Exhibit 10(vii)
PRIVATE EQUITY LINE OF CREDIT AGREEMENT
BY AND BETWEEN
BOAT BASIN INVESTORS LLC
AND
STARUNI CORPORATION
DATED AS OF SEPTEMBER 28, 2000
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This PRIVATE EQUITY LINE OF CREDIT AGREEMENT is entered into as of the 28th
day of September, 2000 (this "Agreement"), by and between Boat Basin Investors
LLC, a limited liability company fon-ned under the laws of Nevis (the
"Investor"), and Staruni Corporation, a corporation organized and existing under
the laws of the State of California (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor
and the Investor shall purchase from time to time as provided herein, up to
$2,000,000 of the Common Stock (as defined below), and
WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2) ("Section 4(2)") and Regulation D ("Regulation D") of the United
States Securities Act of 1933, as amended and the regulations promulgated
thereunder (the "Securities Act"), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments in Common Stock to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1. 1 "Affiliates" shall have the meaning assigned to such term in
Section 3.4 hereof.
Section 1.2 "Sale Price" shall mean the closing sale price (as reported by
Bloomberg L.P.) of the Common Stock on the Principal Market.
Section 1.3 "Capital Shares" shall mean the Common Stock and any shares of any
other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.
Section 1.4 "Commitment Amount" shall mean the $2,000,000 up to which the
Investor has agreed to provide to the Company in order to purchase Put Shares
pursuant to the terms and conditions of this Agreement.
Section 1.5 "Commitment Period" shall mean the period commencing on the
Effective Date and expiring on the earliest to occur of (x) the date on which
the Investors shall have purchased Put Shares pursuant to this Agreement for an
aggregate Purchase Price of $2,000,000, or (y) the date occurring forty- eight
(48) months from the date of commencement of the Commitment Period.
Section 1.6 "Common Stock" shall mean the Company's common stock, no par value
per share.
Section 1.7 "Common Stock Equivalents" shall mean any securities that are
convertible into or exchangeable for Common Stock or any warrants, options or
other rights to subscribe for or purchase Common Stock or any such convertible
or exchangeable securities.
Section 1.8 "Condition Satisfaction Date" shall have the meaning assigned to
such term in Section 7.2 hereof.
Section 1.9 "Control Persons" shall have the meaning assigned to such term in
Section 12.2 hereof.
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Section 1.10 "Damages" shall mean any loss, claim, damage, liability, costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements and costs and expenses of expert witnesses and investigation).
Section 1. 11 "XXXXX" shall mean the SEC's electronic data gathering and
retrieval system.
Section 1.12 "Effective Date" shall mean the date on which the SEC fast declares
effective a Registration Statement registering resale of the Registrable
Securities as set forth in Section 7.2(a).
Section 1.13 "Escrow Agent" shall mean Xxxxxx Xxxxxxxx Xxxxxxx LLP.
Section 1.14 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and the regulations promulgated thereunder.
Section 1.15 "Floor Price P" shall mean a closing bid price of twenty cents
($.20) per share or less for any five consecutive Trading Days during the
Valuation Period. "Floor Price C" shall mean fifteen cents ($.15) per share
determined on any Put Date.
Section 1.16 "Investment Amount" shall mean the dollar amount (within the range
specified in Section 2.2) to be invested by the Investor to purchase Put Shares
with respect to any Put Purchase Notice delivered by the Company to the Investor
in accordance with Section 2.2 hereof.
Section 1.17 "Legend" shall have the meaning assigned to such term in Section
9.1 hereof.
Section 1.18 "Material Adverse Effect" shall mean any effect on the business,
operations, properties, prospects or financial condition of the Company that is
material and adverse to the Company or to the Company and such other entities
controlling or controlled by the Company, taken as a whole, and/or any
condition, circumstance or situation that would prohibit or otherwise interfere
with the ability of the Company to enter into and perform its obligations under
this Agreement and to carry on the business of the Company as presently
conducted.
Section 1.19 "Market Price" shall mean for the purpose of calculating the
Purchase Price of the Put Shares, the lowest lowest closing bid price of the
Common Stock as reported on the Principal Market over the Valuation Period.
Section 1.20 "Maximum Put Amount" shall mean a maximum of 15% of the aggregate
trading volume during the Valuation Period excluding from such calculation any
Trading Day where the lowest bid price is less than 25% of the Floor Price C.
Section 1.21 "NASD" shall mean the National Association of Securities Dealers,
Inc.
Section 1.22 "Outstanding" when used with reference to Common Stock or Capital
Shares (collectively the "Shares"), shall mean, at any date as of which the
number of such Shares is to be determined, all issued and outstanding Shares,
and shall include all such Shares issuable in respect of outstanding scrip or
any certificates representing fractional interests in such Shares; provided,
however, that "Outstanding" shall not mean any such Shares then directly or
indirectly owned or held by or for the account of the Company.
Section 1.23 "Person" shall mean an individual, a corporation, a partnership, an
association, a limited liability company, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
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Section 1.24 "Principal Market" shall mean the Nasdaq National Market, the
NASDAQ Small-Cap Market, the NASD OTC Bulletin Board, the American Stock
Exchange or the New York Stock Exchange, whichever isat the time the principal
trading exchange or market for the Common Stock.
Section 1.25 Intentionally omitted.
Section 1.26 "Purchase Price" as used in this Agreement shall mean seventy-five
percent (75%) of the Market Price on the Put Date. The foregoing percentage is
the "Purchase Price Percentage."
Section 1.27 "Put" shall mean each occasion the Company elects to draw down a
portion from the equity line by exercising its right to tender a Put Purchase
Notice requiring the Investor to purchase a discretionary amount of the
Company's Common Stock, subject to the terms of this Agreement which tender must
be given to the Investor.
Section 1.28 "Put Closing" shall mean one of the closings of a purchase and sale
of the Put Shares pursuant to Section 2.3.
Section 1.29 "Put Closing Date" shall mean, with respect to a Put Closing the
fourth Trading Day following the Put Date related to such Put Closing, provided
all conditions to such Put Closing have been satisfied on or before such Trading
Day.
Section 1.30 "Put Date" shall mean such date as a Put Purchase Notice has been
delivered to the Investor.
Section 1.31 "Put Purchase Notice" shall mean a written notice to the Investor
setting forth the Investment Amount that the Company intends to sell to the
Investor, as such form is attached hereto as Exhibit A.
Section 1.32 "Put Shares" shall mean all shares of Common Stock issued or
issuable pursuant to a Put that has occurred or may occur in accordance with the
terms and conditions of this Agreement.
Section 1.33 "Registrable Securities" shall mean the Put Shares and the Warrant
Shares until the Registration Statement has been declared effective by the SEC
and all Put Shares and Warrant Shares have been disposed of pursuant to the
Registration Statement.
Section 1.34 "Registration Statement" shall mean a registration statement on
Form SB-2 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate and which form shall be available for the resale of the Registrable
Securities to be registered thereunder in accordance with the provisions of this
Agreement, and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor and Placement
Agent of the Registrable Securities under the Securities Act.
Section 1.35 "Regulation D" shall have the meaning set forth in the recitals of
this Agreement.
Section 1.36 "SEC" shall mean the Securities and Exchange Commission.
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Section 1.37 "Section 4(2)" shall have the meaning set forth in the recitals of
this Agreement.
Section 1.38 "Securities Act" shall have the definition ascribed to it in the
recitals of this Agreement.
Section 1.39 "SEC Documents" shall mean, to the extent applicable, the Company's
latest Form 10- KSB as of the time in question, all Forms 10-QSB and 8-K filed
thereafter, and the Proxy Statement for its latest fiscal year as of the time in
question until such time the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement.
Section 1.40 "Subscription Date" shall mean the date on which this Agreement is
executed and delivered by the parties hereto.
Section 1.41 "Put Cushion" shall mean the mandatory minimum twenty-five (25)
Trading Days between Put Dates.
Section 1.42 "Trading Day" shall mean any day during which the Principal Market
shall be open for business.
Section 1.43 Intentionally Omitted.
Section 1.44 "Valuation Period" shall mean the period of thirty (30) days during
which the Purchase Price of the Common Stock is determined with respect to any
Put Date, which shall occur during the immediate thirty (30) days prior to the
Put Date.
Section 1.45 "Warrants" shall mean the common stock purchase warrants of the
Company collectively described in Section 2.4, forms of which are annexed hereto
as Exhibits E and F. "Put Warrants"shall mean the common stock purchase warrants
of the Company described in Section 2.4, a form of which is annexed hereto as
Exhibit E.
Section 1.46 "Warrant Shares" shall mean the Common Stock issuable upon exercise
of the Warrants.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.1 Investments/Puts. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII hereof), on any
Put Date the Company may exercise a Put by the delivery of a Put Purchase
Notice. The number of Put Shares that the Investor shall receive pursuant to
such Put shall be determined by dividing the Investment Amount specified in the
Put Purchase Notice by the Purchase Price determined during the Valuation
Period.
Section 2.2 Mechanics.
(a) Put Purchase Notice. At any time during the Comniitment Period, the
Company may deliver a Put Purchase Notice, in substantially the form and
substance of Exhibit A, to the Investor, subject to the conditions set forth in
Section 7.2; provided, however, the Investment Amount for each Put as designated
by the Company in the applicable Put Purchase Notices shall be neither less than
$50,000 nor more than $1 00,000, subject further to the Maximum Put Amount and,
provided further, that any amount in excess of $50,000 be consented to in
writing by the Investor.
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(b) Date of Delivgg of Put Purchase Notice. A Put Purchase Notice shall be
deemed delivered on (i) the Trading Day it is received by facsimile or otherwise
by the Investor if such notice is received prior to 12:00 noon New York time, or
(ii) the immediately succeeding Trading Day if it is received by facsimile or
otherwise after 12:00 noon New York time on a Trading Day or at any time on a
day which is not a Trading Day. No Put Purchase Notice may be deemed delivered,
on a day that is not a Trading Day.
(c) Determination of Purchase Price and Put Shares Issuable. The Purchase
Price for any Put shall be the product of the Market Price multiplied by the
Purchase Price Percentage less 10%oftheamountstatedinanyPutPurchaseNotice.
ThenumberofPutSharestobepurchasedbythe Investor shall be settled on the Put
Closing Date
(d) Floor Price Limitation. If the Market Price is less than either Floor
Price P or Floor Price C the Company shall not sell and the Investor shall not
purchase the Put Shares otherwise to be purchased for such Put Date, unless the
Company and the Investor each consent to such sale in writing.
Section 2.3 Put Closings. On each Put Closing Date for a Put (i) the Company
shall deliver in the form required pursuant to Article IX hereof to the Escrow
Agent to be held in escrow, certificates representing the Put Shares to be
purchased by the Investor pursuant to Section 2.1 herein, or if deliverable
without legend pursuant to Article IX and if DTC eligible, deliver the Put
Shares electronically by DTC or DWAC after the Put Date and on or prior to the
Put Closing Date, registered in the name of the Investor or, at the Investor's
option, deposit such certificate(s) into such account or accounts previously
designated by the Investor (ii) the CQMPM shall deliver to the Escrow Agent Put
Warrants in accordance with Section 2.4, in the form annexed hereto as Exhibit
"E"and (iii) the Investor shall deliver to the Escrow Agent to be held in escrow
the Investment Amount specified in the Put Purchase Notice by wire transfer of
immediately available funds on or before the Put Closing Date. In addition, on
or prior to the Put Closing Date, each of the Company and the Investor shall
deliver all documents, instruments and writings required to be delivered or
reasonably requested by either ofthem pursuant to this Agreement in order to
implement and effect the transactions contemplated herein. Payment of funds to
the Company and delivery of the certificates And the Put Warrants to the
Investor shall occur out of escrow in accordance with the escrow agreement
referred to in Section 7.2(o) following (x) the Company's deposit into escrow of
the certificates representing the Put Shares and the Put Warrants and (y) the
Investor's deposit into escrow of the Investment Amount.
Section 2.4 Issuance of Warrants. Under the terms of this Agreement, the Company
shall issue to the Investor Warrants to purchase up to I 0% of the number of Put
Shares purchased on each Put Closing Date in the form annexed hereto as Exhibit
E and the Company shall issue to the Investor Warrants to purchase 1,000,000
Warrant Shares in the form of Warrant annexed hereto as Exhibit F.
Section 2.5 Termination of Investment Obligation. The obligation of the Investor
to purchase shares of Common Stock shall terminate permanently (including with
respect to a Put Closing Date that has not yet occurred) in the event that (i)
there shall occur any stop order or suspension of the effectiveness of the
Registration Statement for a consecutive ten day calendar period or for an
aggregate of thirty (30) Trading Days during the Commitment Period, for any
reason, (ii) the Company files a petition in bankruptcy or a petition in
bankruptcy is filed against the Company or the Company is adjudicated bankrupt,
(iii) the Company consolidates with or merges into any other Person and the
Company shall not be the continuing or surviving corporation, (iv) the Company
fails to deliver the Warrants as described in Section 2.4, (v) the Company
effects a reclassification or recapitalization without the Investor's consent as
described in Section 6.11, or (vi) the Company shall at any time fail to comply
with the requirements of Section 6.2, 6.3, 6.4, 6.5 or 6.6.
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Section 2.6 Non-Usage Fee. The Company shall have the obligation to deliver Put
Purchase Notices to the Investor during each six (6) month period of the
Commitment Period having an aggregate dollar amount of $200,000 ("Minimum Put
Commitment"). In the event the Company does not deliver Put Purchase Notices
during any six (6) month period of the Commitment Period for the Minimum Put
Commitment, then the Company shall pay the Investor a non-usage fee of $25,000
less IO% of the actual aggregate dollar amount of Put Purchase Notices during
the subject six (6) month period ("NonUsage Fee"). The Investor shall give the
Company written notice to pay the Non-Usage Fee I 0 days after the end of any
six (6) month period during which the Minimum Put Commitment has not been made.
The Company shall be required to pay the Non-Usage Fee 5 days after the receipt
of such notice. If the Company fails to pay the Non-Usage Fee upon notice, the
Non-Usage Fee may be deducted by the Investor from the Purchase Price of any
subsequent Put Purchase Notice delivered by the Company. Failure of the Investor
to give written notice of a Non-Usage Fee to the Company, shall not waive the
Investor's rights to collect any such fee nor relieve the Company of its
obligation to pay such fee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1 Intent. The Investor is entering into this Agreement for its own
account and not with a view to the distribution of the Common Stock, and the
Investor has no present arrangement (whether or not legally binding) at any time
to sell the Common Stock to or through any person or entity; provided, however,
that by making the representations herein, the Investor does not agree to hold
the Common Stock for any minimum or other specific term and reserves the right
to dispose of the Common Stock at any time in accordance with federal and state
securities laws applicable to such disposition.
Section 3.2 Sophisticated Investor. The Investor is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as
defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in Common Stock. The Investor acknowledges that an
investment in the Common Stock is speculative and involves a high degree of
risk.
Section 3.3 Authority. This Agreement has been duly authorized and validly
executed and delivered by the Investor and is a valid and binding agreement of
the Investor enforceable against it in accordance with its ten-ns, subject to
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.
Section 3.4 Not an Affiliate. The Investor is not an officer, director or to
Investor's good faith belief, an "affiliate" (as that term is defined in Rule
405 of the Securities Act) of the Company.
Section 3.5 Absence of Conflicts. The execution and delivery of this Agreement
and any other document or instrument executed in connection herewith, and the
consummation of the transactions contemplated hereby, and compliance with the
requirements hereof, will not violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Investor, or, to the Investor's
knowledge, (a) violate any provision of any indenture, instrument or agreement
to which Investor is a party or is subject, or by which Investor or any of its
assets is bound, (b) conflict with or constitute a material default thereunder,
(c) result in the creation or imposition of any lien pursuant to the terms of
any such indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by Investor to any third party, or (d) require the approval
of any third-party (which has not been obtained) pursuant to any material
contract, agreement, instrument, relationship or legal obligation to which
Investor is subject or to which any of its assets, operations or management may
be subject.
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Section 3.6 Disclosure; Access to Information. The Investor has received all
documents, records, books and other information pertaining to Investor's
investment in the Company that have been requested by the Investor. The Company
is subject to the periodic reporting requirements of the Exchange Act, and the
Investor has had access to copies of any such reports that have been requested
by it.
Section 3.7 Manner of Sale. At no time was Investor presented with or solicited
by or through any leaflet, public promotional meeting, television advertisement
or any other form of general solicitation or advertising.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor, except as may be set forth
in the disclosure schedule delivered in connection herewith, that:
Section 4.1 Organization of the Company. The Company is a corporation duly
organized and existing in good standing under the laws of the State of
California and has all requisite corporate authority to own its properties and
to carry on its business as now being conducted. The Company is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, other than those in which the failure so
to qualify would not have a Material Adverse Effect.
Section 4.2 Authority. (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement to
issue the Put Shares; (ii) the execution, issuance and delivery of this
Agreement 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; and (iii) this Agreement has been duly executed and
delivered by the Company and 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, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Section 4.3 Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of 250,000,000 shares of Common Stock, of which
15,526,839 shares are issued and outstanding and 50,000,000 shares of preferred
stock, of which no shares are issued and outstanding. Except as set forth in
Schedule 4.3, there are no options, warrants, or rights to subscribe to,
securities, rights or obligations convertible into or exchangeable for or giving
any right to subscribe for any shares of capital stock of the Company. All of
the outstanding shares of Common Stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable.
Section 4.4 Common Stock. As of the commencement of the Commitment Period, the
Company will have registered its Common Stock pursuant to Section 12(b) or 12(g)
of the Exchange Act and be in full compliance with all reporting requirements of
the Exchange Act, if any, and the Company will have maintained all requirements
for the continued listing or quotation of its Common Stock, and such Common
Stock is then listed or quoted on the Principal Market. As of the date hereof,
the Common Stock is quoted on the OTC Bulletin Board.
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Section 4.5 Financial Statements. The Company has delivered or made available to
the Investor true and complete copies of unaudited financial statements (without
footnotes) as of and for the period ending June 30, 2000 ("Financial
Statements"). The Company has not provided to the Investor any information that,
according to applicable law, rule or regulation, should have been disclosed
publicly prior to the date hereof by the Company, but which has not been so
disclosed. The Financial Statements fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of
operations for the periods then ended, subject to normal year-end audit
adjustments.
Section 4.6 Valid Issuances. Assuming the accuracy of the representations and
warranties contained in Sections 3.1, 3.2 and 3.7 hereof both at the date hereof
and at the time of sale and issuance, the sale and issuance of the Put Shares
will be exempt from registration under the Securities Act in reliance upon
Section 4(2) thereof and/or Regulation D thereto and when issued, the Put Shares
shall be duly and validly issued, fully paid, and nonassessable. Neither the
sales of the Put Shares pursuant to, nor the Company's performance of its
obligations under this Agreement will (i) result in the creation or imposition
of any liens, charges, claims or other encumbrances upon the Put Shares or any
ofthe assets of the Company, or (ii) entitle the holders of Outstanding Capital
Shares to preemptive or other rights to subscribe to or acquire the Capital
Shares or other securities of the Company. The Put Shares shall not subject the
Investor to personal liability by reason of the possession thereof.
Section 4.7 No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) ofregulation D) or
general advertising with respect to any of the Put Shares, or (ii) made any
offers or sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the Common Stock
under the Securities Act.
Section 4.8 Corporate Documents. The Company has furnished or made available to
the Investor true and correct copies of the Company's Certificate of
Incorporation, as amended and in effect on the date hereof (the "Certificate"),
and the Company's By-Laws, as amended and in effect on the date hereof (the
"By-Laws").
Section 4.9 No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including, without limitation, the issuance of Common Stock
do not and will not (i) result in a violation of the Company's Certificate or
By-Laws or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of ten-nination, amendment, acceleration or cancellation of, any
material agreement, indenture, instrument or any "lock-up" or similar provision
of any underwriting or similar agreement to which the Company is a party, or
(iii) result in a violation of any federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or by which any property or
asset of the Company is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect) nor is
the Company otherwise in violation of, conflict with or in default under any of
the foregoing; provided that, for purposes of the Company's representations and
warranties as to violations of foreign law, rule or regulation referenced in
clause (iii), no such representations and warranties are being made insofar as
the execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby are or may
be affected by the status of the Investor under or pursuant to any such foreign
law, rule or regulation. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
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for possible violations that either individually 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 to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Common Stock in
accordance with the terms hereof (other than any SEC, NASD or state securities
filings that may be required to be made by the Company subsequent to any Put
Closing, any registration statement that may be filed pursuant hereto, and any
shareholder approval required by the rules applicable to companies whose common
stock trades on any Principal Market); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investor
herein.
Section 4.10 No Material Adverse Change. Since the date of the Financial
Statements described in Section 4.5, no Material Adverse Effect has occurred or
exists with respect to the Company.
Section 4. 1 1 No Undisclosed Liabilities. The Company has no liabilities or
obligations which are material, individually or in the aggregate, and are not
disclosed to the Investor in the Financial Statements or otherwise in writing,
other than those incurred in the ordinary course of the Company's businesses
since the date of the Financial Statements and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the Company.
Section 4.12 No Undisclosed Events or Circumstances. No event or circumstance
has occurred or exists with respect to the Company or its businesses,
properties, prospects, operations or financial condition, that, under applicable
law, rule or regulation, requires as of the date hereof, public disclosure or
announcement prior to the date hereof by the Company.
Section 4.13 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement under circumstances that
would require registration of the Common Stock under the Securities Act. 10
Section 4.14 Litigation and Other Proceedings. Except as set forth in the
Financial Statements described in Section 4.5, there are no lawsuits or
proceedings pending or to the best knowledge of the Company threatened, against
the Company, nor has the Company received any written or oral notice of any such
action, suit, proceeding or investigation, which might have a Material Adverse
Effect. Except as set forth on Schedule 4.14, no judgment, order, writ,
injunction, decree or award has been issued by or, so far as is known by the
Company, requested by any court, arbitrator or governmental agency which might
result in a Material Adverse Effect.
Section 4.15 No Misleading or Untrue Communication. The Company and any Person
representing the Company, in connection with the transactions contemplated by
this Agreement, have not made, at any time, any oral communication in connection
with same, which contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not misleading.
Section 4.16. Non-Public Information. Neither the Company nor any of its
officers or agents has disclosed any material non-public information about the
Company to the Investor or the Placement Agent.
Section 4.17 No Default or Violation. The Company is not (i) in default under or
in violation of and no event has occurred which has not been waived which, with
notice or lapse of time or both, would result in a default by the Company,
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nor has the Company received notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, (ii) in violation of any order of any court, arbitration or
governmental body, or (iii) in violation of any statute, rule or regulation of
any governmental authority, except as could not have or result in a Material
Adverse Effect.
Section 4.18 Financial Statements. The financial statements ofthe Company
included in the reports filed by the Company under the Exchange Act comply in
all material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to non-nal,
immaterial, year-end audit adjustments.
ARTICLE V
COVENANTS OF THE INVESTOR
Section 5.1 Compliance with Law. The investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and the
rules and regulations of the Principal Market on which the Company's Common
Stock listed.
Section 5.2 Selling Restrictions. The Investor has the right to sell shares of
the Company's Common Stock equal in number to the number of the Shares to be
purchased pursuant to this Agreement during the Commitment Period.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Registration Riphts. The Company shall cause a Registration
Statement to be filed with respect to all Put Shares and Warrant Shares within
sixty (60) days of the Subscription Date and shall use its best efforts to cause
such Registration Statement to be declared effective within one hundred twenty
(120) days of the Subscription Date and remain effective for a period of two (2)
years. The Company shall provide the Investor, or its counsel, a copy of the
Registration Statement at least two (2) days prior to filing with the SEC.
Section 6.2 Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times shares of Common Stock for the purpose of enabling the Company to satisfy
any obligation to issue the Put Shares.
Section 6.3 Quoting or Listing of Common Stock. The Company shall maintain the
quoting or listing of the Common Stock on a Principal Market, and as soon as
practicable (but in any event prior to the commencement of the Commitment
Period) to list the Put Shares on the Principal Market, if the Principal Market
is the Nasdaq, AMEX or NYSE. The Company further shall, if the Company applies
to have the Common Stock traded on any other Principal Market, include in such
application the Put Shares, and shall take such other action as is necessary or
desirable in the opinion of the Investor to cause the Common Stock to be listed
on such other Principal Market as promptly as possible.
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The Company shall take all action necessary to continue the quoting, listing and
trading of its Common Stock on the Principal Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market.
Section 6.4 Exchange Act Registration. The Company shall cause its Common Stock
to become and continue to be registered under Section 12(g) or 12(b) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules thereunder)
to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act. The Company will take
all action to obtain a listing and continue the listing and trading of its
Conunon Stock on the Principal Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the Principal Market.
Section 6.5 Legends. The certificates evidencing the Common Stock to be sold by
the Investor pursuant to Section 9.1 shall be free of restrictive legends,
except as set forth in Article IX.
Section 6.6. Corporate Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.
Section 6.7. Additional SEC Documents. In the event that the SEC Documents
fumished or submitted to the SEC by the Company are not available or accessible
by the Investor(s) on XXXXX, the Company will deliver to the Investor, as and
when the originals thereof are submitted to the SEC for filing, copies of all
such SEC Documents.
Section 6.8. Blackout Period. The Company will immediately notify the Investor
upon the occurrence of any of the following events in respect of a registration
statement or related prospectus in respect of an offering of Registrable
Securities: (i) receipt of any request for additional information by the SEC or
any other federal or state governmental authority during the period of
effectiveness of the registration statement for amendments or supplements to the
registration statement or related prospectus; (ii) the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such registration statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the registration statement, related prospectus or documents so that,
in the case of the registration statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the registration
statement would be appropriate; and the Company will promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Put Purchase Notice during the
continuation of any of the foregoing events or if the Company has knowledge that
any of the foregoing events will occur within twenty (20) days of such
knowledge.
Section 6.9. Expectations Regardiniz Put Purchase Notices. Within ten (10) days
after the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company undertakes to notify the
44
Investor as to its reasonable expectations as to the dollar amount it intends to
raise during such calendar quarter, if any, through the issuance of Put Purchase
Notices. Such notification shall constitute only the Company's good faith
estimate and shall in no way obligate the Company to raise such amount, or any
amount, or otherwise limit its ability to deliver Put Purchase Notices. The
failure by the Company to comply with this provision can be cured by the
Company's notifying the Investor at any time as to its reasonable expectations
with respect to the current calendar quarter.
Section 6.10. Capital Raising Limitations.
(i) Capital Raising Limitations. For so long as a Put Closing has occurred
in the Investment Agreements as the Company has designated in its Put Purchase
Notice (Investor consented to each Investment Amount in excess of $50,000 and
less than $100,000 and a Put Closing has occurred at each time designated in the
Put Purchase Notice) during the period from the date ofthis Agreement until its
expiration, the Company shall not issue or sell, or agree to issue or sell
Equity Securities (as defined below), for cash in private capital raising
transactions without obtaining the prior written approval of the Investor (the
limitations referred to in this subsection 6. 1 0(i) are collectively referred
to as the "Capital Raising Limitations"). For purposes hereof, the following
shall be collectively referred to herein as, the "Equity Securities": (i) Common
Stock or any other equity securities, (ii) any debt or equity securities which
are convertible into, exercisable or exchangeable for, or carry the right to
receive additional shares of Common Stock or other equity securities, or (iii)
any securities of the Company pursuant to an equity line structure or forrnat
similar in nature to this transaction.
(ii) Excgtions to Capital Raising Limitations. Notwithstanding the above,
the Capital Raising Limitations shall not apply to any transaction involving
issuances of securities in connection with a merger, consolidation, acquisition
or sale of assets, or in connection with any strategic partnership or joint
venture (the primary purpose of which is not to raise equity capital), or in
connection with the disposition or acquisition of a business, product or license
by the Company or exercise of options by employees, consultants or directors, or
a primary underwritten offering of the Company's Common Stock.
Section 6.11. No Reclassification or Recapitalization. The Company shall not,
without the consent of the Investor, during the term of this Agreement, effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a smaller number of shares (a "Reverse Stock Split"), provided
that the Company may effect such Reverse Stock Split without the consent of
Investor in connection with achieving listing requirements for any Principal
Market.
Section 6.12. Disclosure of Material Information. In the event that any or all
of the information set forth on Schedule 8.2(a) hereto becomes material, the
Company shall make full and complete public disclosure in accordance with all
applicable law.
Section 6.13. Issuance of Put Shares. The sale and issuance of the Put Shares
shall be made in accordance with the provisions and requirements of applicable
federal and state law.
45
ARTICLE VII
CONDITIONS TO DELIVERY OF PUT PURCHASE NOTICES AND
CONDITIONS TO PUT CLOSING
Section 7.1 Conditions Precedent to the Oblijzation of the Co!ppany to Issue and
Sell Common Stock. The obligation hereunder of the Company to issue and sell the
Put Shares to the Investor incident to each Put Closing is subject to the
satisfaction, at or before each such Put Closing, of each of the conditions set
forth below.
(a) Accuracy of the Investor's Representation and Warranties. The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date of this Agreement and as of the date of each
such Put Closing as though made at each such time.
(b) Performance by the Investor. The Investor shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such Put Closing.
Section 7.2 Conditions Precedent to the Riaht of the CompgLny to Deliver a Put
Purchase Notice and the Obligation of the Investor to purchase Put Shares. The
right of the Company to deliver a Put Purchase Notice and the obligation of the
Investor hereunder to acquire and pay for the Put Shares incident to a Put
Closing is subject to the satisfaction, (i) on the Put Date, (ii) for each day
during the Valuation Period, and (iii) on the applicable Put Closing Date (each
a "Condition Satisfaction Date"), of each of the following conditions:
(a) Registration of the Conunon Stock with the SEC. The Company shall have
filed with the SEC a Registration Statement with respect to the resale of the
Registrable Securities that shall have been declared effective by the SEC prior
to the first Put Date, but in no event later than one hundred twenty (120) days
after the Subscription Date.
(b) Effective Registration Statement. The Registration Statement shall have
become effective on or prior to the Put Date and shall remain effective on each
Condition Satisfaction Date and (i) neither the Company nor the Investor shall
have received notice that the SEC has issued or intends to issue a stop order
with respect to the Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so, and (ii) no
other suspension of the use or withdrawal of the effectiveness of the
Registration Statement or related prospectus shall exist.
(c) Accurge 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 each Condition Satisfaction Date as though made at each
such time (except for representations and warranties specifically made as of a
particular date) with respect to all periods, and as to all events and
circumstances occurring or existing to and including each Condition Satisfaction
Date, except for any conditions which have temporarily caused any
representations or warranties herein to be incorrect and which have been
corrected with no continuing impairment to the Company or the Investor.
(d) Performance by the Company. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to each Condition Satisfaction Date, including
but not limited to the requirements for the Company and its transfer agent set
forth in Sections 9.1 and 9.2 to deliver Common Stock without legends pursuant
to the terms set forth in Sections 9.1 and 9.2, and Exhibit B hereto and each of
the representations and warranties of the Company, as set forth in Article IV,
shall be true and correct and there shall be no omissions of any material fact
which, if disclosed, would render any such representation or warranty untrue.
46
(e) No Injunction. 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 that prohibits
or directly or materially adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced that may have the
effect of prohibiting or materially adversely affecting any of the transactions
contemplated by this Agreement.
(f) Adverse Changes. Since the date of filing of the Company's most recent
SEC Document, no event that had or is reasonably likely to have a Material
Adverse Effect has occurred.
(g) No Suspension of Trading In or De-listing of Common Stock. The trading
of the Common Stock (including without limitation the Put Shares) shall not have
been suspended by the SEC, the Principal Market or the NASD and the Common Stock
(including without limitation the Put Shares) shall have been approved for
listing or quotation and shall have actually been listed or quoted on, and shall
not have been de-listed from the Principal Market, nor shall the Company have
received any letter or notice of any suspension or de-listing or warning of such
suspension or de-listing. The issuance of shares of Common Stock with respect to
the applicable Put Closing, if any, shall not violate the shareholder approval
requirements of the Principal Market.
(h) Legal Opinions. The Company's counsel shall deliver to the Investor
prior to the first Put Date an opinion in the form of Exhibit C hereto.
(i) Due Diligence. No dispute between the Company and the Investor shall
exist pursuant to Section 8.2(c) as to the adequacy of the disclosure contained
in the Registration Statement.
(j) Ten Percent Limitation. The number of Put Shares to be purchased on
each Put Closing Date and the number of Warrant Shares issuable upon any
exercise of such Warrant by the Investor shall not exceed the number of such
shares that, when aggregated with all other shares of Common Stock then owned by
the Investor beneficially or deemed beneficially owned by the Investor, would
result in the Investor owning more than 9.99% of all of such Common Stock as
would be outstanding on such Put Closing Date or such date of exercise of the
Warrant, as determined in accordance with Section 16 of the Exchange Act and the
regulations promulgated thereunder. In such event, the Investment Amount
designated in any Put Purchase Notice shall be reduced by the minimum amount
necessary as to not result in the Investor owning more than 9.99% of the Common
Stock of the Company. For purposes of this Section 7.20), in the event that the
amount of Common Stock outstanding as determined in accordance with Section 16
of the Exchange Act and the regulations promulgated thereunder is greater on a
Put Closing Date than on the date upon which the Put Purchase Notice associated
with such Put Closing Date is given, the amount of Common Stock outstanding on
such Put Closing Date shall govern for purposes of determining whether the
Investor, when aggregating all purchases of Common Stock made pursuant to this
Agreement and, if any, Shares, would own more than 9.99% of the Common Stock
following such Put Closing Date.
(k) Cross Default. The Company shall not be in default of a term, covenant,
warranty or undertaking of any other agreement to which the Company and Investor
are parties, nor shall there have occurred an event of default under any such
other agreement, in each case which default would have a material adverse effect
on the financial condition of the Company or the Company's ability to comply
with its obligations to the Investor.
(l) No Knowledge. The Company shall have no knowledge of any event more
likely than not to have the effect of causing such Registration Statement to be
suspended or otherwise ineffective (which event is more likely than not to occur
within the Valuation Period during which the Put Purchase Notice is deemed
delivered).
47
(m) Put Cushion. The Put Cushion shall have elapsed since the immediately
preceding Put Date.
(n) Shareholder Vote. The issuance of shares of Common Stock with respect
to the applicable Put Closing, if any, shall not violate the shareholder
approval requirements of the Principal Market.
(o) Escrow Agreement. The parties hereto shall have entered into a mutually
acceptable escrow agreement for the Purchase Prices due hereunder, providing for
reasonable interest on any funds deposited into the escrow account established
under the escrow agreement.
(p) Compliance Certificate. The Company shall deliver a Compliance
Certificate in the form attached hereto as Exhibit D on each Put Closing Date.
(q) Other. On each Condition Satisfaction Date, the Investor shall have
received and been reasonably satisfied with such other certificates and
documents as shall have been reasonably requested by the Investor in order for
the Investor to confirm the Company's satisfaction of the conditions set forth
in this Section 7.2. including, without limitation, a certificate in
substantially the form and substance of Exhibit D hereto, executed in either
case by an executive officer of the Company and to the effect that all the
conditions to such Put Closing shall have been satisfied as at the date of each
such certificate.
ARTICLE VIII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION
Section 8.1 Due Diligence Review. The Company shall make available for
inspection and review by the Investor, advisors to and representatives of the
Investor (who may or may not be affiliated with the Investor and who are
reasonably acceptable to the Company), any underwriter participating in any
disposition of the Registrable Securities on behalf of the Investor pursuant to
the Registration Statement, any such registration statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all financial and
other records, all SEC Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company's officers, directors and
employees to supply all such information reasonably requested by the Investor or
any such representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investor and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
Section 8.2 Non-Disclosure of Non-Public Information.
(a) Except as set forth on Schedule 8.2(a) hereof, the Company represents
and warrants that the Company and its officers, directors, employees and agents
have not disclosed any non-public information to the Investor or advisors to or
representatives of the Investor. The Company covenants and agrees that it shall
refrain from disclosing, and shall cause its officers, directors, employees and
agents to refrain from disclosing, unless prior to disclosure of such
information the Company identifies such information as being non-public
information and provides the Investor, such advisors and representatives with
48
the opportunity to accept or refuse to accept such non-public information for
review. The Company may, as a condition to disclosing any non-public information
hereunder, require the Investor's advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.
(b) The Company acknowledges and understands that the Investor is entering
into this Agreement at the request of the Company and in good faith reliance on
(i) the Company's representation set forth in Section 4.16 that neither it nor
its agents have disclosed to the Investor any material non-public information;
and (ii) the Company's covenant set forth in Section 6. 1 0 that if all or any
portion of the information set forth on Schedule 8.2(a) becomes material, the
Company shall timely make full and complete public disclosure of all or such
portion of such information that shall have become material in accordance with
all applicable law.
(c) Nothing herein shall require the Company to disclose non-public
information to the Investor or its advisors or representatives, and the Company
represents that it does not disseminate non-public information to any investors
who purchase stock in the Company in a public offering, to money managers or to
securities analysts, provided, however, that notwithstanding anything herein to
the contrary, the Company will, as herein above provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 8.2 shall be construed to mean that such
persons or entities other than the Investor (without the written consent of the
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of a material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE IX
LEGENDS
Section 9.1 Legends. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend (the
"Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH N
A PRIVATE EQUITY LINE OF CREDIT AGREEMENT BETWEEN UNITED VENTURES GROUP, INC.
AND BOAT BASIN INVESTORS L.L.C. DATED AUGUST _, 2000. A COPY OF THE PORTION OF
THE AFORESAID AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE
COMPANY'S EXECUTIVE OFFICES.
49
Notwithstanding the foregoing, upon the execution and delivery hereof, the
Company is issuing to the transfer agent for its Common Stock (and to any
substitute or replacement transfer agent for its Common Stock upon the Company's
appointment of any such substitute or replacement transfer agent) instructions
in substantially the form of Exhibit B hereto. Such instructions shall be
irrevocable by the Company from and after the date hereof or from and after the
issuance thereof to any such substitute or replacement transfer agent, as the
case may be, except as otherwise expressly provided herein. It is the intent and
purpose of such instructions, as provided therein, to require the transfer agent
for the Common Stock from time to time upon transfer of Registrable Securities
by the Investor to issue certificates evidencing such Registrable Securities
free of the Legend during the following periods and under the following
circumstances and without consultation by the transfer agent with the Company or
its counsel and without the need for any further advice or instruction or
documentation to the transfer agent by or from the Company or its counsel or the
Investor:
(a) at any time after the Effective Date, upon surrender of one or more
certificates evidencing Common Stock that bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates free of the
Legend to replace those surrendered; provided that (i) the Registration
Statement shall then be effective; (ii) the Investor confirms to the transfer
agent that it has sold, pledged or otherwise transferred or agreed to sell,
pledge or otherwise transfer such Common Stock in a bona fide transaction to a
third party that is not an affiliate of the Company; and (iii) the Investor
confirms to the transfer agent that the Investor has complied with the
prospectus delivery requirement; and
(b) at any time upon any surrender of one or more certificates evidencing
Registrable Securities that bear the Legend, to the extent accompanied by a
notice requesting the issuance of new certificates free of the Legend to replace
those surrendered and containing representations that (i) the Investor is
permitted to dispose of such Registrable Securities without limitation as to
amount or manner of sale pursuant to Rule 144(k) under the Securities Act or
(ii) the Investor has sold, pledged or otherwise transferred or agreed to sell,
pledge or otherwise transfer such Registrable Securities in a manner other than
pursuant to an effective registration statement, to a transferee who will upon
such transfer be entitled to freely tradeable securities. Any of the notices
referred to above in this Section 9.1 may be sent by facsimile to the Company's
transfer agent.
Section 9.2 No Other Stock Transfer Restrictions. No legend other than the one
specified in Section 9.1 has been or shall be placed on the share certificates
representing the Common Stock and no instructions or "stop transfers orders," so
called, "stock transfer restrictions," or other restrictions have been or shall
be given to the Company's transfer agent with respect thereto other than as
expressly set forth in this Article IX.
Section 9.3 Investor's Compliance. Nothing in this Article IX shall affect in
any way the Investor's obligations under any agreement to comply with all
applicable securities laws upon resale of the Common Stock.
50
ARTICLE X
CHOICE OF LAW/VENUE
Section 10.1 Choice of Law/Venue. This Agreement and the Warrants shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts of laws. Any controversy or claim
arising out of or related to this Agreement and the Warrants or the breach
thereof, shall be settled by binding arbitration in New York City, New York in
accordance with the rules of the Judicial Arbitration & Mediation Services
Eastern Regional Office located in New York City, New York ("JAMS"). A
proceeding shall be commenced upon written demand by Company or the Investor to
the other. The arbitrator(s) shall enter a judgement by default against any
party which fails or refuses to appear in any properly noticed arbitration
proceeding. The proceeding shall be conducted by one (1) arbitrator, unless the
amount alleged to be in dispute exceeds two hundred fifty thousand dollars
($250,000), in which case three (3) arbitrators shall preside. The arbitrator(s)
will be chosen by the parties from a list provided by JAMS, and if they are
unable to agree within ten (10) days, JAMS shall select the arbitrator(s). The
arbitrators must be experts in securities law and financial transactions. The
arbitrators shall assess costs and expenses of the arbitration, including all
attorneys' and experts' fees, as the arbitrators believe is appropriate in light
of the merits of parties' respective positions in the issues in dispute. The
award of the arbitrator(s) shall be final and binding upon the parties and may
be enforced in any court having jurisdiction. Nothing in this section 10. I
shall preclude the parties from seeking extraordinary relief in the event that a
claim of irreparable harm arises, provided however, that such application shall
be made in the United States District Court for the Southern District of New
York, or in the Supreme Court of the State of New York, New York County. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.
ARTICLE XI
ASSIGNMENT; ENTIRE AGREEMENT, AMENDMENT; TERMINATION
Section 11.1 Assignment. Neither this Agreement nor any rights of the Investor
or the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, and be binding upon, any transferee of
any of the Common Stock purchased or acquired by the Investor hereunder with
respect to the Common Stock held by such person unless such Common Stock is free
from restrictions on further transfer of such Common Stock, and (b) the
Investor's interest in this Agreement may be assigned at any time, in whole or
in part, to any other person or entity (including any affiliate of the Investor)
effective upon written notice to the Company. The Company shall have the right
to require any assignee to execute a counterpart of this Agreement.
Section 11.2 Termination. This Agreement shall terminate forty-eight (48) months
after the commencement of the Commitment Period; provided, however, that the
provisions of Articles VI, VIII, IX, X, XI, and XII shall survive the
termination of this Agreement.
Section 11.3 Entire Agreement, Amendment. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subjects hereof, and no party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except as specifically
set forth in this Agreement. Except as expressly provided in this Agreement,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by both parties hereto.
51
ARTICLE XII
NOTICES; INDEMNIFICATION
Section 12.1 Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to Staruni Corporation: With a copy to:
Staruni Corporation Xxxxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxxxx Xxxxxxxxx 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Telecopier: Telecopier: (000) 000-0000
Attention: Xxxxx Xxxxxx Attention: Xxxxxx X. Xxxxxxxx, Esq.
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12.1 by giving at least ten (10) days prior
written notice of such changed address or facsimile number to the other party
hereto.
Section 12.2 Indemnification.
(a) The Company agrees to indemnify and hold harmless the Investor, its
partners, affiliates, officers, directors, employees, and duly authorized
agents, and each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or
is controlled by the Investor (the "Control Person") from and against any
Damages, joint or several, and any action in respect thereof to which the
Investor, its partners, Affiliates, officers, directors, employees, and duly
authorized agents, and any such Control Person becomes subject to, resulting
from, arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Company contained in this Agreement in any event as such Damages are incurred.
(b) The Investor agrees to indemnify and hold harmless the Company, its
partners, Affiliates, officers, directors, employees, and duly authorized
agents, and each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the Control Persons from and against any Damages, joint or
several, and any action in respect thereof to which the Company, its partners,
Affiliates, officers, directors, employees, and duly authorized agents, and any
such Control Person becomes subject to, resulting from, arising out of or
relating to any misrepresentation, breach of warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of Investor contained
in this Agreement.
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Section 12.3 Method of Asserting Indemnification Claims All claims for
indemnification by any Indemnified Party asserted and resolved as follows:
(a) In the event any claim or demand in respect of which any person
claiming indemnification under any provision of Section 12.2 (an "Indemnified
Party") might seek indemnity under Section 12.2 is asserted against or sought to
be collected from such Indemnified Party by a person other than the Company, the
Investor or any affiliate of the Company or (a "Third Party Claim"), the
Indemnified Party shall deliver a written notification, enclosing a copy of all
papers served, if any, and specifying the nature of and basis for such Third
Party Claim and for the Indemnified Party's claim for indemnification that is
being asserted under any provision of Section 12.2 against any person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the period ending thirty (30)
calendar days following receipt by the Indemnifying Party of either a Claim
Notice or an Indemnity Notice (as defined below) (the "Dispute Period") whether
the Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party under Section 12.2 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant to this Section 12.3 (a),
then the Indemnifying Party will have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at the sole cost and expense
of the Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any relief
which affects the Indemnified Party, other than the payment of monetary damages
or that provides for the payment of monetary damages as to which the Indemnified
Party will not be indemnified in full pursuant to Section 12.2). The
Indemnifying Party will have full control of such defense and proceedings,
including any compromise or settlement thereof, provided, however, that the
Indemnified Party may, at the sole cost and expense of the Indemnified Party, at
any time prior to the Indemnifying Party's delivery of the notice referred to in
the first sentence of this clause 1, file any motion, answer or other pleadings
or take any other action that the Indemnified Party reasonably believes to be
necessary or appropriate to protect its interests; and provided further, that if
requested by the Indemnifying Party, the Indemnified Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnifying Party in contesting any Third Party Claim that the Indemnifying
Party elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause 1, and except as provided in the
preceding sentence, the Indemnified Party will bear its own costs and expenses
with respect to such participation. Notwithstanding the foregoing, the
Indemnified Party may take over the control of the defense or settlement of a
Third Party Claim at any time if it irrevocably waives its right to indemnity
under Section 12.2 with respect to such Third Party Claim.
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(c) If the Indemnifying Party fails to notify the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 12.3 (a), or if the Indemnifying Party gives such
notice but fails to prosecute vigorously and diligently or settle the Third
Party Claim, or if the Indemnifying Party fails to give any notice whatsoever
within the Dispute Period, then the Indemnified Party will have the right to
defend, at the sole cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which proceedings will be prosecuted by
the Indemnified Party in a reasonable manner and in good faith or will be
settled at the discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing provisions of
this clause 2, if the Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party disputes its liability or
the amount of its liability hereunder to the Indemnified Party with respect to
such Third Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause 3 below, the Indemnifying
Party will not be required to bear the costs and expenses of the Indemnified
Party's defense pursuant to this clause 2 or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the Indemnified
Party will reimburse the Indemnifying Party in full for all reasonable costs and
expenses incurred by the Indemnifying Party in connection with such litigation.
The Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this clause 2, and
the Indemnifying Party will bear its own costs and expenses with respect to such
participation.
(d) If the Indemnifying Party notifies the Indemnified Party that it does
not dispute its liability or the amount of its liability to the Indemnified
Party with respect to the Third Party Claim under Section 12.2 or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes its liability or the amount of its liability to the Indemnified
Party with respect to such Third Party Claim, the Loss in the amount specified
in the Claim Notice will be conclusively deemed a liability of the Indemnifying
Party under Section 12.2 and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability with respect to such
claim, the Indemnifying Party and the indemnified Party will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute shall be resolved by
arbitration in accordance with paragraph (c) of this Section 12.3.
(e) In the event any Indemnified Party should have a claim under Section
12.2 against the Indemnifying Party that does not involve a Third Party Claim,
the Indemnified Party shall deliver a written notification of a claim for
indemnity under Section 12.2 specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such claim (an "Indemnity Notice") with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that the Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the Loss in the
amount specified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnifying Party under Section 12.2 and the Indemnifying Party shall
pay the amount of such Loss to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party will proceed in good faith to negotiate a resolution of such dispute, and
if not resolved through negotiations within the Resolution Period, such dispute
shall be resolved by arbitration in accordance with paragraph (c) of this
Section 12.3.
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ARTICLE XIII
MISCELLANEOUS
Section 13.1 Fees and Expenses. Each of the Company and the Investor agrees to
pay its own expenses incident to the performance of its obligations hereunder
except that the Company shall pay the fees of the Investor's attorneys and the
Escrow Agreement in connection with this transaction and the preparation of
documents which shall be only and to the extent set forth in the Escrow
Agreement. Any such fees shall be netted from the proceeds of any Put Purchase
Price.
Section 13.2 Brokerage. Each of the parties hereto represents that it has had no
dealings in connection with this transaction with any finder or broker who will
demand payment of any fee or commission except for Capstone Partners. The
Company shall pay the fees of Capstone Partners pursuant to a separately
negotiated placement agreement
Section 13.3 Publicity. Except as required by applicable law, the Company shall
not issue any press release or otherwise make any public statement or
announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement without the prior consent of the
Purchaser.
Section 13.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
Section 13.5 Entire Agreement. This Agreement with the Exhibits hereto set forth
the entire agreement and understanding of the parties relating to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
negotiations and understandings between the parties, both oral and written
relating to the subject matter hereof The terms and conditions of all Exhibits
to this Agreement are incorporated herein by this reference and shall constitute
part of this Agreement as if fully set forth herein.
Section 13.6 Survival; Severability. The representations, warranties, covenants
and agreements of the parties hereto shall survive each Put Closing hereunder.
In the event that any provision of this Agreement becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision;
Provided that such severability shall be ineffective if it materially changes
the economic benefit of this Agreement to any party.
Section 13.7 Title and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 13.8 Reporting Entity for the Common Stock. The reporting entity relied
upon for the determination of the trading price or trading volume of the Common
Stock on any given Trading Day for the purposes of this Agreement shall be
Bloomberg, L.P. or any successor thereto. The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.
IN WITNESS WHEREOF, the parties hereto have caused this Private Equity Line
of Credit Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
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STARUNI CORPORATION
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
Boat Basin Investors, LLC
By: /s/
-------------------------------------
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EXHIBIT A
FORM OF
PUT PURCHASE NOTICE
Reference is made to the Private Equity Line of Credit Agreement dated
as of September _____, 2000 (the "Agreement") between Staruni Corporation, a
______________ corporation (the "Company") and Boat Basin Investors LLC.
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Agreement.
In accordance with and pursuant to Section 2.2 of the Agreement, the
Company hereby issues this Put Purchase Notice to exercise a Put request for the
Put Amount indicated below.
Investment Amount:___________________________________
Valuation Period start date:_____________________________
Valuation Period end date:______________________________
Put Closing Date:_____________________________________
Floor Price:__________________________________________
Dated:_______________________________________________
STARUNI CORPORATION
By:__________________________________________________
Name:
Title:
Address:
Facsimile No.:
Wire Instructions:______________________________________
Contact Name:_________________________________________
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EXHIBIT B
INSTRUCTIONS TO TRANSFER AGENT
STARUNI CORPORATION
[Name and address _____________________, 2000
of Transfer Agent]
Ladies & Gentlemen:
Reference is made to that certain Private Equity Line of credit Agreement
(the "Agreement") by and among certain Investors (the "Investor") and Staruni
Corporation. Pursuant and subject to the terms and conditions set forth in the
Agreement the Investor has agreed to purchase from the Company and the Company
has agreed to sell to the Investor from time to time during the term of the
Agreement shares (the "Shares") of Common Stock of the Company, $0.001 par value
(the "Common Stock") and certain warrants (the "Warrants") which shall be
exercisable into shares of Common Stock. The shares of Common Stock issuable
upon exercise of the Warrants are referred to herein as "Warrant Shares." The
Shares and Warrant Shares are collectively referred to herein as "Underlying
Shares."
This letter shall serve as our irrevocable authorization and direction to
you (provided that you are the transfer agent for the Company with respect to
its Common Stock at such time) to issue Underlying Shares from time to time upon
notice from the Company to issue such Underlying Shares. So long as you have
previously received (w) a notice of effectiveness of the Company's outside
counsel substantially in the form of Exhibit I attached hereto (which the
Company shall direct be delivered to you by such outside counsel upon the
effectiveness of the registration statement covering resales of Underlying
Shares) stating that a registration statement covering resales of Underlying
Shares has been declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and that Underlying Shares may be
issued (or reissued if they have been issued at a time when there was not such
an effective registration statement) or resold without any restrictive legend
(the "Notice of Effectiveness"), (x) a copy of such registration statement, (y)
an appropriate representation that the resale prospectus contained in the
registration statement has been delivered in compliance with applicable rules
and regulations and (z) with respect to the issuance of replacement Warrant
Shares, the certificates representing the originally issued Warrant Shares have
been returned to you as transfer agent, then certificates representing
Underlying Shares shall not bear any legend restricting transfer of Underlying
Shares thereby and should not be subject to any stop-transfer restriction;
provided, however, that if you have not previously received a copy of the Notice
of Effectiveness, such registration statement and such representation or you
have received a subsequent notice by the Company or its counsel of the
suspension or termination of the effectiveness of the registration statement or
the imposition of a Blackout Period as set forth in the Section 6.8 of the
Agreement, then certificates representing Underlying Shares shall bear the
following legend:
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THAT ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS OR UNITED VENTURES GROUP, INC. (THE "COMPANY") SHALL HAVE
RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
provided, however, that the Company may, from time to time, notify you to place
stop-transfer restrictions on the certificates for Underlying Shares in the
event, but only in the event, a registration statement covering
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Underlying Shares is subject to amendment for events then current.
Please be advised that the Investor has relied upon this instruction letter
as an inducement to enter into the Agreement and, accordingly, the Investor, is
a third party beneficiary to these instructions.
Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at ________________________.
Very truly yours,
STARUNI CORPORATION
By:__________________________________________
ACKNOWLEDGED AND AGREED:
[TRANSFER AGENT]
By:__________________________________________
Name:_______________________________________
Title:________________________________________
Tel.:_________________________________________
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Exhibit I
[FORM OF NOTICE OF EFFECTIVENESS]
[Addressee]
[Address]
TO WHOM IT MAY CONCERN:
We are counsel to Staruni Corporation, a ___________________ corporation (the
"Company"), and we have represented the Company in connection with that certain
Private Equity Line of Credit Agreement (the "Agreement") between the Company
and the Investor named therein, pursuant to which the Company agreed to issue
shares (the "Shares") of its common stock (the "Common Stock") from time to time
during the term of the Agreement and warrants to purchase shares of the Common
Stock (the "Warrant Shares"). Pursuant to the Agreement, the Company agreed to
register the Common Stock and the Warrant Shares.
In connection with the foregoing, we have been advised that the Registration
Statement on Form_______________ (File No. 333-_______________) of the Company
(the "Registration Statement"), a copy of which is enclosed, was declared
effective at___________________M., eastern time, on_______________________,
2000. Upon issuance of the Underlying Shares referred to in the Company's
instruction letter attached, and provided that you have received a copy of the
representation pursuant to item (z) in the second paragraph of such instruction
letter, you are authorized to issue certificates for the Company's Common Stock
without restrictive legends. We have no knowledge as of the date hereof, after
telephonic inquiry of a member of the Securities and Exchange Commission's staff
that any stop order suspending the effectiveness of the Registration Statement
has been issued or that any proceedings for that purpose are pending before, or
threatened by, the Securities and Exchange Commission and, accordingly, the
Underlying Shares are available for resale under the Securities Act of 1933, as
amended in the manner specified in, and pursuant to the terms of the
Registration Statement.
Very truly yours,
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