulation or order then in effect and applicable to Buyers
or the Company.
k. There shall not have occurred any material
adverse change in the business condition (financial or otherwise), or results of
operations of the Company since the date of this Agreement.
8. INDEMNIFICATION.
---------------
In consideration of each Buyer's execution and delivery of
this Agreement and acquiring the Securities hereunder and in addition to all of
the Company's other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of
Securities and all of their officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Buyer
Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Buyer Indemnitee is a
party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "Buyer Indemnified
17
Liabilities"), incurred by any Buyer Indemnitee (and shall advance the same) as
a result of, or arising out of, or relating to (a) subject to Section 9(i), any
misrepresentation or breach of any representation or warranty made by the
Company in the Closing Agreements or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Closing Agreements or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Units or the status of such
Buyer or holder of any of the Securities as an investor in the Company. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Buyer Indemnified Liabilities which is permissible
under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New York
without regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed
in two or more identical counterparts, all of which 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. In the event any signature page
is delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyers, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments and documents
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers or
other communications required or permitted to be given under the terms of this
Agreement shall be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
18
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
if to the Company:
Capita Research Group, Inc.
591 Skippack Pike
Suite 300
Blue Bell, Pennsylvania 19422
Telephone: 215-619-7777
Facsimile: 215-619-0775
Attention: Chief Financial Officer
with a copy to:
Andrew J. Beck, Esq.
Torys
237 Park Avenue
New York, New York 10017
Facsimile: 212-682-0200
if to the Transfer Agent:
Nevada Agency and Trust Company
50 West Liberty Street, Suite 880
Reno, Nevada 89501
Telephone: 775-322-0626
Facsimile: 775-322-5623
Attention: Compliance Department
If to a Buyer, to its address and facsimile number on the
Schedule of Buyers, with copies to such Buyer's counsel as set forth on the
Schedule of Buyers. Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Units. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Buyers. A Buyer may assign some or all of its
rights hereunder without the consent of the Company, provided, however, that (i)
any such assignment shall not release such Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, and (ii) no Buyer may assign its
rights hereunder in a manner that would cause the offering of Securities
hereunder to be required to be registered under the 1933 Act.
h. 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.
19
i. Survival. The representations and warranties
of the Company and the Buyers contained in Sections 3 and 2, respectively, shall
survive the Closing until eighteen months after the Closing Date. The agreements
and covenants set forth in Sections 4, 5 and 9, and the indemnification
provisions set forth in Section 8, shall survive the Closing. Each Buyer shall
be responsible only for its own representations, warranties, agreements and
covenants hereunder.
j. Publicity. The Company and each Buyer shall
have the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof), but only to the extent required by such law or regulation.
k.
Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. No Strict Construction. The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.
m. Equitable Relief. The Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
n. Consent to Jurisdiction. The parties hereto
expressly submit themselves to the exclusive jurisdiction of the state and
federal courts of New York in any action or proceeding relating to this
Agreement or any of the other documents contemplated hereby or any of the
transactions contemplated hereby or thereby. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in such a court and any claim that any such action, suit or proceeding
brought in such a court has been brought in an inconvenient forum. The parties
hereto irrevocably and unconditionally consent to the service of process of any
of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, at
their respective addresses set forth or provided for herein, such service to
become effective 10 days after such mailing. Nothing herein shall affect the
right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the other parties in any
other jurisdiction.
20
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-------------------
Name: David B. Hunter
Its: President
21
BUYERS:
SOUNDSHORE HOLDINGS LTD.
By: /s/ Anthony Giordano
--------------------
Name: Anthony Giordano
Its: Director
SOUNDSHORE OPPORTUNITY HOLDING FUND LTD.
By: /s/ Anthony Giordano
--------------------
Name: Anthony Giordano
Its: Director
SOUNDSHORE STRATEGIC HOLDING FUND LTD.
By: /s/ Anthony Giordano
--------------------
Name: Anthony Giordano
Its: Director
22
SCHEDULE OF BUYERS
Investor Name, Address and Number of shares of Number of Investor's Advisor and
Facsimile Number Common Stock Warrants Lega; Counsel Address
---------------- ------------ -------- ---------------------
SoundShore Holdings Ltd. (Bermuda) 666,750 666,750 (A Warrants) Eleazer Klein, Esq.
666,750 (B Warrants) New York, NY 10022
c/o AIG International Management Fax: (212) 593-5955
Company, Inc.
1281 East Main Street
Stamford, Connecticut 06902
Fax: (203) 324-8488
SoundShore Strategic 118,750 118,750 (A Warrants) Eleazer Klein, Esq.
Holding Fund Ltd. (Bermuda) Schulte Roth & Zabel LLP
118,750 (B Warrants) New York, NY 10022
c/o AIG International Management Fax: (212) 593-5955
Company, Inc.
1281 East Main Street
Stamford, Connecticut 06902
Fax: (203) 324-8488