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EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of October 8, 1999 (this
"AGREEMENT"), by and between CVF Technologies Corporation, a Nevada corporation,
with principal executive offices located at 916 Center Street, Lewiston, New
York 14092 (the "COMPANY"), and The Shaar Fund Ltd. ("BUYER").
WHEREAS, Buyer desires to purchase from the Company, and the Company
desires to issue and sell to Buyer, upon the terms and subject to the conditions
of this Agreement, (i) 350,000 shares of the Company's Series B 6% Convertible
Preferred Stock, par value $0.001 per share (collectively, the "PREFERRED
SHARES"), and (ii) Common Stock Purchase Warrants in the form attached hereto as
Exhibit A to purchase 215,384 shares of Common Stock (as defined below)
(collectively, the "WARRANTS");
WHEREAS, upon the terms and subject to the designations, preferences
and rights set forth in the Company's Certificate of Designation of Series B 6%
Convertible Preferred Stock in the form attached hereto as Exhibit B-1 (the
"CERTIFICATE OF DESIGNATION"), the Preferred Shares are convertible into shares
of the Company's common stock, par value $0.001 per share (the "COMMON STOCK" or
"COMMON SHARES"); and
WHEREAS, the Warrants, upon the terms and subject to the conditions
specified in the Warrants, will be exercisable for a period of three years
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
I. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS
A. TRANSACTION. Buyer hereby agrees to purchase from the Company, and
the Company has offered and hereby agrees to issue and sell to Buyer in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Preferred
Shares and the Warrants to purchase 215,384 shares of Common Stock.
B. PURCHASE PRICE; FORM OF PAYMENT. The purchase price for the
Preferred Shares and the Warrants to be purchased by Buyer hereunder shall be
$3,500,000 (the "PURCHASE PRICE"). Simultaneously with the execution of this
Agreement, Buyer shall pay the Purchase Price by wire transfer of immediately
available funds to the escrow agent (the "ESCROW AGENT") identified in those
certain Escrow Instructions of even date herewith, a copy of which is attached
hereto as Exhibit C (the "ESCROW INSTRUCTIONS"). Simultaneously with the
execution of this Agreement, the Company shall deliver one or more duly
authorized, issued and executed certificates (I/N/O Buyer or, if the Company
otherwise has been notified, I/N/O Buyer's nominee) evidencing the Preferred
Shares and the Warrants which Buyer is purchasing, to the Escrow Agent or its
designated depository. By
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executing and delivering this Agreement, Buyer and the Company each hereby
agrees to observe the terms and conditions of the Escrow Instructions, all of
which are incorporated herein by reference as if fully set forth herein.
C. METHOD OF PAYMENT. Payment into escrow of the Purchase
Price shall be made by wire transfer of immediately available funds to:
The Bank of New York
48 Wall Street
New York, NY 10038
ABA No.: 021000018
For the Account of: Cadwalader, Wickersham & Taft
Trust Account IOLA Fund
Account No.: 0902061070
II. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to and covenants and agrees with the
Company as follows:
A. Buyer is purchasing the Preferred Shares, the Warrants, the Common
Stock issuable upon exercise of the Warrants (the "WARRANT SHARES"), the Common
Stock, if any, issuable in payment of dividends on the Preferred Shares (the
"DIVIDEND SHARES"), and the Common Stock issuable upon conversion or redemption
of the Preferred Shares (the "CONVERSION SHARES" and, collectively with the
Preferred Shares, the Warrants, the Warrant Shares and the Dividend Shares, the
"SECURITIES") for its own account, for investment purposes only and not with a
view towards or in connection with the public sale or distribution thereof in
violation of the Securities Act.
B. Buyer is (i) an "ACCREDITED INVESTOR" within the meaning of Rule 501
of Regulation D under the Securities Act, (ii) experienced in making investments
of the kind contemplated by this Agreement, (iii) capable, by reason of its
business and financial experience, of evaluating the relative merits and risks
of an investment in the Securities, and (iv) able to afford the loss of its
investment in the Securities.
C. Buyer understands that the Securities are being offered and sold by
the Company in reliance on an exemption from the registration requirements of
the Securities Act and equivalent state securities and "blue sky" laws, and that
the Company is relying upon the accuracy of, and Buyer's compliance with,
Buyer's representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of Buyer to
purchase the Securities;
D. Buyer understands that the Securities have not been approved or
disapproved by the Securities and Exchange Commission (the "COMMISSION") or any
state securities commission.
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E. This Agreement has been duly and validly authorized, executed and
delivered by Buyer and is a valid and binding agreement of Buyer enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and except as rights to
indemnity and contribution may be limited by federal or state securities laws or
the public policy underlying such laws.
F. Prior to the conversion of all the Preferred Shares into Common
Stock, neither Buyer nor its affiliates nor any person acting on its or their
behalf has the intention of entering, or will enter into, any put option, short
position or other similar instrument or position with respect to the Common
Stock and neither Buyer nor any of its affiliates nor any person acting on its
or their behalf will use at any time shares of Common Stock acquired pursuant to
this Agreement to settle any put option, short position or other similar
instrument or position that may have been entered into prior to the execution of
this Agreement; provided, however, that nothing in this Section II.F. shall
operate to forbid Buyer or any of its affiliates or any Person acting on its or
their behalf from selling, or entering into any other transaction with respect
to, the Common Stock contemporaneously with or following such date and time as
the Person or Persons in whose name or names the Common Stock Delivered at
Conversion shall be issuable shall be deemed to have become the holder or
holders of record of the Common Shares represented thereby and all voting and
other rights associated with the beneficial ownership of such Common Shares
shall have vested with such Person or Persons.
III. THE COMPANY'S REPRESENTATIONS
The Company represents and warrants to Buyer that:
A. CAPITALIZATION.
1. The authorized capital stock of the Company consists solely
of: (x) 50,000,000 shares of Common Stock, of which 6,720,628 shares
are issued and outstanding and 434,700 shares are issued and held in
treasury on the date hereof; and (y) 500,000 shares of preferred stock,
of which 25,000 shares are designated Redeemable Series A Preferred
Stock, par value $0.001 per share, and are issued and outstanding. As
of the date hereof, the Company has 840,000 outstanding stock options
to purchase shares of Common Stock and warrants outstanding to purchase
1,052,507 shares of Common Stock.
2. The Conversion Shares, the Dividend Shares and the Warrant
Shares have been duly and validly authorized and reserved for issuance
by the Company, and when issued by the Company upon conversion of, or
in lieu of cash dividends on, the Preferred Shares and on exercise of
the Warrants will be duly and validly issued, fully paid and
nonassessable and will not subject the holder thereof to personal
liability by reason of being such holder.
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3. Except as disclosed on Schedule III.A.3 there are no
preemptive, subscription, "call," right of first refusal or other
similar rights to acquire any capital stock of the Company or any of
its Material Subsidiaries or other voting securities of the Company
that have been issued or granted to any person or any other obligations
of the Company or any of its Material Subsidiaries to issue, grant,
extend or enter into any security, option, warrant, "call," right,
commitment, agreement, arrangement or undertaking with respect to any
of their respective capital stock.
4. Schedule III.A.4. hereto lists all the subsidiaries of the
Company. All of the subsidiaries of the Company of which the Company
owns, directly or indirectly, more than 20% of the capital stock,
partnership or membership interests or other equity interests are
identified on Schedule III.A.4. as "Material Subsidiaries" (the
"MATERIAL SUBSIDIARIES"). Except as disclosed on Schedule III.A.4.
hereto, the Company does not own or control, directly or indirectly,
any interest in any corporation, partnership, limited liability
company, unincorporated business organization, association, trust or
other business entity.
5. The Company has delivered to Buyer complete and correct
copies of the Certificate of Incorporation and the By-Laws of the
Company and the Material Subsidiaries, in each case as amended to the
date of this Agreement. Except as set forth on Schedule III.A.4, the
Company has delivered to Buyer true and complete copies of all minutes
of the Board of Directors of the Company (the "BOARD OF DIRECTORS")
since October 1, 1996.
B. ORGANIZATION; REPORTING COMPANY STATUS.
1. Each of the Company and each of the Material Subsidiaries
is a corporation duly organized, validly existing and in good standing
under the laws of the state of jurisdiction in which it is incorporated
and is duly qualified as a foreign corporation in all jurisdictions in
which the failure to so qualify would reasonably be expected to have a
material adverse effect on the business, properties, prospects,
condition (financial or otherwise) or results of operations of the
Company and the Material Subsidiaries taken as a whole or on the
consummation of any of the transactions contemplated by this Agreement
(a "MATERIAL ADVERSE EFFECT").
2. The Company has registered the Common Stock pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"). The Common Stock is listed and traded on the American
Stock Exchange (the "AMEX") and the Company has not received any notice
regarding, and to its knowledge there is no threat of, the termination
or discontinuance of the eligibility of the Common Stock for such
listing.
C. AUTHORIZATION. The Company (i) has duly and validly authorized and
reserved for issuance 5,722,031 shares of Common Stock, sufficient in number for
the conversion of and the payment of dividends (in lieu of cash payments) on the
350,000 Preferred Shares and the exercise of the Warrants, and (ii) at all times
from and after the date hereof shall have a sufficient number of shares of
Common Stock duly and validly authorized and reserved for issuance to satisfy
the
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conversion of Preferred Shares, the payment of dividends (in lieu of cash
payments) on the Preferred Shares and the exercise of the Warrants. The Company
understands and acknowledges the potentially dilutive effect to the Common Stock
of the issuance of the Preferred Shares, the Conversion Shares, the Dividend
Shares and the Warrant Shares upon the conversion of, and payment of dividends
on, the Preferred Shares and the exercise of the Warrants, respectively. The
Company further acknowledges that its obligation to issue Conversion Shares upon
conversion of the Preferred Shares and Warrant Shares upon exercise of the
Warrants in accordance with this Agreement, the Certificate of Designation and
the Warrants is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company and notwithstanding the commencement of any case under 11 U.S.C.
sec. 101 et seq. (the "BANKRUPTCY CODE"). In the event the Company is a debtor
under the Bankruptcy Code, the Company hereby waives to the fullest extent
permitted any rights to relief it may have under 11 U.S.C. sec. 362 in respect
of the conversion of the Preferred Shares and the exercise of the Warrants. The
Company agrees, without cost or expense to Buyer, to take or consent to any and
all action necessary to effectuate relief under 11 U.S.C. sec. 362. Schedule
III.C. hereto sets forth (i) all issuances and sales by the Company since
December 31, 1998 of its capital stock, and other securities convertible,
exercisable or exchangeable for capital stock of the Company, (ii) the amount of
such securities sold, including any underlying shares of capital stock, (iii)
the purchaser thereof, (iv) the amount paid therefor, and (v) the material terms
of all outstanding capital stock of the Company (other than the Common Stock).
D. AUTHORITY; VALIDITY AND ENFORCEABILITY. The Company has the
requisite corporate power and authority to file and perform its obligations
under the Certificate of Designation and to enter into the Documents (as
hereinafter defined), and to perform all of its obligations hereunder and
thereunder (including the issuance, sale and delivery to Buyer of the
Securities). The execution, delivery and performance by the Company of the
Documents, and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the filing of the Certificate
of Designation with the Nevada Secretary of State's office, the issuance of the
Preferred Shares and the Warrants and the issuance and reservation for issuance
of the Conversion Shares, the Dividend Shares and the Warrant Shares), have been
duly authorized by all necessary corporate action on the part of the Company.
Each of the Documents has been duly and validly executed and delivered by the
Company and the Certificate of Designation has been duly filed with the Nevada
Secretary of State's office by the Company and each Document constitutes a valid
and binding obligation of the Company enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and except as rights to indemnity and contribution may be
limited by federal or state securities laws or the public policy underlying
such laws. The Securities have been duly and validly authorized for issuance by
the Company and, when executed and delivered by the Company, will be valid and
binding obligations of the Company enforceable against it in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally. For purposes of this Agreement, the term
"DOCUMENTS" means (i) this Agreement; (ii) the Registration Rights Agreement of
even date herewith between the Company and
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Buyer, a copy of which is annexed hereto as Exhibit D (the "REGISTRATION RIGHTS
AGREEMENT"); (iii) the Certificate of Designation; (iv) the Warrants; and (v)
the Escrow Instructions.
E. VALIDITY OF ISSUANCE OF THE SECURITIES. As of the Closing Date, the
Preferred Shares and the Warrants, and the Conversion Shares, the Dividend
Shares and the Warrant Shares upon their issuance in accordance with the
Certificate of Designation, respectively, will be validly issued and
outstanding, fully paid and nonassessable, and not subject to any preemptive
rights, rights of first refusal, tag-along rights, drag-along rights or other
similar rights.
F. NON-CONTRAVENTION. Except as set forth on Schedule III.F. hereto,
the execution and delivery by the Company of the Documents, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated hereby and thereby, including, without limitation, the filing of
the Certificate of Designation with the Nevada Secretary of State's office, do
not, and compliance with the provisions of this Agreement and other Documents
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or result in the creation of any Lien (as defined below)
upon any of the properties or assets of the Company or any of its Material
Subsidiaries under, or result in the termination of, or require that any consent
be obtained or any notice be given with respect to, (i) the Certificate of
Incorporation or By-Laws of the Company or the comparable charter or
organizational documents of any of its Material Subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or permit applicable to the Company or any of its Material
Subsidiaries or their respective properties or assets, or (iii) any Law (as
defined below) applicable to the Company or any of its Material Subsidiaries or
their respective properties or assets.
G. APPROVALS. No authorization, approval or consent of any court or
public or governmental authority is required to be obtained by the Company for
the issuance and sale of the Preferred Shares or the Warrants (and the
Conversion Shares and Warrant Shares) to Buyer as contemplated by this
Agreement, except such authorizations, approvals and consents that have been
obtained by the Company prior to the date hereof.
H. COMMISSION FILINGS. The Company has properly and timely filed with
the Commission all reports, proxy statements, forms and other documents required
to be filed with the Commission under the Securities Act and the Exchange Act
since October 1, 1996 (the "COMMISSION FILINGS"). As of their respective dates,
(i) the Commission Filings complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may be, and
the rules and regulations of the Commission promulgated thereunder applicable to
such Commission Filings, and (ii) none of the Commission Filings contained at
the time of their filing 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
Commission Filings, as of the dates of such documents, were true and complete in
all material respects and
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complied with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, have been prepared in
accordance with generally accepted accounting principles in the United States
("GAAP") (except in the case of the unaudited statements, as permitted by Form
10-Q under the Exchange Act) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
the consolidated financial position of the Company and its Material Subsidiaries
as of the dates thereof and the consolidated 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 that in the aggregate are not
material and to any other adjustment described therein).
I. ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date
(as defined in Section III.M.), there has not occurred any change, event or
development in the business, financial condition, prospects or results of
operations of the Company and the Material Subsidiaries having or reasonably
likely to have a Material Adverse Effect, there has not existed any condition
having or reasonably likely to have a Material Adverse Effect, and the Company
and the Material Subsidiaries have conducted their respective businesses only in
the ordinary course.
J. FULL DISCLOSURE. There is no fact known to the Company
(other than general economic or industry conditions known to the public
generally) that has not been fully disclosed in writing to Buyer that (i)
reasonably could be expected to have a Material Adverse Effect or (ii)
reasonably could be expected to materially and adversely affect the ability of
the Company to perform its obligations pursuant to the Documents.
K. ABSENCE OF LITIGATION. Except as set forth on Schedule
III.K, there are (i) no suits, actions or proceedings pending or, to the
knowledge of the Company, threatened against the Company or any of its Material
Subsidiaries, (ii) no complaints, lawsuits, charges or other proceedings pending
or, to the knowledge of the Company, threatened in any forum by or on behalf of
any present or former employee of the Company or any of its Material
Subsidiaries, any applicant for employment or classes of the foregoing alleging
breach of any express or implied contract of employment, any applicable law
governing employment or the termination thereof or other discriminatory,
wrongful or tortuous conduct in connection with the employment relationship, or
(iii) no judgments, decrees, injunctions or orders of any governmental entity or
arbitrator outstanding against the Company or any Material Subsidiary.
L. ABSENCE OF EVENTS OF DEFAULT. Except as set forth in
Schedule III.L, no "EVENT OF DEFAULT" (as defined in any agreement or instrument
to which the Company is a party) and no event which, with notice, lapse of time
or both, would constitute an Event of Default (as so defined), has occurred and
is continuing.
M. FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. The
Company has delivered to Buyer true and complete copies of the (i) audited
balance sheet of the Company and the Material Subsidiaries as at December 31,
1998, 1997 and 1996, respectively, and the related audited statements of income,
changes in stockholders' equity and cash flows for the three fiscal years ended
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December 31, 1998 including the related notes and schedules thereto and (ii)
unaudited balance sheets of the Company and the Material Subsidiaries and the
statements of income, changes in stockholders' equity and cash flows for each
fiscal quarter ended since December 31, 1998 including the related notes and
schedules, all certified by the chief financial officer of the Company
(collectively, the "FINANCIAL STATEMENTS"), and all management letters, if any,
from the Company's independent auditors relating to the dates and periods
covered by the Financial Statements. Each of the Financial Statements is
complete and correct in all material respects, has been prepared in accordance
with GAAP (subject, in the case of the interim Financial Statements, to normal
year end adjustments and the absence of footnotes), and fairly presents the
financial position, results of operations and cash flows of the Company as at
the dates and for the periods indicated. For purposes hereof, the audited
balance sheet of the Company as at December 31, 1998 is hereinafter referred to
as the "BALANCE SHEET" and December 31, 1998 is hereinafter referred to as the
"BALANCE SHEET DATE". The Company has no indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due), which was not fully reflected in, reserved
against or otherwise described in the Balance Sheet or the notes thereto or was
not incurred in the ordinary course of business consistent with the Company's
past practices since the Balance Sheet Date.
N. COMPLIANCE WITH LAWS; PERMITS. Each of the Company and each
of its Material Subsidiaries has complied and is in compliance with all laws,
rules, regulations, codes, ordinances and statutes (collectively, "LAWS")
applicable to it or to the conduct of its business. The Company possesses all
material permits, approvals, authorizations, licenses, certificates and consents
from all public and governmental authorities which are necessary to conduct its
business.
O. RELATED PARTY TRANSACTIONS. Except as set forth on Schedule
III.O. hereto, neither the Company nor any of its officers, directors or
"AFFILIATES" (as such term is defined in Rule 12b-2 under the Exchange Act) nor
any family member of any officer, director or Affiliate of the Company has
borrowed any moneys from or has outstanding any indebtedness or other similar
obligations to the Company or any of the Material Subsidiaries. Except as set
forth on Schedule III.O. hereto, neither the Company nor any of its officers,
directors or Affiliates nor any family member of any officer, director or
Affiliate of the Company (i) owns any direct or indirect interest constituting
more than a 1% equity (or similar profit participation) interest in, or controls
or is a director, officer, partner, member or employee of, or consultant to or
lender to or borrower from, or has the right to participate in the profits of,
any person or entity which is (x) a competitor, supplier, customer, landlord,
tenant, creditor or debtor of the Company or any Material Subsidiary, (y)
engaged in a business related to the business of the Company or any Material
Subsidiary, or (z) a participant in any transaction to which the Company or any
Material Subsidiary is a party or (ii) is a party to any contract, agreement,
commitment or other arrangement with the Company or any Material Subsidiary.
P. INSURANCE. Each of the Company and each of the Material
Subsidiaries maintains property and casualty, general liability, workers'
compensation, environmental hazard, personal injury and other similar types of
insurance with financially sound and reputable insurers that is
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adequate, consistent with industry standards and the Company's historical claims
experience. Each of the Company and each of the Material Subsidiaries has not
received notice from, and has no knowledge of any threat by, any insurer (that
has issued any insurance policy to the Company or the Material Subsidiaries)
that such insurer intends to deny coverage under or cancel, discontinue or not
renew any insurance policy presently in force.
Q. SECURITIES LAW MATTERS. Assuming the accuracy of the
representations and warranties of Buyer set forth in Section II hereof, the
offer and sale by the Company of the Securities is exempt from (i) the
registration and prospectus delivery requirements of the Securities Act and the
rules and regulations of the Commission thereunder and (ii) the registration
and/or qualification provisions of all applicable state securities and "blue
sky" laws. Other than pursuant to an effective registration statement under the
Securities Act, the Company has not issued, offered or sold the Preferred Shares
or any shares of Common Stock (including for this purpose any securities of the
same or a similar class as the Preferred Shares or Common Stock, or any
securities convertible into or exchangeable or exercisable for the Preferred
Shares or Common Stock or any such other securities) within the one-year next
preceding the date hereof, except as disclosed on Schedule III.Q. hereto or
otherwise previously disclosed in writing to Buyer, and the Company shall not
directly or indirectly take, and shall not permit any of its directors, officers
or Affiliates directly or indirectly to take, any action (including, without
limitation, any offering or sale to any person or entity of the Preferred Shares
or shares of Common Stock), so as to make unavailable the exemption from
Securities Act registration being relied upon by the Company for the offer and
sale to Buyer of the Preferred Shares and the Warrants (and the Conversion
Shares and the Warrant Shares) as contemplated by this Agreement. No form of
general solicitation or advertising has been used or authorized by the Company
or any of its officers, directors or Affiliates in connection with the offer or
sale of the Preferred Shares and the Warrants (and the Conversion Shares and the
Warrant Shares) as contemplated by this Agreement or any other agreement to
which the Company is a party.
R. Environmental Matters. Except as set forth on Schedule
III.R.6 hereto:
1. The Company, the Material Subsidiaries and their
respective operations are in compliance with all applicable
Environmental Laws and all permits (including terms, conditions, and
limitations therein) issued pursuant to Environmental Laws or
otherwise;
2. Each of the Company and each of the Material
Subsidiaries has all permits, licenses, waivers, exceptions, and
exemptions required under all applicable Environmental Laws necessary
to operate its business;
3. Each of the Company and each of the Material
Subsidiaries is not the subject of any outstanding written order of or
agreement with any governmental authority or person respecting (i)
Environmental Laws or permits, (ii) Remedial Action or (iii) any
Release or threatened Release of Hazardous Materials;
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4. Each of the Company and each of the Material
Subsidiaries has not received any written communication alleging that
it may be in violation of any Environmental Law or any permit issued
pursuant to any Environmental Law, or may have any liability under any
Environmental Law;
5. Each of the Company and each of the Material
Subsidiaries does not have any liability, contingent or otherwise, in
connection with any presence, treatment, storage, disposal or Release
of any Hazardous Materials whether on property owned or operated by the
Company and the Material Subsidiaries or property of third parties, and
the Company and the Material Subsidiaries have not transported, or
arranged for transportation of, any Hazardous Materials for treatment
or disposal of any property except, in each case, in compliance in all
material respects with applicable Environmental Laws;
6. To the Company's knowledge, there are no
investigations of the business, operations, or currently or previously
owned, operated or leased property of the Company and the Material
Subsidiaries pending or threatened which could lead to the imposition
of any case or liability pursuant to any Environmental Law;
7. There is not located at any of the properties
owned or operated by the Company and the Material Subsidiaries any (A)
underground storage tanks, (B) asbestos-containing material or (C)
equipment containing polychlorinated biphenyls; and,
8. Each of the Company and the Material Subsidiaries
has provided to Buyer all environmentally related assessments, audits,
studies, reports, analyses, and results of investigations that have
been performed with respect to the currently or previously owned,
leased or operated properties or activities of the Company and the
Material Subsidiaries.
9. There are no liens arising under or pursuant to
any Environmental Law on any real property owned, operated, or leased
by the Company and the Material Subsidiaries, and no action of any
governmental authority has been taken or, to the knowledge of the
Company, is in process of being taken which could subject any of such
properties to such liens, and the Company and the Material Subsidiaries
have not and is not expected to be required to place any notice or
restriction relating to the presence of Hazardous Material at any real
property owned, operated, or leased by it in any deed to such property.
10. Neither the Company nor any of the Material
Subsidiaries owns, operates, or leases any hazardous waste generation,
treatment, storage, or disposal facility, as such terms are used
pursuant to the RCRA and related or analogous state, local, or foreign
law. None of the properties owned, operated, or leased by the Company,
the Material Subsidiaries or any predecessor thereof are now, or were
in the past, used in any part as a dump, landfill, or disposal site,
and neither Company, the Material Subsidiaries nor any predecessor
thereof have filled any wetlands.
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11. The purchase that is the subject of this
Agreement will not require any governmental approvals under
Environmental Laws, including those that are triggered by sales or
transfers of businesses or real property, including, as examples and
without limitation, the New Jersey Industrial Site Recovery Act, N.J.
Stat. 13:1K-7 et seq., and the Connecticut Transfer of Establishments
Act, Conn. Gen. Stat. sec. 22a-134 et seq.
12. There is no currently existing requirement or
requirement to be imposed in the future by any Environmental Law or
Environmental Permit which could result in the incurrence of a cost
that could be reasonably expected to have a Material Adverse Effect.
13. Each of the Company and the Material Subsidiaries
has disclosed to Buyer all other acts or conditions that could result
in any material costs or liabilities under Environmental Laws.
For purposes of this Section III.R.:
"ENVIRONMENTAL LAW" means any foreign, federal, state or local
statute, regulation, ordinance, or common law as now or hereafter in effect in
any way relating to the protection of human health, safety or welfare, or the
environment including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Hazardous Materials Transportation
Act, the Resource Conservation and Recovery Act ("RCRA"), the Clean Water Act,
the Clean Air Act, the Toxic Substances Control Act, the Federal Insecticide,
Fungicide, and Rodenticide Act, and the Occupational Safety and Health Act, and
the regulations promulgated pursuant thereto.
"HAZARDOUS MATERIAL" means any substance that is listed,
classified or regulated pursuant to any Environmental Law, including petroleum,
gasoline, and any other petroleum product, by-product, fraction or derivative,
asbestos or asbestos-containing material, lead-containing paint, water, or
plumbing, polychlorinated biphenyls, radioactive materials and radon;
"RELEASE" means any placement, release, spill, filtration,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
migration, or leaching to, through, or under the indoor or outdoor environment,
or into, through, under, or out of any property;
"REMEDIAL ACTION" means all actions to (x) clean up, remove,
remediate, treat or in any other way address any Hazardous Material; (y) prevent
or contain the Release of any Hazardous Material; or (z) perform studies and
investigations or post-remedial monitoring and care in relation to (x) and (y)
above.
S. LABOR MATTERS. Neither the Company nor any of the Material
Subsidiaries is party to any labor or collective bargaining agreement and there
are no labor or collective bargaining agreements which pertain to employees of
the Company. No employees of the Company or the Material Subsidiaries are
represented by any labor organization and none of such employees has made a
pending demand for recognition, and there are no representation proceedings or
petitions
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seeking a representation proceeding presently pending or, to the Company's
knowledge, threatened to be brought or filed, with the National Labor Relations
Board or other labor relations tribunal. There is no organizing activity
involving the Company or the Material Subsidiaries pending or to the Company's
knowledge, threatened by any labor organization or group of employees of the
Company or the Material Subsidiaries. There are no (i) strikes, work stoppages,
slowdowns, lockouts or arbitrations or (ii) material grievances or other labor
disputes pending or, to the knowledge of the Company, threatened against or
involving the Company or the Material Subsidiaries. There are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge of the
Company, threatened by or on behalf of any employee or group of employees of the
Company or the Material Subsidiaries.
T. ERISA MATTERS. All Plans maintained by the Company, its
Material Subsidiaries and ERISA Affiliates are listed in Schedule III.T. and
copies of all documentation relating to such Plans (including, but not limited
to, copies of written Plans, written descriptions of oral Plans, summary plan
descriptions, trust agreements, the three most recent annual returns, employee
communications and IRS determination letters) have been delivered or made
available for review by the Buyer. Each Plan has at all times been maintained
and administered in all material respects in accordance with its terms and the
requirements of applicable law, including ERISA and the Code, and each Plan
intended to qualify under Section 401(a) of the Code has at all times since its
adoption been so qualified, and each trust which forms a part of any such plan
has at all times since its adoption been tax-exempt under Section 501(a) of the
Code. The Company, its Material Subsidiaries and its ERISA Affiliates are in
compliance in all material respects with all provisions of ERISA applicable to
it. No Reportable Event has occurred, been waived or exists as to which the
Company, its Material Subsidiaries or any ERISA Affiliate was required to file a
report with the PBGC, and the present value of all liabilities under each
Pension Plan (based on those assumptions used to fund such Plans) listed in
Schedule III.T. did not, as of the most recent annual valuation date applicable
thereto, exceed the value of the assets of such Pension Plan. None of the
Company, its Material Subsidiaries or ERISA Affiliates has incurred, or
reasonably expects to incur, any Withdrawal Liability with respect to any
Multi-employer Plan that could result in a Material Adverse Effect. None of the
Company, its Material Subsidiaries or ERISA Affiliates has received any
notification that any Multi-employer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multi-employer Plan
is reasonably expected to be in reorganization or termination where such
reorganization or termination has resulted or could reasonably be expected to
result in increases to the contributions required to be made to such Plan or
otherwise. No direct, contingent or secondary liability has been incurred or is
expected to be incurred by the Company or its Material Subsidiaries under Title
IV of ERISA to any party with respect to any Plan, or with respect to any other
Plan presently or heretofore maintained or contributed to by any ERISA
Affiliate. Neither the Company, its Material Subsidiaries, or ERISA Affiliate
has incurred any liability for any tax imposed under section 4971 through 4980B
of the Code or civil liability under section 502(i) or (l) of ERISA. No suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of plan activities and any other claim which could reasonably be
expected to result in a material liability or expense to the Company, its
Material Subsidiaries or ERISA Affiliates) has been brought or, to the knowledge
of the Company, threatened against or with
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respect to any Plan and there are no facts or circumstances known to the
Company, its Material Subsidiaries or ERISA Affiliates that could reasonably be
expected to give rise to any such suit, action or other litigation. All
contributions to Plans that were required to be made under such Plans have been
made, and all benefits accrued under any unfunded Plan have been paid, accrued
or otherwise adequately reserved in accordance with generally accepted
accounting principles, all of which accruals under unfunded Plans are as
disclosed in Schedule III.T., and the Company, its Material Subsidiaries and
ERISA Affiliates have each performed all material obligations required to be
performed under all Plans. The execution, delivery and performance of this
Agreement, the Note, the Warrants and the Registration Rights Agreement and the
consummation of the transactions contemplated hereby and thereby (including,
without limitation, the offer, issue and sale by the Company and its Material
Subsidiaries, and the purchase by the Buyer, of the Preferred Shares, the
Conversion Shares, the Warrants, the Warrant Shares and Dividend Shares) will
not involve any "prohibited transaction" within the meaning of ERISA or the Code
with respect to any Plan.
For purposes of this Section III.T.:
"ERISA" means the Employee Retirement Income Security Act of
1974, or any successor statute, together with the regulations thereunder, as the
same may be amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that was, is or hereafter may become, a member of a group of which
the Company is a member and which is treated as a single employer under Section
414 of the Internal Revenue Code of 1986, as amended (the "INTERNAL REVENUE
CODE").
"MULTI-EMPLOYER PLAN" means a multi-employer plan as defined
in Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate
(other than one considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Section 414 of the Internal Revenue Code) is making or accruing an
obligation to make contributions, or has within any of the preceding six plan
years made or accrued an obligation to make contributions.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"PLAN" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, or whether for the benefit of
a single individual or more than one individual including, but not limited to,
any "employee benefit plan" within the meaning of Section 3(3) of ERISA,
including any Pension Plan.
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"PENSION PLAN" means any pension plan (other than a
Multi-employer Plan) subject to the provision of Title IV of ERISA or Section
412 of the Internal Revenue Code that is maintained for employees of the
Company, its Material Subsidiaries, or any ERISA Affiliate.
"REPORTABLE EVENT" means any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan
"WITHDRAWAL LIABILITY" means liability to a Multi-employer
Plan as a result of a complete or partial withdrawal from such Multi-employer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
U. TAX MATTERS.
1. The Company has filed all material Tax Returns
which it is required to file under applicable Laws; all such Tax
Returns are true and accurate in all material respects and have been
prepared in compliance with all applicable Laws; the Company has paid
all Taxes due and owing by it (whether or not such Taxes are required
to be shown on a Tax Return) and has withheld and paid over to the
appropriate taxing authorities all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder,
creditor or other third parties; and since the Balance Sheet Date, the
charges, accruals and reserves for Taxes with respect to the Company
(including any provisions for deferred income taxes) reflected on the
books of the Company are adequate to cover any Tax liabilities of the
Company if its current tax year were treated as ending on the date
hereof.
2. No claim has been made by a taxing authority in a
jurisdiction where the Company does not file tax returns that such
corporation is or may be subject to taxation by that jurisdiction.
There are no foreign, federal, state or local tax audits or
administrative or judicial proceedings pending or being conducted with
respect to the Company; no information related to Tax matters has been
requested by any foreign, federal, state or local taxing authority;
and, except as disclosed above, no written notice indicating an intent
to open an audit or other review has been received by the Company from
any foreign, federal, state or local taxing authority. There are no
material unresolved questions or claims concerning the Company's Tax
liability. The Company (A) has not executed or entered into a closing
agreement pursuant to Section 7121 of the Internal Revenue Code or any
predecessor provision thereof or any similar provision of state, local
or foreign law; or (B) has not agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Internal Revenue Code or
any similar provision of state, local or foreign law by reason of a
change in accounting method initiated by the Company or any of its
subsidiaries or has any knowledge that the IRS has proposed any such
adjustment or change in accounting method, or has any application
pending with any taxing authority requesting permission for any changes
in accounting methods that relate to the business or operations of the
Company. The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Internal
Revenue Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Internal Revenue Code.
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3. The Company has not made an election under Section
341(f) of the Internal Revenue Code. The Company is not liable for the
Taxes of another person that is not a subsidiary of the Company under
(A) Treas. Reg. Section 1.1502-6 (or comparable provisions of state,
local or foreign law), (B) as a transferee or successor, (C) by
contract or indemnity or (D) otherwise. The Company is not a party to
any tax sharing agreement. The Company has not made any payments, is
obligated to make payments or is a party to an agreement that could
obligate it to make any payments that would not be deductible under
Section 280G of the Internal Revenue Code.
For purposes of this Section III.U.:
"IRS" means the United States Internal Revenue Service.
"TAX" or "TAXES" means federal, state, county, local, foreign,
or other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"TAX RETURN" means any return, information report or filing
with respect to Taxes, including any schedules attached thereto and including
any amendment thereof.
V. PROPERTY. Except as set forth on Schedule III.V, each of
the Company and each of the Material Subsidiaries has good and marketable title
to all of its assets and properties material to the conduct of its business,
free and clear of any liens, pledges, security interests, claims, encumbrances
or other restrictions of any kind (collectively, "LIENS"). With respect to any
assets or properties it leases, each of the Company and its Material
Subsidiaries holds a valid and subsisting leasehold interest therein, free and
clear of any Liens, is in compliance, in all material respects, with the terms
of the applicable lease, and enjoys peaceful and undisturbed possession under
such lease. All of the assets and properties of the Company and its Material
Subsidiaries that are material to the conduct of business as presently conducted
or as proposed to be conducted by it are in good operating condition and repair.
The inventory of the Company and its Material Subsidiaries is in good and
marketable condition, does not include any material quantity of items which are
obsolete, damaged or slow moving, and is salable (or may be leased) in the
normal course of business as currently conducted by it.
W. INTELLECTUAL PROPERTY. The Company owns or possesses
adequate and enforceable rights to use all patents, patent applications,
trademarks, trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures) and other similar rights and proprietary knowledge (collectively,
"INTANGIBLES") necessary for the conduct of its business as now being conducted
including, but not limited to, those described on Schedule III.W. hereto. Except
as set forth on Schedule III.W, the Company has all
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right, title and interest in all of the Intangibles, free and clear of any and
all Liens. The Company is not infringing upon or in conflict with any right of
any other person with respect to any Intangibles. Except as disclosed on
Schedule III.W. hereto, (i) no claims have been asserted by any individual,
partnership, corporation, unincorporated organization or association, limited
liability company, trust or other entity (collectively, a "PERSON") contesting
the validity, enforceability, use or ownership of any Intangibles, and the
Company has no knowledge of any basis for such claim, and (ii) neither the
Company nor the Material Subsidiaries has any knowledge of infringement or
misappropriation of the Intangibles by any third party.
X. CONTRACTS. All contracts, agreements, notes, instruments,
franchises, leases, licenses, commitments, arrangements or understanding,
written or oral (collectively, "CONTRACTS") which are material to the business
and operations of the Company and the Material Subsidiaries are in full force
and effect and constitute legal, valid and binding obligations of the Company
and the Material Subsidiaries and, to the best knowledge of the Company, the
other parties thereto; the Company and the Material Subsidiaries and, to the
best knowledge of the Company, each other party thereto, have performed in all
material respects all obligations required to be performed by them under the
Contracts, and no material violation or default exists in respect thereof, nor
any event that with notice or lapse of time, or both, would constitute a default
thereof, on the part of the Company and the Material Subsidiaries or, to the
best knowledge of the Company, any other party thereto; none of the Contracts is
currently being renegotiated; and the validity, effectiveness and continuation
of all Contracts will not be materially adversely affected by the transactions
contemplated by this Agreement.
Y. REGISTRATION RIGHTS. Except as set forth on Schedule III.Y,
no Person has, and as of the Closing (as defined below), no Person shall have,
demand, "piggy-back" or other rights to cause the Company to file any
registration statement under the Securities Act, relating to any of its
securities or to participate in any such registration statement.
Z. DIVIDENDS. The timely payment of dividends on the Preferred
Shares as specified in the Certificate of Designation is not prohibited by the
Certificate of Incorporation or By-Laws of the Company or any agreement,
contract, documents or other undertaking to which the Company or any of the
Material Subsidiaries is a party.
AA. INVESTMENT COMPANY ACT. Neither the Company nor any of the
Material Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"), nor
is the Company nor any of the Material Subsidiaries directly or indirectly
controlled by or acting on behalf of any Person which is an "investment company"
within the meaning of the Investment Company Act.
BB. BUSINESS PLAN. Any business information of the Company
previously submitted to Buyer in any form, including the projections contained
therein, was prepared by the senior management of the Company in good faith and
is based on assumptions that the Company believes are reasonable. The Company is
not aware of any fact or condition that could reasonably be expected to result
in the Company not achieving the results described in such business plan.
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CC. YEAR 2000 COMPLIANCE. The Company is currently reviewing
its products, business and operations that could be adversely affected by the
risk that computer applications used by the Company and the Material
Subsidiaries may be unable to recognize and properly perform date-sensitive
functions involving dates prior to and after December 31, 1999 (the "YEAR 2000
PROBLEM"). The Company believes its internal information and business systems
will be able to perform properly date-sensitive functions for all dates before
and after January 1, 2000. In addition, the Company is currently surveying those
vendors, suppliers and other third parties (collectively, the "OUTSIDE PARTIES")
with which the Company and the Material Subsidiaries do business and whose
failure to adequately address the Year 2000 Problem could reasonably be expected
to adversely affect the business and operations of the Company and the Material
Subsidiaries. Based upon the aforementioned internal review and surveys of the
Outside Parties as of the date of this Agreement, the Year 2000 Problem has not
resulted in, and is not reasonably expected to have, a Material Adverse Effect.
DD. INTERNAL CONTROLS AND PROCEDURES. The Company maintains
accurate books and records and internal accounting controls that provide
reasonable assurance that (i) all transactions to which the Company or each of
the Material Subsidiaries is a party or by which its properties are bound are
executed with management's authorization; (ii) the reported accountability of
the Company's and the Material Subsidiaries' assets is compared with existing
assets at regular intervals; (iii) access to the Company's and the Material
Subsidiaries' assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which each of the Company and the
Material Subsidiaries is a party or by which its properties are bound are
recorded as necessary to permit preparation of the financial statements of the
Company in accordance with GAAP.
EE. PAYMENTS AND CONTRIBUTIONS. Neither the Company nor any of
its Material Subsidiaries nor any of their respective directors, officers or, to
their respective knowledge, other employees has (i) used any company funds for
any unlawful contribution, endorsement, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment of company funds to any foreign or domestic government official
or employee, (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other similar payment to any person with
respect to the company matters.
FF. NO MISREPRESENTATION. No representation or warranty of the
Company contained in this Agreement, any schedule, annex or exhibit hereto or
any agreement, instrument or certificate furnished by the Company to Buyer
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, not misleading.
GG. FINDER'S FEE. There are no finder's fee, brokerage
commission or like payment in connection with the transactions contemplated by
this Agreement for which Buyer is liable or responsible.
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IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS
A. RESTRICTIVE LEGEND. Buyer acknowledges and agrees that,
upon issuance pursuant to this Agreement, the Securities (including any
Dividends Shares, Conversion Shares or the Warrant Shares) shall have endorsed
thereon a legend in substantially the following form (and a stop-transfer order
may be placed against transfer of the Preferred Shares, the Warrant Shares and
the Conversion Shares until such legend has been removed):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR SUCH OTHER LAWS."
B. FILINGS. The Company shall make all necessary Commission
Filings and "blue sky" filings required to be made by the Company in connection
with the sale of the Securities to Buyer as required by all applicable Laws, and
shall provide a copy thereof to Buyer promptly after such filing.
C. REPORTING STATUS. So long as Buyer beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
by it with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
D. USE OF PROCEEDS. The Company shall use the net proceeds
from the sale of the Securities (excluding amounts paid by the Company for
Buyer's out-of-pocket costs and expenses whether or accounted for or incurred in
connection with the transactions contemplated by this Agreement (including the
fees and disbursements of Buyer's legal counsel) and finder's fees in connection
with such sale) solely for general corporate and working capital purposes.
E. LISTING. Except to the extent the Company lists its Common
Stock on The New York Stock Exchange or the Nasdaq National Market System, the
Company shall use its best efforts to maintain its listing of the Common Stock
on the Amex. If the Common Stock is delisted from the Amex, the Company will use
its best efforts to list the Common Stock on the most liquid national securities
exchange or quotation system that the Common Stock is qualified to be listed on.
F. RESERVED CONVERSION SHARES. The Company at all times from
and after the date hereof shall have such number of shares of Common Stock duly
and validly authorized and reserved for issuance as shall be sufficient for the
conversion in full of, and the payment of dividends on, the Preferred Shares and
the exercise in full of the Warrants.
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G. RIGHT OF FIRST REFUSAL. If, during the period commencing
on the date hereof and ending three years after the Closing Date (the "RIGHT OF
FIRST REFUSAL PERIOD"), the Company should propose (the "PROPOSAL") to issue
Common Stock or securities convertible into Common Stock at a price less than
the Current Market Price (as defined in the Certificate of Designation), or
debt at less than par value or having an effective annual interest rate in
excess of 9.9% (each a "RIGHT OF FIRST REFUSAL SECURITY" and collectively, the
"RIGHT OF FIRST REFUSAL SECURITIES"), in each case on the date of issuance the
Company shall be obligated to offer such Right of First Refusal Securities to
Buyer on the terms set forth in the Proposal (the "OFFER") and Buyer shall have
the right, but not the obligation, to accept such Offer on such terms. The
Company shall provide written notice to Buyer of any Proposal, setting forth in
full the terms and conditions thereof, and Buyer shall then have 10 business
days to accept or reject the Offer in writing. If the Company issues any Right
of First Refusal Securities during the Right of First Refusal Period but fails
to: (i) notify Buyer of the Proposal, (ii) offer Buyer the opportunity to
complete the transaction as set forth in the Proposal, or (iii) enter into and
consummate an agreement to issue such Right of First Refusal Securities to
Buyer on the terms and conditions set forth in the Proposal, after Buyer has
accepted the Offer, then the Company shall pay to Buyer, as liquidated damages,
an amount equal to 10% of the amount paid to the Company for the Right of First
Refusal Securities. The foregoing Right of First Refusal is and shall be senior
in right to any other right of first refusal issued by the Company to any other
Person.
H. INFORMATION. Each of the parties hereto acknowledges and
agrees that Buyer shall not be provided with, nor be given access to, any
material non-public information relating to the Company and the Material
Subsidiaries.
I. EXEMPTION FROM INVESTMENT COMPANY ACT. The Company shall
conduct its business, and shall cause the Material Subsidiaries to conduct their
businesses, in a manner so that neither the Company nor any Material Subsidiary
shall become an "investment company" within the meaning of the Investment
Company Act.
J. ACCOUNTING AND RESERVES. The Company shall maintain a
standard and uniform system of accounting and shall keep proper books and
records and accounts in which full, true and correct entries shall be made of
its transactions, all in accordance with GAAP applied on a consistent basis
through all periods, and shall set aside on such books for each fiscal year all
such proper reserves for depreciation, obsolescence, amortization, bad debts and
other purposes in connection with its operations as are required by such
principles so applied.
K. TRANSACTIONS WITH AFFILIATES. Neither the Company nor any
of its Material Subsidiaries shall, directly or indirectly, enter into any
transaction or agreement with any stockholder, officer director or Affiliate of
the Company or family member of any officer, director or Affiliate of the
Company, unless the transaction or agreement is (i) reviewed and approved by a
majority of Disinterested Directors (as defined below) and (ii) on terms no less
favorable to the Company or the applicable Material Subsidiary than those
obtainable from a non-affiliated person. A "DISINTERESTED DIRECTOR" shall mean
an individual who is not and who has not been an officer or
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employee of the Company and who is not a member of the family of, controlled by
or under common control with, any such officer or employee.
L. ISSUANCES OF ADDITIONAL CONVERTIBLE PREFERRED SHARES OR
CONVERTIBLE DEBENTURES. So long as Buyer beneficially owns any of the Preferred
Shares, the Company shall not issue any additional convertible preferred stock
or convertible debt securities, in each case, convertible into Common Stock at a
floating conversion price, without the prior written consent of Buyer.
M. CERTAIN RESTRICTION. So long as any Preferred Shares are
outstanding, no dividends shall be declared or paid or set apart for payment or
other distribution declared or made upon Junior Securities (as defined in the
Certificate of Designation), nor shall any Junior Securities be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of shares of Common Stock made for purposes of or pursuant to the
provisions of an employee incentive or benefit plan (including a stock option
plan) of the Company or any Material Subsidiary, for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Company, directly or indirectly.
N. TRANSFER AGENT. If requested by Buyer, the Company shall
replace the then Transfer Agent for the Common Stock with a Transfer Agent
designated by Buyer.
O. AMENDMENT OF CERTIFICATE OF DESIGNATION. The Company
covenants and agrees that it take all corporate and other steps required to
amend and restate the Certificate of Designation to read in its entirety
substantially as set forth in Exhibit B-2 attached hereto and shall cause such
Amended and Restated Certificate of Designation of Series B 6% Convertible
Preferred Stock to be duly filed with the Secretary of State of the State of
Nevada no later than the third business days after the date hereof.
V. TRANSFER AGENT INSTRUCTIONS
A. The Company undertakes and agrees that no instruction other
than the instructions referred to in this Section V and customary stop transfer
instructions prior to the registration and sale of the Common Stock pursuant to
an effective Securities Act registration statement will be given to its transfer
agent for the Common Stock and that the Conversion Shares, the Dividend Shares
and the Warrants Shares otherwise shall be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement, the
Registration Rights Agreement and applicable law. Nothing contained in this
Section V.A. shall affect in any way Buyer's obligations and agreement to comply
with all applicable securities laws upon resale of such Common Stock. If, at any
time, Buyer provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of the resale by Buyer of such
Common Stock is not required under the Securities Act and that the removal of
restrictive legends is permitted under applicable law, the Company shall permit
the transfer of such Common Stock and, promptly instruct the Company's
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transfer agent to issue one or more certificates for Common Stock without any
restrictive legends endorsed thereon.
B. Buyer shall have the right to convert the Preferred Shares
by telecopying an executed and completed Notice of Conversion (as defined in the
Certificate of Designation) to the Company. Each date on which a Notice of
Conversion is telecopied to and received by the Company in accordance with the
provisions hereof shall be deemed a Conversion Date (as defined in the
Certificate of Designation). The Company shall transmit the certificates
evidencing the shares of Common Stock issuable upon conversion of any Preferred
Shares (together with certificates evidencing any Preferred Shares not being so
converted) to Buyer via express courier, by electronic transfer or otherwise,
within five business days after receipt by the Company of the Notice of
Conversion (the "DELIVERY DATE"). Within 30 days after Buyer delivers the Notice
of Conversion to the Company, Buyer shall deliver to the Company the Preferred
Shares being converted.
C. Buyer shall have the right to purchase shares of Common
Stock pursuant to exercise of the Warrants in accordance with its applicable
terms of the Warrants. The last date that the Company may deliver shares of
Common Stock issuable upon any exercise of Warrants is referred to herein as the
"WARRANT DELIVERY DATE."
D. The Company understands that a delay in the issuance of the
shares of Common Stock issuable in lieu of cash dividends on the Preferred
Shares, upon the conversion of the Preferred Shares or exercise of the Warrants
beyond the applicable Dividend Payment Due Date (as defined in the Certificate
of Designation), Delivery Date or Warrant Delivery Date could result in economic
loss to Buyer. As compensation to Buyer for such loss (and not as a penalty),
the Company agrees to pay to Buyer for late issuance of Common Stock issuable in
lieu of cash dividends on the Preferred Shares, upon conversion of the Preferred
Shares or exercise of the Warrants in accordance with the following schedule
(where "NO. BUSINESS DAYS" is defined as the number of business days beyond five
days from the Dividend Payment Due Date, the Delivery Date or the Warrant
Delivery Date, as applicable):
NO. BUSINESS DAYS COMPENSATION FOR EACH 10 SHARES OF
PREFERRED SHARES NOT CONVERTED
TIMELY OR 500 SHARES OF COMMON STOCK
ISSUABLE IN PAYMENT OF DIVIDENDS OR
UPON EXERCISE OF WARRANTS NOT ISSUED
TIMELY
------------------ -------------------------------------
1 $ 25
2 50
3 75
4 100
5 125
6 150
7 175
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8 200
9 225
10 250
more than 10 $250 + $100 for each Business Day
Late beyond 10 days
The Company shall pay to Buyer the compensation described above by the transfer
of immediately available funds upon Buyer's demand. Nothing herein shall limit
Buyer's right to pursue actual damages for the Company's failure to issue and
deliver Common Stock to Buyer, and in addition to any other remedies which may
be available to Buyer, in the event the Company fails for any reason to effect
delivery of such shares of Common Stock within five business days after the
relevant Dividend Payment Due Date, the Delivery Date or the Warrant Delivery
Date, as applicable, Buyer shall be entitled to rescind the relevant Notice of
Conversion or exercise of Warrants by delivering a notice to such effect to the
Company whereupon the Company and Buyer shall each be restored to their
respective original positions immediately prior to delivery of such Notice of
Conversion on delivery.
VI. DELIVERY INSTRUCTIONS
The Securities shall be delivered by the Company to the Escrow Agent pursuant to
Section I.B. hereof on a "delivery-against-payment basis" at the Closing.
VII. CLOSING DATE
The date and time (the "CLOSING DATE") of the issuance and sale of the Preferred
Shares and the Warrants (the "CLOSING") shall be the date hereof or such other
as shall be mutually agreed upon in writing. The issuance and sale of the
Securities shall occur on the Closing Date at the offices of the Escrow Agent.
Notwithstanding anything to the contrary contained herein, the Escrow Agent
shall not be authorized to release to the Company the Purchase Price and to
Buyer the certificate(s) (I/N/O Buyer or I/N/O Buyer's nominee) evidencing the
Securities being purchased by Buyer unless the conditions set forth in Section
VIII.C. and IX.H. hereof have been satisfied.
VIII. CONDITIONS TO THE COMPANY'S OBLIGATIONS
Buyer understands that the Company's obligation to sell the Securities on the
Closing Date to Buyer pursuant to this Agreement is conditioned upon:
A. Delivery by Buyer to the Escrow Agent of the Purchase
Price;
B. The accuracy on the Closing Date of the representations and
warranties of Buyer contained in this Agreement as if made on the Closing Date
(except for representations and warranties which, by their express terms, speak
as of and relate to a specified date, in which case
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such accuracy shall be measured as of such specified date) and the performance
by Buyer in all material respects on or before the Closing Date of all covenants
and agreements of Buyer required to be performed by it pursuant to this
Agreement on or before the Closing Date; and
C. There shall not be in effect any Law or order, ruling,
judgment or writ of any court or public or governmental authority restraining,
enjoining or otherwise prohibiting any of the transactions contemplated by this
Agreement.
IX. CONDITIONS TO BUYER'S OBLIGATIONS
The Company understands that Buyer's obligation to purchase the Securities on
the Closing Date pursuant to this Agreement is conditioned upon:
A. Delivery by the Company to Buyer of evidence that the
Certificate of Designation has been filed and is effective.
B. Delivery by the Company to the Escrow Agent of one or more
certificates (I/N/O Buyer or I/N/O Buyer's nominee) evidencing the Securities to
be purchased by Buyer pursuant to this Agreement;
C. The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date (except for representations and warranties which, by their express terms,
speak as of and relate to a specified date, in which case such accuracy shall be
measured as of such specified date) and the performance by the Company in all
material respects on or before the Closing Date of all covenants and agreements
of the Company required to be performed by it pursuant to this Agreement on or
before the Closing Date, all of which shall be confirmed to Buyer by the chief
executive officer of the Company by delivery of the certificate to that effect;
D. Buyer having received an opinion of counsel for the
Company, dated the Closing Date, in form, scope and substance reasonably
satisfactory to Buyer as to the matters set forth in Annex A;
E. There not having occurred (i) any general suspension of
trading in, or limitation on prices listed for, the Common Stock on the Amex,
(ii) the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States or any of its territories, protectorates or
possessions, or (iv) in the case of the foregoing existing at the date of this
Agreement, a material acceleration or worsening thereof;
F. There not having occurred any event or development, and
there being in existence no condition, having or which reasonably and
foreseeable could have a Material Adverse Effect;
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G. The Company shall have delivered to Buyer (as provided in
the Escrow Instructions) reimbursement of Buyer's out-of-pocket costs and
expenses whether or not accounted for or incurred in connection with the
transactions contemplated by this Agreement (including the fees and
disbursements of Buyer's legal counsel) of $60,000;
H. There shall not be in effect any Law or order, ruling,
judgment or writ of any court or public or governmental authority restraining,
enjoining or otherwise prohibiting any of the transactions contemplated by this
Agreement;
I. Delivery by the Company of irrevocable instructions to the
Company's transfer agent to reserve 5,722,031 shares of Common Stock for
issuance of the Conversion Shares and the Warrant Shares;
J. The Company shall have obtained all consents, approvals or
waivers from governmental authorities and third persons necessary for the
execution, delivery and performance of the Documents and the transactions
contemplated thereby, all without material cost to the Company; and
K. Buyer shall have received such additional documents,
certificates, payment, assignments, transfers and other delivers, as it or its
legal counsel may reasonably request and as are customary to effect a closing of
the matters herein contemplated.
X. TERMINATION
A. TERMINATION BY MUTUAL WRITTEN CONSENT. This Agreement may
be terminated and the transactions contemplated hereby may be abandoned, for any
reason and at any time prior to the Closing Date, by the mutual written consent
of the Company and Buyer.
B. TERMINATION BY THE COMPANY OR BUYER. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by action
of the Company or Buyer if (i) the Closing shall not have occurred at or prior
to 5:00 p.m., New York City time, on October 18, 1999 (the "LATEST CLOSING
DATE"); provided, however, that the right to terminate this Agreement pursuant
to this Section X.B. shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement has been the cause of or
resulted in the failure of the Closing to occur at or before such time and date;
provided, further, however, that if the Closing shall not have occurred on or
prior to the Latest Closing Date, the Closing may only occur after the Latest
Closing Date with the written consent of Buyer.
C. TERMINATION BY BUYER. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned by Buyer at any time prior
to the Closing Date, if (i) the Company shall have failed to comply in all
material respects with its covenants or agreements contained in this Agreement,
(ii) there shall have been a breach by the Company with respect to any
representation or warranty made by it in this Agreement, (iii) there shall have
occurred any event or
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development, or there shall be in existence any condition, having or reasonably
likely to have a Material Adverse Effect or (iv) the Company shall have failed
to satisfy the conditions provided in Section IX hereof.
D. TERMINATION BY THE COMPANY. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by the
Company at any time prior to the Closing Date, if (i) Buyer shall have failed to
comply in all material respects with its covenants or agreements contained in
this Agreement or (ii) there shall have been a breach by Buyer with respect to
any representation or warranty made by it in this Agreement.
E. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to this Section X, this Agreement shall thereafter
become void and have no effect, and no party hereto shall have any liability or
obligation to any other party hereto in respect of this Agreement, except that
the provisions of Article XI, this Section X.E and Section X.F shall survive any
such termination; provided, however, that no party shall be released from any
liability hereunder if this Agreement is terminated and the transactions
contemplated hereby abandoned by reason of (i) willful failure of such party to
perform its obligations hereunder or (ii) any misrepresentation made by such
party of any matter set forth herein.
F. FEES AND EXPENSES OF TERMINATION. If this Agreement is
terminated for any reason, the Company shall promptly reimburse Buyer for all of
Buyer's out-of-pocket costs and expenses incurred in connection with the
transactions contemplated by this Agreement and the other Documents (including,
without limitation, the fees and disbursements of Buyer's legal counsel).
XI. SURVIVAL; INDEMNIFICATION
A. The representations, warranties and covenants made by each
of the Company and Buyer in this Agreement, the annexes, schedules and exhibits
hereto and in each instrument, agreement and certificate entered into and
delivered by them pursuant to this Agreement, shall survive the Closing and the
consummation of the transactions contemplated hereby. In the event of a breach
or violation of any of such representations, warranties or covenants, the party
to whom such representations, warranties or covenants have been made shall have
all rights and remedies for such breach or violation available to it under the
provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or prior
to the Closing Date.
B. The Company hereby agrees to indemnify and hold harmless
Buyer, its Affiliates and their respective officers, directors, partners and
members (collectively, the "BUYER INDEMNITEES"), from and against any and all
losses, claims, damages, judgments, penalties, liabilities and deficiencies
(collectively, "LOSSES"), and agrees to reimburse Buyer Indemnitees for all out
of- pocket expenses (including the fees and expenses of legal counsel), in each
case promptly as incurred by Buyer Indemnitees and to the extent arising out of
or in connection with:
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1. any misrepresentation, omission of fact or breach
of any of the Company's representations or warranties contained in this
Agreement or the other Documents, or the annexes, schedules or exhibits
hereto or thereto or any instrument, agreement or certificate entered
into or delivered by the Company pursuant to this Agreement or the
other Documents;
2. the purchase of the Preferred Shares and the
Warrants, the conversion of the Preferred Shares and the exercise of
the Warrants and the consummation of the transactions contemplated by
this Agreement and the other Documents, the use of any of the proceeds
of the Purchase Price by the Company, the purchase or ownership of any
or all of the Securities, the performance by the parties hereto of
their respective obligations hereunder and under the Documents or any
claim, litigation, investigation, proceedings or governmental action
relating to any of the foregoing, whether or not Buyer is a party
thereto; and
3. resales of the Common Shares by Buyer in the
manner and as contemplated by this Agreement and the Registration
Rights Agreement.
C. Buyer hereby agrees to indemnify and hold harmless the
Company, its Affiliates and their respective officers, directors, partners and
members (collectively, the "COMPANY INDEMNITEES"), from and against any and all
Losses, and agrees to reimburse the Company Indemnitees for all out-of-pocket
expenses (including the fees and expenses of legal counsel), in each case
promptly as incurred by the Company Indemnitees and to the extent arising out of
or in connection with:
1. any misrepresentation, omission of fact, or breach
of any of Buyer's representations or warranties contained in this
Agreement or the other Documents, or the annexes, schedules or exhibits
hereto or thereto or any instrument, agreement or certificate entered
into or delivered by Buyer pursuant to this Agreement or the other
Documents; and
2. any failure by Buyer to perform in any material
respect any of its covenants, agreements, undertakings or obligations
set forth in this Agreement or the other Documents or any instrument,
certificate or agreement entered into or delivered by Buyer pursuant to
this Agreement or the other Documents.
D. Promptly after receipt by either party hereto seeking
indemnification pursuant to this Section XI (an "INDEMNIFIED PARTY") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "CLAIM"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section XI is being sought (the "INDEMNIFYING PARTY") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party except
to the extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the
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Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
E. In the event one party hereunder should have a claim for
indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.
XII. 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
conflicts of law principles of such state.
XIII. SUBMISSION TO JURISDICTION
Each of the parties hereto consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement
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and the other Documents. Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may effectively do so, any
defense of an inconvenient forum or improper venue to the maintenance of such
action or proceeding in any such court and any right of jurisdiction on account
of its place of residence or domicile. Each party hereto irrevocably and
unconditionally consents to the service of any and all process in any such
action or proceeding in such courts by the mailing of copies of such process by
certified or registered airmail at its address specified in Section IXX. Each
party hereto agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
XIV. WAIVER OF JURY TRIAL
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES
HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS. EACH PARTY HERETO (i)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
XV. COUNTERPARTS; EXECUTION
This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument. A facsimile transmission of
this signed Agreement shall be legal and binding on all parties hereto.
XVI. HEADINGS
The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
XVII. SEVERABILITY
In the event any one or more of the provisions contained in
this Agreement or in the other Documents should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any way be
29
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affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
XVIII. ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS
This Agreement and the Documents constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, modification or waiver
of this Agreement shall be binding unless executed in writing by all parties. No
waiver of any of the provisions of the Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
XIX. NOTICES
Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail, postage
prepaid, or by a nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight courier service, or,
if mailed, three (3) days after the date of deposit in the United States mails,
as follows:
A. if to the Company, to:
CVF Technologies Corporation
916 Center Street
Lewiston, NY 14092
Attention: Jeffrey I. Dreben
(716) 754-7883
(716) 754-7606 (Fax)
with a copy to:
Hodgson Russ Andrews Woods & Goodyear LLP
One M&T Plaza, Suite 2000
Buffalo, NY 14203-2391
Attention: John J. Zak, Esq.
(716) 848-1253
(716) 849-0349 (Fax)
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B. if to Buyer, to:
The Shaar Fund Ltd.
c/o Levinson Capital Management
2 World Trade Center, Suite 1820
New York, NY 10048
Attention: Samuel Levinson
(212) 432-7711
(212) 432-7771 (Fax)
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane New
York, NY 10038
Attention: Dennis J. Block, Esq.
(212) 504-5555
(212) 504-5557 (Fax)
C. if to the Escrow Agent, to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Attention: Dennis J. Block, Esq.
(212) 504-5555
(212) 504-5557 (Fax)
The Company, Buyer or the Escrow Agent may change the foregoing address by
notice given pursuant to this Section XIII.
XX. CONFIDENTIALITY
Each of the Company and Buyer agrees to keep confidential and
not to disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by law (including, without limitation, pursuant to Item 601(b)(10)
of Regulation S-K under the Securities Act and the Exchange Act).
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XXI. ASSIGNMENT
This Agreement shall not be assignable by either of the
parties hereto prior to the Closing without the prior written consent of the
other party, and any attempted assignment contrary to the provisions hereby
shall be null and void; provided, however, that Buyer may assign its rights and
obligations hereunder, in whole or in part, to any affiliate of Buyer.
[SIGNATURE PAGE FOLLOWS.]
32
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the date first above written.
CVF TECHNOLOGIES CORPORATION
By: /s/ Jeffrey I. Dreben
---------------------------------
Name: Jeffrey I. Dreben
Title: President
THE SHAAR FUND LTD.
By: /s/ Samuel Levinson
---------------------------------
Name: Samuel Levinson
Title: Managing Director