EXHIBIT 6(j) Note Purchase Agreement between Upside Development, Inc. and
Augustine Capital Management, LLC.
NOTE PURCHASE AGREEMENT
UPSIDE DEVELOPMENT, INC.
THE SECURITIES WHICH ARE THE SUBJECT OF THIS NOTE PURCHASE AGREEMENT (AS IT MAY
BE AMENDED FROM TIME TO TIME, THE "AGREEMENT') HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE AND WILL BE OFFERED AND SOLD IN RELIANCE
ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THESE LAWS BY VIRTUE OF THE
INTENDED COMPLIANCE BY UPSIDE DEVELOPMENT, INC., WITH SECTION 3(b) OF THE
SECURITIES ACT, THE PROVISIONS OF REGULATION D UNDER SUCH ACT AND SIMILAR
EXEMPTIONS UNDER STATE LAW. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC"), ANY STATE
SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This Agreement has been executed by the undersigned purchaser
(hereafter, the "Purchaser") in connection with the private placement of that
certain 7% Convertible Promissory Note (referred to herein as the "Note"), of
Upside Development, Inc. (the "Company"), a publicly-held and traded corporation
formed under the laws of the State of Delaware. The Note is being offered and
sold in partial reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D") as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act" or the "Securities Act").
This Note Purchase Agreement (this "Agreement") is made as of September 27,
2001.
Section 1.1 Purchase and Sale of the Note. Upon the following terms and
conditions, the Company shall issue and sell one or more Notes (each a Note) to
the Purchaser, and the Purchaser shall purchase the Note from the Company. The
Note shall be represented in the form of Exhibit A attached hereto and
incorporated herein by reference. The Note is convertible in accordance with its
terms into non-legended common stock of the Company, $.001 par value per share
("Common Stock"). The Note shall be in the aggregate principal amount of
US$1,000,000.00, and shall be sold at the Purchase Price (defined below), at the
Closing (defined below). Interest on the Note shall be paid in accordance with
the terms of the Note.
Section 1.2 Purchase Price. The total aggregate purchase price for the
Note (the "Purchase Price") shall be up to One Million Dollars ($1,000,000.00).
Section 1.3 Closing.
(a) The closing of the purchase and sale of the Note (the "Closing")
shall take place at the law offices of H. Xxxxx Xxxxxxx, Xx. (the "Escrow
Agent"), 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, X.X., XXX 00000 (telephone:
000.000.0000, telecopier 919.785.3116), on the date on which the last to be
fulfilled or waived of the conditions set forth in Sections 4.1 and 4.2 hereof
and applicable to the Closing shall be fulfilled or waived in accordance
herewith. There may be multiple Closings, with no more than $100,000 of the Note
issued in any month and provided all of the conditions in Sections 4.1 and 4.2
are fulfilled or waived in accordance herewith..
(b) On each Closing Date, the Company shall, through the Escrow Agent,
deliver to the Purchaser the Note issued in the name of the Purchaser, and the
Escrowed Shares (defined below) to the Escrow Agent. The Purchaser shall on the
Closing Date deliver to the Escrow Agent on behalf of the Company the Purchase
Price for the Note by wire transfer in immediately available funds to such
account as shall be designated in writing by the Escrow Agent. Upon receipt of
the Note and the Escrowed Shares, the Escrow Agent shall immediately deliver via
wire transfer the Purchase Price (less any fees agreed to be paid by the
Company) to the Company, and the Note to the Purchaser. The Escrowed Shares
shall be held by the Escrow Agent in accordance with the terms of the Escrow
Agreement (defined below), pending conversion of the Note in accordance with
their terms. In addition to the above, each party shall deliver to the Escrow
Agent on behalf of the other all documents, instruments and writings required to
be delivered by such party pursuant to this Agreement at or prior to the
Closing.
Section 1.4 Reporting Status; Registration of Securities; Compliance
with Regulation D. The Company represents and warrants that, as of the date of
this Agreement, the Company is subject to the reporting requirements of Section
13 or 15(d) of the Securities 1934 Act of 1934, as amended (the "1934 Act"), and
the Company is otherwise in compliance with the requirements of Regulation D
with respect to the offerings contemplated hereby. The Common Stock underlying
the Note will be registered pursuant to an SB-2 registration statement (the
"Registration Statement") which shall be filed in final form with the SEC and
declared effective by the SEC prior to the initial Closing. The Company is able
to and does hereby offer and sell the Note (and upon effectiveness of the
Registration Statement, the underlying Common Stock) (collectively the
"Securities"), in accordance with the federal and state securities laws.
Section 2.1 Representations and Warranties of the Purchaser. The
Purchaser makes the following representations and warranties to the Company.
(a) Accredited Investor. The Purchaser is an "accredited
investor" under the definition set forth in Rule 501(a) of Regulation D,
promulgated under the Securities Act.
(b) Speculative Investment. The Purchaser is aware that an
investment in the Securities is highly speculative and subject to substantial
risks. The Purchaser is capable of bearing the high degree of economic risk and
the burden of this venture, including, but not limited to, the possibility of
complete loss of the Purchaser's investment in the Securities which make
liquidation of this investment impossible for the indefinite future.
(c) Privately Offered. The offer to acquire the Note was
directly communicated to the Purchaser in such manner that the Purchaser was
able to ask questions of and receive answers concerning the terms and conditions
of this transaction. At no time was the Purchaser presented with or solicited by
or through any leaflet, public promotional meeting, television advertisement, or
any other form of general advertising.
(d) Purchase for Investment. The Note is being acquired solely
for the Purchaser's own account, and is not being purchased with view to the
resale, distribution, subdivision or fractionalization thereof without proper
registration with applicable securities administrators or an applicable
exemption from such registration.
(e) Access to Information. Purchaser or Purchaser's
professional advisor has been granted the opportunity to ask questions or and
receive answers from representatives of the Company, its officers, directors,
employees and agents concerning the terms and conditions of the offering of
Securities, the Company, its business and prospects, and to obtain any
additional information which Purchaser or Purchaser's professional advisor deems
necessary to verify the accuracy and completeness of the information received.
(f) Reliance on Own Advisors. Purchaser has relied on the
advice of, or has consulted with, Purchaser's own tax, investment, legal or
other advisors and has not relied on the Company or any of it affiliates,
officers, directors, attorneys, accountants or any affiliates of any thereof and
each other person, if any, who controls any thereof, within the meaning of
Section 15 of the Securities Act for any tax or legal advice. The foregoing,
however, does not limit or modify Purchaser's right to rely upon representations
and warranties of the Company in Section 2.2 of this Agreement and any
representations of any third parties acting as agents for or on the Company's
behalf.
(g) Capability to Evaluate. Purchaser has such knowledge and
experience in financial and business matters so as to enable such Purchaser to
utilize the information made available to it in connection with the offer of the
Securities in order to evaluate the merits and risks of the prospective
investment.
(h) Authority. Purchaser has full power and authority to
execute and deliver this Agreement and each other document included herein for
which a signature is required in such capacity and on behalf of the subscribing
individual, partnership, trust, estate, corporation or other entity for whom or
which Purchaser is executing this Agreement.
Section 2.2 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization and Qualification. The Company (and each of its
subsidiaries, if applicable) is a corporation duly incorporated and existing in
good standing under the laws of the State of Delaware and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company and each subsidiary, if any, is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary other than those in which the failure so to qualify
would not have a Material Adverse Effect. "Material Adverse Effect", for
purposes of this Agreement, means any adverse effect on the business,
operations, properties, prospects, or financial condition of the entity with
respect to which such term is used and which is material to such entity and
other entities controlled by such entity taken as a whole.
(b) Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue Securities and the Escrowed Shares in accordance with the terms hereof,
(ii) the execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required, (iii) this Agreement has been duly executed and delivered by the
Company, (iv) this Agreement constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application) and (v) prior to the Closing
Date, any necessary amendment to the Company's Articles of Incorporation
authorizing Company to issue all of the Securities and the Escrowed Shares will
have been filed with the Secretary of State of the state in which the Company is
incorporated and will be in full force and effect, enforceable against the
Company in accordance with the terms of such amended Articles of Incorporation.
(c) Authorized Capital; Rights or Commitments to Stock. As of May
1, 2001, the authorized capital stock of the Company consists of 200,000,000
shares of Common Stock, of which approximately 27,000,000 shares are issued and
outstanding as of such date; 5,000,000 shares of preferred stock, of which
5,000,000 are issued and outstanding as of such date and; approximately
1,500,000 outstanding warrants and 4,000,000 outstanding options to purchase
shares of Common Stock.
All of the outstanding shares of the Company's Common Stock have been
validly issued and are fully paid and non-assessable. Except as stated above or
as described in Exhibit C (attached only if applicable), no shares of Common
Stock are entitled to registration rights or preemptive rights, and there are no
(I) outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities (not
including the Note) or rights convertible into, any shares of capital stock of
the Company, (II) contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of capital
stock of the Company or (III) options, warrants, scrip, rights to subscribe to,
or commitments to purchase or acquire, any shares, or securities (whether the
Note or other notes, debentures, preferred stock or otherwise) or rights
convertible into shares of capital stock of the Company. Exhibit C shall
specifically indicate registration rights associated with any such securities
and whether the Company intends to register such securities or capital stock
underlying such securities within one (1) year after the Closing Date.
(d) Issuance of Securities. The issuance of the Securities, including
without limitation the Escrowed Shares, has been duly authorized and, when paid
for and issued in accordance with the terms hereof, the Note shall be validly
issued, fully paid and non-assessable and entitled to the rights described in
Exhibit A hereto. The Common Stock issuable upon conversion of the Note and the
Escrowed Shares will be duly authorized and reserved for issuance and, upon
conversion, will be validly issued, fully paid and non-assessable, and the
holders shall be entitled to all rights and preferences accorded to a holder of
Common Stock.
(e) No Conflicts. The Company has furnished or made available to the
Purchaser true and correct copies of the Company's Articles of Incorporation as
in effect on the date hereof (the "Articles"), and the Company's By-Laws, as in
effect on the date hereof (the "By-Laws"). The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby do not and will not (i) result in a
violation of the Company's Articles or By-Laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or assets of the Company or any of its subsidiaries is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect); provided that, for purposes of such
representation as to federal, state, local or foreign law, rule or regulation,
no representation is made herein with respect to any of the same applicable
solely to the Purchaser and not to the Company. The business of the Company is
not being conducted in violation of any law, ordinance or regulations of any
governmental entity, except for violations that either singly or in the
aggregate do not and will not have a Material Adverse Effect. The Company is not
required under federal, state or local law, rule or regulation in the United
States to obtain any consent, authorization or order of, or make any filing
(other than any filing of a vote establishing a class or series of stock with
the Secretary of State or similar authority of the state in which the Company is
incorporated) or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Note in accordance with the terms hereof, except
the filing of Form D with the SEC, if required by the provisions of Regulation
D; provided that, for purposes of the representation made in this sentence, the
Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Purchaser herein. If applicable, the
Company will send a copy of the Form D to the Escrow Agent once filed with the
SEC.
(f) Reporting Status; Financial Statements. The Company is as of the
date hereof subject to the reporting requirements of Sections 13 or 15(d) of the
0000 Xxx. The Company is not an investment company or a developmental stage
company that has no specific business plan or purpose.
Except as set forth in Exhibit C, no information or documentation
provided to the Purchaser as of the date hereof has contained any untrue
statement of a material fact or has 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. Except as set
forth in Exhibit C, the financial statements of the Company provided to the
Purchaser, if any, comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the Note thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) No Material Adverse Change. Since at least December 31, 1999, no
Material Adverse Effect has occurred or exists with respect to the Company or
any of its subsidiaries.
(h) No Undisclosed Liabilities. The Company and its subsidiaries have
no material liabilities or obligations not disclosed to the Purchaser in
writing, other than those incurred in the ordinary course of the Company's or
any of its subsidiaries' respective businesses since December 31, 1999, which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company or any of its subsidiaries.
(i) No Undisclosed Events or Circumstances. No event or circumstance
has occurred or exists with respect to the Company or any of its subsidiaries or
their respective businesses, properties, prospects, operations or financial
condition which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed.
(j) No General Solicitation. Neither the Company, nor any of its
affiliates, or, to the best of its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) in connection with the offer
or sale of the Securities.
(k) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any of the Company's securities or
solicited any offers to buy any of such securities, under circumstances that
would prevent the Company from offering the Securities and delivering the
Escrowed Shares pursuant to Regulation D and/or the Registration Statement.
Section 3.1 Securities Compliance. The Company shall to the extent
required notify the SEC, NASD and NASDAQ OTC Bulletin Board Market, in
accordance with their requirements, of the transactions contemplated by this
Agreement, and shall take all other necessary action and proceedings as may be
required by applicable law, rule and regulation, for the legal and valid
issuance of the Note and the Common Stock issuable upon conversion thereof, to
the Purchaser.
Section 3.2 Registration and Listing. Until at least one (1) year after
all of the principal of the Note has been converted into Common Stock, the
Company will take all action within its power to continue the listing or trading
of its Common Stock on the NASDAQ OTC Bulletin Board Market (or other principal
market) and will comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the NASD and NASDAQ. The
covenants set forth in this Section 3.2 shall not be deemed to prohibit a
merger, sale of all assets or other corporate reorganization if the entity
surviving or succeeding to the Company is bound by this Agreement with respect
to its securities issued in exchange for or in replacement of the Note or Common
Stock or the consideration received for or in replacement of the Note or Common
Stock is cash.
Section 3.3 Transfer Agent Instructions.
a. The Note. Except as noted in Section 3.4 below, upon conversion of
the Note, the Purchaser shall give a notice of conversion to the Company and the
Company shall instruct its transfer agent to issue, and deliver to Purchaser
within three business (3) days after the date of such notice of conversion, one
or more certificates representing that number of shares of Common Stock into
which the Note is convertible in accordance with the provisions regarding
conversion set forth in Exhibit A. The Company shall act as Note Registrar and
shall maintain an appropriate ledger containing the necessary information with
respect to the Note.
b. Common Stock to be Issued Without Restrictive Legend. Upon the
conversion of all or any portion of the Note, the Company shall instruct its
transfer agent to issue certificates equivalent to the number of shares of
Common Stock to be received upon such conversion, along with any shares issued
as interest in accordance with the terms of the Note, without restrictive legend
in the name of the Purchaser (or its nominee) and in such denominations to be
specified at conversion by the Purchaser. The Common Stock shall be immediately
freely transferable on the books and records of the Company.
c. Registration. If upon conversion of the Note effected by Purchaser
pursuant to the terms of this Agreement the Company fails to issue certificates
for shares of Common Stock issuable upon such conversion (the "Underlying
Shares") to Purchaser bearing no restrictive legend of any kind for any reason,
then the Company shall be required, at the request of Purchaser and at the
Company's expense, to effect the registration of the Underlying Shares under the
1933 Act and all relevant "blue sky" laws as promptly as is practicable but in
any event within the time limits specified in this Paragraph 3.3(c). The Company
and Purchaser shall cooperate in good faith in connection with the furnishing of
information required for such registration and the taking of such other actions
as may be legally or commercially necessary in order to effect such
registration. The Company shall file a registration statement within thirty (30)
days after Purchaser's demand therefor and shall use its best efforts to cause
such registration statement to become effective as soon as practicable
thereafter and in any event within one hundred twenty (120) days from the
initial filing thereof. Such best efforts shall include, without limitation,
promptly responding to all comments received from the SEC and providing
Purchaser's counsel with a contemporaneous copy of all written correspondence
with the SEC. Once declared effective by the SEC, the Company shall cause such
registration statement to remain effective until the earlier of: (i) the sale by
Purchaser of all Underlying Shares registered; or (ii) one hundred eighty (180)
days after the effective date of such registration statement. In the event the
Company undertakes to file a registration statement on Form S-1 in connection
with the Common Stock, upon the effectiveness of such registration, Purchaser
shall have the option to sell the Underlying Shares pursuant thereto. The
foregoing shall not in any way limit Purchaser's rights in connection with the
Common Stock or the Underlying Shares pursuant to Regulation D, the Registration
Statement or otherwise. If the registration statement required hereunder is not
declared effective by the SEC within the time limits stated in this Paragraph
3.3(c), the Company will be liable to Purchaser for liquidated damages. Such
liquidated damages shall be in the amount of three percent (3%) of the Purchase
Price for each thirty (30) day period beginning on the date effectiveness was
called for under this Paragraph 3.3(c) and ending on the date on which such
registration statement is declared effective by the SEC. Said liquidated damages
shall be pro-rated for the partial thirty (30) day period in which the
registration statement is declared effective. Said liquidated damages shall be
due and payable at the end of each such thirty (30) day period, and shall be
paid in cash at the place specified in writing by Purchaser. After one (1) year
from the Closing Date, such liquidated damages will cease to accrue, and
Purchaser may rely upon Rule 144 for conversion of the Note into Common Stock
and for all sales of Common Stock received upon conversion.
Section 3.4 Escrow of Common Stock. As additional security for the
transactions contemplated herein, the Company has agreed to place in escrow with
the Escrow Agent 5,000,000 shares of non-restricted Common Stock ("Escrowed
Shares"), in accordance with the terms of that escrow agreement attached to this
Agreement as Exhibit B (the "Escrow Agreement"). With respect to the conversion
of the Note, in addition to the provisions of Section 3.3 above, upon conversion
of the Note into Common Stock in accordance with their terms, so long as a
sufficient number of Escrowed Shares are held by the Escrow Agent to effect such
a conversion, the Purchaser shall submit via facsimile a copy of each notice of
conversion to the Escrow Agent, and the Escrow Agent shall transmit to the
Purchaser via electronic transfer, or via delivery of one or more non-legended
stock certificates (along with duly executed and Medallion guaranteed stock
powers) representing, such number of Escrowed Shares as are specified in such
notice of conversion. Such transfer, so long as in accordance with the terms of
this Agreement, the Escrow Agreement and the notice of conversion delivered to
the Escrow Agent, shall satisfy the conversion requirement of any portion of the
Note so converted. If all (or such number that no further portion of the Note
may be converted in full based upon the then-prevailing conversion price) of the
Escrowed Shares are delivered to the Purchaser pursuant to conversion of the
Note, but there is any portion of the Note still outstanding, the Company shall
place additional non-restricted Common Stock in escrow, which the Company shall
place in escrow within three (3) business days after the original Escrow Shares
were delivered pursuant to conversions. The number of additional shares shall be
equal to two and one-half times [(the outstanding principal of that portion of
the Note not previously converted) divided by {(the then current bid price of
the Common Stock, determined by taking the lowest closing bid price for the ten
(10) trading days prior to such written request by Purchaser) multiplied by the
then applicable conversion rate as stated in the Note}].
Likewise, the Company agrees, and does hereby reaffirm and covenant,
that, should the Purchaser, in good faith, reasonably deem itself insecure upon
examination and consideration of the outstanding principal amount due under the
Note and the number of Escrowed Shares remaining with the Escrow Agent, then the
Purchaser may give the Company written notice of such fact via facsimile, and
the Company will immediately (but in any event within three (3) business days
after such facsimile notice) place with the Escrow Agent sufficient additional
Shares to provide reasonable security for the Purchaser. For purposes of this
paragraph, "reasonable security" on any given date shall mean a sufficient
number of Escrowed Shares that, if all of the then-remaining outstanding
principal of the Note were converted on that date at the applicable discount
rate, then there would be at least two hundred fifty percent (250%) of the
required number of Escrowed Shares to effect such conversion in full. Thus, for
example, if there were a $50,000 balance remaining on the Note, and the closing
bid price were $4.25 per share, and the conversion price were $3.40 per share,
then the Purchaser would be "reasonably secure" so long as there were 36,765
Escrowed Shares on deposit with the Escrow Agent [50,000/3.40 X 2.5 = 36,765].
Upon conversion of all the outstanding principal amount of the Note,
any and all remaining Escrow Shares shall be returned to the Company by the
Escrow Agent in accordance with the terms of the Escrow Agreement or in
accordance with the instructions of the Company.
Section 3.5 Use of Proceeds. The Company shall use the proceeds from
the sale of the Securities for general working capital purposes. If specifically
requested by the Purchaser, the Company will provide the Purchaser a schedule of
the exact use of proceeds prior to Closing.
Section 4.1 General Conditions Precedent to the Obligation of the
Company to Sell the Note. The obligation hereunder of the Company to issue
and/or sell the Securities to the Purchaser is subject to the satisfaction, at
the Closing, of each of the conditions set forth below. These conditions may be
waived by the Company at any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for any representations and warranties that are
effective as of a particular, specified date).
(b) [Intentionally left blank.]
(c) No Injunction, No Legal Action. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement. No legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
(d) [Intentionally left blank.]
(e) [Intentionally left blank.]
(f) [Intentionally left blank.]
Section 4.2 General Conditions Precedent to the Obligation of the
Purchaser to Purchase the Note. The obligation hereunder of the Purchaser to
acquire and pay for the Securities is subject to the satisfaction, at the
Closing, of each of the conditions set forth below.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that are effective
as of a particular, specified date).
(b) Performance by the Company. The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company pursuant to this Agreement and the Escrow Agreement at or prior to
the Closing.
(c) Trading and Listing. The Company shall not have received notice of,
and trading in the Company's Common Stock shall not have been, suspended by the
SEC or a national securities exchange (currently the NASDAQ OTB Bulletin Board
Market) (except for any suspension of trading of limited duration agreed to
between the Company and the principal exchange on which the Common Stock is
traded solely to permit dissemination of material information regarding the
Company) or delisted by such exchange, and trading in securities generally as
reported by such exchange shall note have at any prior time been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such exchange.
(d) No Injunction; Effectiveness of Registration Statement. No statute,
rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement. The Registration Statement shall be
effective and shall contain as unsold Shares at least 200% of that number of
Shares that the remainder of the outstanding Note can be converted into if the
remaining Note to be issued at the Closing were converted on such date.
(e) Common Stock. The average daily volume of trading of the Common
Stock of the Company in the OTC market as reported by Bloomberg shall equal or
exceed 40,000 shares for the previous 10 trading days and the volume on any of
such 10 trading days shall not be equal to or less than 20,000 shares.
(f) Execution. The Company shall have executed this Agreement, the
Escrow Agreement and the Note, and delivered such documents and the Note, along
with the Escrowed Shares, to the Escrow Agent on behalf of the Purchaser.
Section 5.1 No Legend on Stock. No certificate representing the Common
Stock issued upon conversion of the Note shall contain any restrictive legend of
any kind.
Section 6.1 Termination. This Agreement may be terminated at any time
prior to the Closing by the mutual written consent of the Company and the
Purchaser. This Agreement may be terminated by action of the respective Board of
Directors or other governing body of the Purchaser or the Company at any time if
the Closing shall not have been consummated by the tenth (10th) business day
following the date of this Agreement, provided that the party seeking to
terminate the Agreement is not in breach of the Agreement. This Agreement shall
automatically terminate without any further action of either party hereto if the
Closing shall not have occurred by the twelfth (12th) business day following the
date of this Agreement, provided, however, that any such termination shall not
terminate the liability of any party which is then in breach of the Agreement.
Section 7.1 Fees and Expenses. The Company shall pay the fees,
commissions and expenses of its advisers, brokers, finders, counsel, accountants
and other experts, if any, and all other expenses associated therewith, in
accordance with their respective agreements. The Company shall pay all stamp and
other taxes and duties levied in connection with the issuance of the Note and
all Common Stock pursuant thereto and hereto. The Escrow Agent shall be entitled
to an escrow/closing fee of one percent (1%) of the gross proceeds of the
Closing, which amount shall be deducted from the Purchase Price at Closing.
Section 7.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) The Company and the Purchaser each (i) hereby irrevocably submits
to the jurisdiction of the United States District Court and other courts of the
United States sitting in the city of Chicago, State of Illinois for the purposes
of any suit, action or proceeding arising out of or relating to this Agreement
and (ii) hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. The
Company and the Purchaser each consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this paragraph shall affect or limit any right to serve
process in any other manner permitted by law.
Section 7.3 Entire Agreement: Amendment. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
Section 7.4 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second (2nd) business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:
to the Company: Mr. Xxxxxxx Xxxxxx
Upside Development, Inc.
000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxx 00000
FAX: 000.000.0000
TEL: 000.000.0000
to the Purchaser: At the address set forth at the foot of this Agreement or as
specified hereafter in writing by Purchaser.
Any party hereto may from time to time change its address for notices by giving
at least ten (10) days' written notice of such changed address to the other
party hereto.
Section 7.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Section 7.6 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.7 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Illinois without regard to such state's principles of conflict of laws.
Section 7.8 Survival. The representations and warranties of the Company
and the Purchaser contained in herein and the agreements and covenants set forth
in Sections 1.1 through 1.4, 3.1 through 3.5 and 7.1 through 7.16 shall survive
for a period of three (3) years after the Closing Date.
Section 7.9 Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchaser
without its consent, unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement.
Section 7.10 NASDAQ. The term "NASDAQ" or "NASDAQ OTC Bulletin Board
Market" herein refers to the principal market on which the Common Stock of the
Company is traded. If the Common Stock is listed on a securities exchange, or if
another market becomes the principal market on which the Common Stock is traded
or through which price quotations for the Common Stock are reported, the term
"NASDAQ" or "NASDAQ OTC Bulletin Board Market " shall be deemed to refer to such
exchange or other principal market.
Section 7.11 Acceptance. Execution and delivery of this Agreement by
the Purchaser shall constitute an offer to purchase the Note, which offer,
unless previously revoked by the Purchaser, may be accepted or rejected by the
Company, in its sole discretion for any cause or for no cause and without
liability to the Purchaser. The Company shall indicate acceptance of this
Agreement by signing as indicated on the signature page hereof.
Section 7.12 Binding Agreement. Upon acceptance of this Agreement by
the Company, the Purchaser agrees that it may not cancel, terminate or revoke
any agreement of the Purchaser made hereunder, and that this Agreement shall
survive the death or disability of the Purchaser and shall be binding upon
heirs, successors, assigns, executors, administrators, guardians, conservators
or personal representatives of the Purchaser.
Section 7.13 Incorporation by Reference. All information set forth on
the signature page is incorporated as integral terms of this Agreement.
Section 7.14 Counterparts. This Agreement may be signed in multiple
counterparts, which counterparts shall constitute one and the same original
instrument.
Section 7.15 Severability. If any portion of this Agreement shall be
held illegal, unenforceable, void or voidable by any court, each of the
remaining terms hereof shall nevertheless remain in full force and effect as a
separate contract.
Section 7.16 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
IN WITNESS WHEREOF, the Purchaser has executed this Agreement on the
date set forth below.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT DATED
September 27, 2001]
COMPANY:
UPSIDE DEVELOPMENT, INC.
By:_________________________________________
Mr. Xxxxxxx Xxxxxx, Chairman and CEO
PURCHASER:
AUGUSTINE ASSOCIATES, L.L.C.
By:_________________________________________
Duly Authorized Company Representative
Required Copy to: Mr. H. Xxxxx Xxxxxxx, Xx., Esq.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopier: 919.785.3116
