EXHIBIT 3
PURCHASE AGREEMENT
DATED AS OF JUNE 7, 2001
BY AND AMONG
JLM INDUSTRIES, INC.
AND
EACH OF THE INVESTORS LISTED
ON SCHEDULE 1 ATTACHED HERETO
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE.............................................1
Section 1.1 Purchase and Sale of Stock..............................1
Section 1.2 The Warrants............................................1
Section 1.3 Purchase Price and Closing..............................2
Section 1.4 Escrow..................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES................................2
Section 2.1 Representation and Warranties of the Company............2
Section 2.2 Representations and Warranties of the Investors........10
ARTICLE III COVENANTS....................................................12
Section 3.1 Securities Compliance..................................12
Section 3.2 Registration and Listing...............................13
Section 3.3 Reporting Requirements.................................13
Section 3.4 Other Agreements.......................................13
Section 3.5 Certificates of Sale...................................13
Section 3.6 Replacement Certificates...............................13
Section 3.7 Expenses...............................................14
Section 3.8 Securities Comp1iance..................................14
Section 3.9 Use of Proceeds........................................14
Section 3.10 Books and Reserves.....................................14
Section 3.11 Ordinary Course of Business............................14
Section 3.12 Board of Directors.....................................14
ARTICLE IV CONDITIONS TO CLOSING........................................15
Section 4.1 Conditions Precedent to the Obligation of Each Party...15
Section 4.2 Conditions Precedent to the Obligation of the Company..15
Section 4.3 Conditions Precedent to the Obligation of the
Investors..............................................15
ARTICLE V LEGEND AND STOCK.............................................18
ARTICLE VI TERMINATION..................................................18
Section 6.1 Termination by Mutual Consent..........................18
Section 6.2 Other Termination......................................18
Section 6.3 Effect of Termination..................................19
ARTICLE VII INDEMNIFICATION..............................................19
Section 7.1 General Indemnity......................................19
Section 7.2 Indemnification Procedure..............................19
Section 7.3 Non-Exclusive Remedy...................................20
-i-
TABLE OF CONTENTS
(continued)
PAGE
ARTICLE VIII MISCELLANEOUS................................................20
Section 8.1 Stamp Taxes; Placement Agent Fees......................20
Section 8.2 Specific Enforcement, Consent to Jurisdiction..........20
Section 8.3 Entire Agreement; Amendments...........................21
Section 8.4 Notices................................................21
Section 8.5 Waivers................................................22
Section 8.6 Headings...............................................23
Section 8.7 Successors and Assigns.................................23
Section 8.8 No Third Party Beneficiaries...........................23
Section 8.9 Governing Law..........................................23
Section 8.10 Survival...............................................23
Section 8.11 Counterparts...........................................23
Section 8.12 Publicity..............................................23
Section 8.13 Severability...........................................24
Section 8.14 Further Assurances.....................................24
Section 8.15 Certain Definitions....................................24
Section 8.16 Confidentiality........................................24
Section 8.17 Acceptance of Investment...............................25
SCHEDULES
Schedule 1 Investors
Schedule 2.1(b) Additional consent or authorization of the Company's Board
Schedule 2.1(c) Authorized and issued and outstanding capital stock
Schedule 2.1(g) Subsidiaries
Schedule 2.1(i) Liabilities, Claims and Losses
Schedule 2.1(j) Certain Developments
Schedule 2.1(k) Indebtedness
Schedule 2.1(l) Assets without good and marketable title
Schedule 2.1(m) Actions Pending
Schedule 2.1(o) Taxes
Schedule 2.1(q) Environmental
Schedule 2.1(r) Material Agreements
Schedule 2.1(t) Employment Agreements
Schedule 2.1(bb) Insurance
Schedule 2.1(cc) Transactions with Related Parties
EXHIBITS
Exhibit A Form of Warrant
Exhibit B Form of Escrow Agreement
Exhibit C Form of Registration Rights Agreement
-ii-
TABLE OF CONTENTS
(continued)
PAGE
Exhibit D Form of Standstill Agreement
Exhibit E Form of Opinion of Counsel
Exhibit F Form of Resolutions of the Company's Board of Directors
-iii-
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "AGREEMENT") is dated as of June 7,
2001 by and among JLM Industries, Inc., a Delaware corporation (the "COMPANY"),
and each of the investors listed on SCHEDULE 1 attached to this Agreement (each
individual, an "INVESTOR" and collectively, the "INVESTORS").
WHEREAS, subject to the terms and conditions contained herein, the
Company shall issue and sell to each Investor and each Investor severally shall
purchase from the Company the number of shares of the Company's common stock,
par value $.01 per share (the "COMMON Stock") set forth opposite such Investor's
signature on the signature pages hereto;
WHEREAS, Phoenix Enterprises LLC, a Delaware limited liability
company ("Phoenix"), has provided a commitment (the "COMMITMENT") to the Company
to purchase, or cause to be purchased, an aggregate of $2.5 million of shares of
Common Stock pursuant to that certain commitment letter agreement dated April
11, 2001 (the "COMMITMENT LETTER");
WHEREAS, pursuant to the Commitment Letter, Phoenix and/or its
designees (collectively, the "HOLDERS") shall receive at or prior to Closing (as
defined below), five-year warrants to purchase an aggregate of 425,000 shares of
Common Stock at an exercise price of $1.15 per share (the "WARRANTS"); and
WHEREAS, the issuance of the Common Stock and the Warrants pursuant
hereto will be made in reliance upon the provisions of Section 4(2) and Rule 506
of Regulation D ("REGULATION D") of the United States Securities Act of 1933, as
amended (the "SECURITIES ACT"), and regulations promulgated thereunder or upon
such other exemption from the registration requirements of the Securities Act as
may be available.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions of this Agreement, the Company hereby agrees to issue and sell
severally to each Investor and each Investor hereby severally agrees to purchase
from the Company the aggregate number of shares set forth opposite such
Investor's signature on the signature pages hereto, at a purchase price of $1.15
per share. The aggregate number of shares to be purchased by the Investors shall
be 2,173,913 and the aggregate purchase price of the shares of Common Stock to
be purchased by the Investors pursuant to this Agreement shall be $2,499,999.95
(the "PURCHASE PRICE").
Section 1.2 THE WARRANTS. At the Closing, the Company agrees to
issue to Phoenix and/or its designees warrants to purchase an aggregate of
325,000 shares of Common
Stock, in the form attached hereto as EXHIBIT A. Phoenix hereby acknowledges and
agrees that in accordance with Section 4 of the Commitment Letter it and/or its
designees have previously received warrants to purchase an aggregate of 100,000
shares of Common Stock. Any shares of Common Stock issuable upon exercise of the
Warrants (and such shares when issued) are herein referred to as the "WARRANT
SHARES". The shares of Common Stock to be acquired by the Investors from the
Company pursuant to this Agreement and the Warrant Shares are sometimes
collectively referred to as the "SHARES".
Section 1.3 PURCHASE PRICE AND CLOSING. The closing of the purchase
and sale of the shares of Common Stock to be acquired by the Investors from the
Company pursuant to Section 1.1 hereof and the issuance of the Warrants pursuant
to Section 1.2 hereof (the "Closing," and the date of the Closing, the "CLOSING
DATE") shall take place at the offices of ▇▇▇▇ Marks & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. E.S.T. on or prior to June 15,
2001; or such other date, time and place as Phoenix and the Company may agree,
provided that all of the closing conditions of the parties set forth in Article
IV have been satisfied or waived.
Section 1.4 ESCROW. On or before the Closing Date, (a) the Company
shall deliver to the escrow agent (the "ESCROW AGENT") identified in the Escrow
Agreement attached hereto as EXHIBIT B (the "ESCROW AGREEMENT") the certificates
representing the shares of Common Stock and Warrants, registered in the
Investor's name and the Holder's name (or its nominee) (or, with respect to the
Warrants, a designee thereof), and (b) each Investor shall deliver to the Escrow
Agent by wire transfer of immediately available funds or certified or official
bank check into escrow the purchase price to be paid for the shares being
purchased by such Investor. In addition, each party shall deliver all documents,
instruments and writings required to be delivered by such party pursuant to this
Agreement at or prior to the Closing. The release of the Purchase Price shall be
governed by the terms and provisions of the Escrow Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATION AND WARRANTIES OF THE COMPANY. The
Company hereby makes the following representations and warranties to each
Investor:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power to own, lease and
operate its properties and assets and to conduct its business as it is now being
conducted. Except as set forth on SCHEDULE 2.1(G), the Company does not have any
subsidiaries (as defined in Section 2.1(g)). 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 except for any jurisdiction in which the failure to be
so qualified will not have a Material Adverse Effect. For purposes of this
Agreement, "Material Adverse Effect" shall mean any event which has, or may
reasonably be expected to have, a material adverse effect on the business,
results of operations, assets or financial condition of the Company
2
and its subsidiaries, 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 any of its obligations under this Agreement or
the Registration Rights Agreement in the form attached hereto as EXHIBIT C (the
"REGISTRATION RIGHTS AGREEMENT") in any material respect.
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement, the Warrants and each other agreement
contemplated hereby to which it is a party (collectively, the "TRANSACTION
DOCUMENTS") and to issue and sell the Shares, in accordance with the terms
hereof and the Warrants. The execution, delivery and performance of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action, and, except as provided in SCHEDULE 2.1(B), no
further consent or authorization of the Company or its Board of Directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company. The Registration Rights Agreement and the Warrants will be duly
executed and delivered by the Company at or prior to the Closing. Each of the
Transaction Documents constitutes, or shall constitute when executed and
delivered at or prior to Closing, 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, fraudulent transfer or similar laws relating to, or
affecting the enforcement of creditor's rights generally and by general
equitable principles (regardless of whether enforcement is sought in equity or
at law).
(c) CAPITALIZATION. The authorized capital stock of the
Company and the shares thereof issued and outstanding as of the date hereof are
set forth on SCHEDULE 2.1(C) hereto. All of the outstanding shares of the
Company's Common Stock have been duly and validly authorized. Except as set
forth on SCHEDULE 2.1(C), no shares of Common Stock are entitled to preemptive
rights or registration rights and there are no outstanding options, warrants,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company. Furthermore, except as set forth in this Agreement and the
Registration Rights Agreement and as set forth on SCHEDULE 2.1(C), there are no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into shares of capital
stock of the Company. Except as provided on SCHEDULE 2.1(C), the Company is not
a party to any agreement granting registration or anti-dilution rights to any
Person with respect to any of its equity or debt securities. Except as provided
on SCHEDULE 2.1(C), the Company is not a party to, and it has no knowledge of,
any agreement restricting the voting or transfer of any shares of the capital
stock of the Company. The offer and sale of all capital stock, convertible
securities, rights, warrants, or options of the Company issued prior to the
Closing complied with all applicable Federal and state securities laws, and no
stockholder has a right of rescission or damages with respect thereto. The
Company has furnished to Phoenix true and correct copies of the Company's
Restated Certificate of Incorporation as in effect on the date hereof (the
"ARTICLES") and the Company's Bylaws as in effect on the date hereof (the
"Bylaws").
(d) ISSUANCE OF SECURITIES. The Common Stock and Warrants to
be issued under this Agreement have been duly authorized by all necessary
corporate action and,
3
when issued and paid for in accordance with the terms hereof, the Common Stock
and Warrants shall be validly issued and outstanding, fully paid and
nonassessable, free and clear of all liens, encumbrances, and rights of first
refusal of any kind, other than resale restrictions imposed by Federal and state
securities laws. The Warrant Shares issuable in accordance with the terms of the
Warrants have been duly authorized by all necessary corporate action and when
issued in accordance with the terms of the Warrants, such shares will be validly
issued and outstanding, fully paid and nonassessable, and the Holders shall be
entitled to all rights accorded to a holder of Common Stock.
(e) NO CONFLICTS. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement and the other Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated herein and therein do not (i) violate any provision of the Articles
or Bylaws, (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, acceleration or cancellation of, any material
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company is a party or by which
the Company or any of its assets are bound, (iii) create or impose a lien,
charge or encumbrance on any property of the Company under any agreement or any
commitment to which the Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any Federal, state, local or foreign statute, 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 asset of the Company or any of its subsidiaries are bound or
affected. 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, the
Registration Rights Agreement and the other Transaction Documents, or issue and
sell the Common Stock to be purchased by the Investors hereunder, the Warrants
and the Warrant Shares in accordance with the terms hereof and thereof (other
than (x) any filings which may be required to be made by the Company in
connection with or in compliance with the provisions of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and applicable
state securities laws, or with the American Stock Exchange, or (y) any
registration statement which may be filed pursuant hereto).
(f) COMMISSION DOCUMENTS, FINANCIAL STATEMENTS. The Common
Stock of the Company is registered pursuant to Section 12(g) of the Exchange
Act, and, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the Securities and Exchange
Commission (the "Commission") pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a), 14 or 15(d) of
the Exchange Act (all of the foregoing including filings incorporated by
reference therein being referred to herein as the "COMMISSION DOCUMENTS"). The
Company has delivered to Phoenix true and complete copies of the Commission
Documents filed with the Commission since December 31, 1998 and prior to the
Closing Date. As of their respective dates, the Company's Annual Report on Form
10-K for the year ended December 31, 2000, its Form 10-K/A for the year ended
December 31, 2000 and its Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2001 filed on April 17, 2001, April 30, 2001 and May 14, 2001,
respectively, complied in all material respects with the requirements of the
4
Exchange Act and the rules and regulations of the Commission promulgated
thereunder and, as of their respective dates, none of the Form 10-K, the Form
10-K/A and the Form 10-Q referred to above contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents filed by the
Company with the Commission since December 31, 1998 (i) 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
indicated in such financial statements or the notes thereto or in the case of
unaudited interim statements, to the extent they may not include footnotes),
(ii) fairly present in all material respects the financial position of the
Company and the results of operations and cash flows as of the dates thereof for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments), and (iii) are in all material respects in agreement
with the books and records of the Company and its subsidiaries.
(g) SUBSIDIARIES. Each of the Company's subsidiaries is set
forth on SCHEDULE 2.1(G) hereof. For the purposes of this Agreement,
"subsidiary" shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interests having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are owned directly or indirectly by the
Company and/or any of its other subsidiaries.
(h) NO MATERIAL ADVERSE CHANGE. Since December 31, 2000, the
Company has not experienced or suffered any change in its financial condition,
results of operations or business which has had any Material Adverse Effect.
(i) NO UNDISCLOSED LIABILITIES. Except as disclosed in
SCHEDULE 2.1(I) hereto, since December 31, 2000, the Company has no liabilities,
obligations, claims or losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise), other than those
reflected in the Form 10-Q for the quarter ended March 31, 2001, or incurred in
the ordinary course of the Company's business and which, individually or in the
aggregate, do not or could not be reasonably expected to have a Material Adverse
Effect.
(j) ABSENCE OF CERTAIN DEVELOPMENTS. Except as provided on
SCHEDULE 2.1(J) hereto, since December 31, 2000, the Company has not (other than
pursuant to the terms and provisions of the Transaction Documents):
(i) issued any stock, bonds or other corporate securities
or any rights, options or warrants with respect thereto;
(ii) declared or made any payment or distribution of cash
or other property to stockholders with respect to its stock, or purchased or
redeemed, or made any agreements so to purchase or redeem, any shares of its
capital stock;
(iii) sold, assigned or transferred any other material
tangible assets, or canceled any material debts or claims, except in the
ordinary course of business;
5
(iv) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any Person except to customers in the ordinary course of business
(and subject to confidentiality agreements) or to Phoenix or its
representatives;
(v) made capital expenditures or commitments therefor that
individually or in the aggregate are in excess of $200,000;
(vi) suffered any material damage, destruction or casualty
loss, whether or not covered by insurance; or
(vii) entered into an agreement, written or otherwise, to
take any of the foregoing actions.
(k) INDEBTEDNESS. SCHEDULE 2.1(K) hereto sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the Company,
or for which the Company has commitments. For the purposes of this Agreement,
"Indebtedness" shall mean (a) any liabilities for borrowed money in excess of
$50,000 (other than trade accounts payable incurred in the ordinary course of
business consistent with past practices), (b) all guaranties, endorsements and
other contingent obligations with respect to the Indebtedness of others, whether
or not the same are or should be reflected in the Company's balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business; and (c) the present value of any lease payments in excess of $50,000
due under leases required to be capitalized in accordance with generally
accepted accounting principles of the United States ("GAAP"). The Company is not
in default with respect to any Indebtedness.
(l) TITLE TO ASSETS. The Company has good and marketable title
to all of its real and personal property, free of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except as disclosed in
SCHEDULE 2.1(L) hereto.
(m) ACTIONS PENDING. Except as set forth in SCHEDULE 2.1(M)
hereto, there is no action, suit, claim, investigation or proceeding pending or,
to the knowledge of the Company, threatened, against or involving the Company or
any of its properties or assets which, in the event a judgment was entered
against the Company would require the Company to pay damages in excess of
$50,000 or otherwise prohibit or restrict the Company from conducting its
business. To the knowledge of the Company, there are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any officers or directors
of the Company in their capacities as such. None of the matters listed on
SCHEDULE 2.1(M) could, if adversely determined, either individually or in the
aggregate have a Material Adverse Effect.
(n) COMPLIANCE WITH LAW. The business of the Company has been
and is presently being conducted in accordance with all applicable Federal,
state and local governmental laws, rules, regulations and ordinances, except as,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. The Company has all
6
franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as now
being conducted by it unless the failure to possess such franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(o) TAXES. Except as set forth on SCHEDULE 2.1(O) hereto, the
Company has accurately prepared and filed all federal, state and other tax
returns required by law to be filed by it, has paid or made provisions for the
payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the financial statements of
the Company for all current taxes and other charges to which the Company is
subject and which are not currently due and payable. Except as disclosed on
SCHEDULE 2.1(O) hereto, none of the federal income tax returns of the Company
for the years subsequent to December 31, 1996 have been audited by the Internal
Revenue Service. The Company has no knowledge of any additional assessments,
adjustments or contingent tax liability (whether federal or state) pending or
threatened against the Company for any period, nor of any basis for any such
assessment, adjustment or contingency.
(p) OPERATION OF BUSINESS. The Company owns or possesses all
patents, trademarks, service marks, trade names, copyrights, licenses and
authorizations as set forth in the Commission Documents ("INTELLECTUAL
PROPERTY"), and all rights with respect to the foregoing which are necessary for
the conduct of its business as now conducted without any conflict with the
rights of others, except to the extent that a Material Adverse Effect could not
reasonably be expected to result from such conflict.
(q) ENVIRONMENTAL COMPLIANCE. The Company has obtained all
material approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations of all governmental authorities, or from
any other Person, that are required under any Environmental Laws. "Environmental
Laws" shall mean all applicable laws relating to the protection of the
environment including, without limitation, all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. The Company is
in compliance with all limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws except where such compliance would not individually or in the
aggregate have a Material Adverse Effect. Except for such instances as would not
individually or in the aggregate have a Material Adverse Effect or as otherwise
set forth on SCHEDULE 2.1(Q), there are no past or present events, conditions,
circumstances, incidents, actions or omissions relating to or in any way
affecting the Company that violate or could reasonably be expected to violate
any Environmental Law after the Closing or that could reasonably be expected to
give rise to any environmental liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study or investigation (i)
under any Environmental Law, or (ii) based on or related to the presence,
manufacture, processing, distribution, use, treatment, storage (including
7
without limitation underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any hazardous
substance.
(r) MATERIAL AGREEMENTS. Except as set forth in SCHEDULE
2.1(R), the Company is not a party to any written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, a copy of which would be
required to be filed with the Commission as an exhibit to a registration
statement on Form S-3 or other applicable form if the Company were registering
securities under the Securities Act (a "Material Agreement"). The Company has in
all material respects performed all the obligations required to be performed by
it to date under the foregoing agreements, has not received a notice of default
and is not in default under any Material Agreement now in effect, the result of
which could reasonably be expected to cause a Material Adverse Effect.
(s) SECURITIES ACT OF 1933. Neither the Company nor any of its
Affiliates (as defined below), nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of the Shares and other securities hereunder.
(t) EMPLOYEES. Except as set forth on SCHEDULE 2.1(T), the
Company has no collective bargaining arrangements or agreements covering any of
its employees. Except as set forth in SCHEDULE 2.1(T), the Company has no
employment contract, agreement regarding proprietary information,
non-competition agreement, non-solicitation agreement, confidentiality
agreement, or any other similar contract or restrictive covenant, relating to
the right of any officer, employee or consultant to be employed or engaged by
the Company or obtain any rights in any assets of the Company. Since December
31, 2000, no officer, consultant or key employee of the Company whose
termination, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, has been terminated or, to the
knowledge of the Company, has any present intention of terminating his or her
employment or engagement with the Company.
(u) USE OF PROCEEDS. The proceeds from the sale of the Common
Stock issued hereby will be applied in full to the Company's obligations to
Citizen's Bank pursuant to that certain Amended and Restated Credit Agreement
dated November 1, 1999, as amended.
(v) PUBLIC UTILITY HOLDING COMPANY ACT AND INVESTMENT COMPANY
ACT STATUS. The Company is not a "holding company" or a "public utility company"
as such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon the Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(w) ERISA. No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company which has
had or could reasonably be expected to have a Material Adverse Effect on the
Company. The execution and delivery of this Agreement and the issue and sale of
the Shares and the Warrants will not involve any transaction which is subject to
the prohibitions of Section 406 of ERISA or in connection with
8
which a tax could be imposed pursuant to Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"). As used in this Section 2.1(w), the term
"Plan" shall mean an "employee pension benefit plan" (as defined in Section 3 of
ERISA) which is or has been established or maintained, or to which contributions
are or have been made, by the Company or by any trade or business, whether or
not incorporated, which, together with the Company, is under common control, as
described in Section 414(b) or (c) of the Code.
(x) PRINCIPAL EXCHANGE. The principal market on which the
Common Stock is currently traded is The Nasdaq National Market.
(y) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or
circumstance has occurred or exists with respect to the Company or its direct or
indirect 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.
(z) FORM S-3. The Company is eligible to file the Registration
Statement (as defined in the Registration Rights Agreement) on Form S-3 under
the Securities Act and rules promulgated thereunder, and Form S-3 is permitted
to be used for the transactions contemplated hereby under the Securities Act and
rules promulgated thereunder.
(aa) NO INTEGRATED OFFERING. Neither the Company, nor any of
its Affiliates, nor to its knowledge any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
registration of the Common Stock under the Securities Act.
(bb) INSURANCE. The Company and its subsidiaries and their
respective properties are insured in such amounts, against such losses and with
such insurers as are prudent when considered in light of the nature of the
properties and businesses of the Company and its subsidiaries. SCHEDULE 2.1(BB)
sets forth a complete and accurate list of the insurance policies of the Company
and its subsidiaries as in effect on the date hereof, including in each case the
applicable coverage limits, deductibles and the policy expiration dates. No
written notice of any termination or threatened termination of any of such
policies has been received by the Company or any of its subsidiaries and such
policies are in full force and effect.
(cc) TRANSACTIONS WITH RELATED PARTIES. Except as set forth in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000 or
in SCHEDULE 2.1(CC), neither the Company nor any subsidiary is a party to any
agreement with any of the Company's directors, officers or shareholders or any
Affiliate or family member of any of the foregoing under which it: (i) leases
any real or personal property other than automobiles (either to or from such
Person), (ii) licenses real or personal property or Intellectual Property
(either to or from such Person), (iii) is obligated to purchase any tangible or
intangible asset from or sell such asset to such Person, (iv) purchases products
or services from such Person, or (v) has borrowed money from or lent money to
such Person.
(dd) INTEREST IN COMPETITORS. Neither the Company, nor any or
its subsidiaries, nor any of their respective officers nor, to the best of the
Company's knowledge,
9
directors, has any interest, either by way of contract or by way of investment
(other than as holder of not more than 2% of the outstanding capital stock of a
publicly traded Person) or otherwise, directly or indirectly, in any Person
other than the Company and its subsidiaries that (i) provides any services or
designs, produces or sells any product or product lines or engages in any
activity similar to or competitive with any activity currently conducted by the
Company or any of its subsidiaries or (ii) has any direct or indirect interest
in any asset or property, real or personal, tangible or intangible, of the
Company.
(ee) NO MANIPULATION. Neither the Company nor any of its
subsidiaries has taken, and their subsidiaries will take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Company's Common
Stock to facilitate the sale or resale of the Common Stock or the Warrant
Shares.
(ff) PRIVATE OFFERING. Neither the Company nor anyone acting
on its behalf shall offer the Shares for issue or sale to, or solicit any offer
to acquire, any of the same from, anyone so as to bring the issuance and sale of
the Shares within the provisions of Section 5 of the Securities Act. Based upon
the representations of the Investors set forth in Section 2.2, the offer,
issuance and sale of the Shares, are and will be exempt from the registration
and prospectus delivery requirements of the Securities Act, and have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws, and are qualified for distribution or are exempt from
such requirements for qualification under applicable federal and state
securities laws.
(gg) DISCLOSURE. Neither this Agreement (including the
Schedules hereto) nor any other documents, certificates or instruments furnished
to Phoenix by or on behalf of the Company in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.
Section 2.2 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each
Investor, severally and not jointly, hereby makes the following representations
and warranties to the Company:
(a) AUTHORIZATION AND POWER. Such Investor has the requisite
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement and each other agreement contemplated hereby to which it is a
party and to purchase the Common Stock in accordance with the terms of this
Agreement. The execution, delivery and performance of this Agreement and the
Registration Rights Agreement and each other agreement contemplated hereby by
such Investor to which it is a party and the consummation by such Investor of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary action, and no further consent or authorization of such Investor
or, if applicable, its board of directors is required. This Agreement has been
duly executed and delivered by such Investor. The Registration Rights Agreement
will be duly executed and delivered by such Investor at or prior to the Closing.
Each of this Agreement, the Registration Rights Agreement
10
and each other agreement contemplated hereby to which it is a party constitutes,
or shall constitute, when executed and delivered to such Investor and the
Company on or prior to the Closing, a valid and binding obligation of such
Investor enforceable against such Investor in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws relating to, or
affecting the enforcement of creditor's rights generally and by general
equitable principles (regardless of whether enforcement is sought in equity or
at law).
(b) NO CONFLICTS. The execution, delivery and performance of
this Agreement and the Registration Rights Agreement by such Investor and the
consummation by such Investor of the transactions contemplated hereby and
thereby or relating hereto do not and will not (i) result in a violation of such
Investor's charter documents or bylaws (if any), (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,
acceleration or cancellation of any material agreement, indenture, instrument,
mortgage, deed of trust, note, bond, license, lease agreement or obligation to
which such Investor is a party or by which such Investor or any of its assets
are bound, or (iii) result in a violation of any Federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including Federal
and state securities laws and regulations) applicable to such Investor or its
properties or by which such Investor or any of its assets are bound, except for
such conflicts, defaults, violations, terminations, accelerations or
cancellations as would not, individually or in the aggregate, prohibit or
otherwise interfere with the ability of such Investor to enter into and perform
its obligations under this Agreement, the Registration Rights Agreement and each
other agreement contemplated hereby to which it is a party in any material
respect. Each Investor 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, the
Registration Rights Agreement or any other agreement contemplated hereby to
which it is a party or to purchase the Common Stock in accordance with the terms
of this Agreement, provided that for purposes of the representation made in this
sentence, such Investor is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company contained herein.
(c) ACQUISITION FOR INVESTMENT. Such Investor is purchasing
the Common Stock from the Company hereunder solely for its own account for the
purpose of investment. Such Investor does not have a present arrangement or
intention to effect any public distribution of the Common Stock to be acquired
by such Investor from the Company hereunder to or through any Person or entity;
provided, however, that by making the representations herein, such Investor
reserves the right to dispose of the Common Stock to be acquired by such
Investor from the Company hereunder at any time in accordance with Federal and
state securities laws applicable to such disposition. Such Investor acknowledges
that it is able to bear the financial risks associated with an investment in the
Common Stock to be acquired by such Investor from the Company hereunder. Such
Investor is capable of evaluating the risks and merits of an investment in the
Common Stock to be acquired from the Company hereunder by virtue of its
experience as an investor and its knowledge, experience, and sophistication in
financial and business matters and such Investor is capable of bearing the
entire loss of its investment in such Common Stock.
11
(d) ACCREDITED INVESTOR. Such Investor is an "accredited
investor" as defined in Rule 501(a) promulgated as part of Regulation D under
the Securities Act.
(e) RULE 144. Such Investor understands that the Common Stock
to be acquired from the Company hereunder must be held indefinitely unless such
Common Stock is registered under the Securities Act or an exemption from
registration is available. Such Investor acknowledges that such Person is
familiar with Rule 144 of the rules and regulations of the Commission, as
amended, promulgated pursuant to the Securities Act ("RULE 144"), and that such
Investor has been advised that Rule 144 permits resales only under certain
circumstances. Such Investor understands that to the extent that Rule 144 is not
available, such Investor will be unable to sell any shares of Common Stock to be
acquired by such Investor from the Company hereunder without either registration
under the Securities Act or the existence of another exemption from such
registration requirement.
(f) INFORMATION. In entering into this Agreement and the
Registration Rights Agreement, such Investor has relied solely upon its own
investigation and analysis of the Company as well as the representations and
warranties contained herein and such Investor acknowledges that except as set
forth hereunder none of the Company, its directors, officers, employees,
Affiliates, controlling persons, agents or representatives makes or has made any
representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information provided or made available to such
Investor or its directors, officers, employees, Affiliates, controlling persons,
agents or representatives.
(g) GENERAL. Such Investor understands that the Common Stock
to be acquired from the Company hereunder is being offered and sold in reliance
on a transactional exemption from the registration requirement of Federal and
state securities laws and the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of such Investor set forth herein in order to determine the applicability of
such exemptions and the suitability of such Investor to acquire such Common
Stock.
(h) NON-AFFILIATE STATUS. Each Investor (other than Phoenix
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇) represents that as of the date hereof and as of the
Closing Date it is not an officer, director or beneficial owner of 10% or more
of the Company's outstanding Common Stock, after giving effect to the shares
issued on the Closing Date.
ARTICLE III
COVENANTS
The Company covenants with each Investor as follows, which covenants
are for the benefit of each Investor and its Permitted Assignees (as defined
herein).
Section 3.1 SECURITIES COMPLIANCE. The Company shall take all
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation (including, without limitation, any rule or regulation
of The Nasdaq National Market), for the
12
legal and valid issuance of the Common Stock to be acquired by the Investors
from the Company hereunder or subsequent holders.
Section 3.2 REGISTRATION AND LISTING. So long as such Investor is
the beneficial owner of the shares of Common Stock acquired from the Company
hereunder, the Company will take all action necessary to cause its Common Stock
to continue to be registered under Section 12(b) or 12(g) of the Exchange Act,
will comply with its reporting and filing obligations under the Exchange Act,
will comply with all requirements related to any registration statement filed
pursuant to this Agreement, and will not take any action or file any document
(whether or not permitted by the Securities Act or the rules promulgated
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act or Securities Act.
So long as such Investor is the beneficial owner of the shares of Common Stock
to be acquired from the Company hereunder, the Company will take all action
necessary to continue the listing or trading of its Common Stock on The Nasdaq
National Market or any relevant market or system, if applicable, and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of The Nasdaq Stock Market, Inc.
Section 3.3 REPORTING REQUIREMENTS. Upon request, the Company shall
furnish the following to each Investor so long as such Investor is the
beneficial owner of Common Stock to be acquired by such Investor from the
Company hereunder:
(a) Quarterly Reports filed with the Commission on Form 10-Q
as soon as available, and in any event within 45 days after the end of each of
the first three fiscal quarters of the Company; and
(b) Annual Reports filed with the Commission on Form 10-K as
soon as available, and in any event within 90 days after the end of each fiscal
year of the Company.
Section 3.4 OTHER AGREEMENTS. So long as such Investor is the
beneficial owner of shares of Common Stock to be acquired by such Investor from
the Company hereunder, and prior to 120 days following the effective date of the
Registration Statement, the Company shall not, without the prior written consent
of Phoenix, issue any Common Stock or any financial instruments convertible into
shares of Common Stock, except under the terms of existing stock option, or
employee stock purchase, plans.
Section 3.5 CERTIFICATES OF SALE. Upon any sale by an Investor of
the shares of Common Stock, the Company shall issue and deliver to such Investor
(or holder) within three (3) days of the sale a new certificate or certificates
for the number of shares of Common Stock which such Investor (or holder) has not
yet elected to sell but which are evidenced in part by the certificate(s)
submitted to the Company in connection with such sale.
Section 3.6 REPLACEMENT CERTIFICATES. The certificate(s)
representing the shares of Common Stock held by any Investor (or then holder)
may be exchanged by such Investor (or such holder) at any time and from time to
time for certificates with different denominations representing an equal
aggregate number of shares, as reasonably requested by
13
such Investor (or such holder) upon surrendering the same. No service charge
will be made for such registration or transfer or exchange.
Section 3.7 EXPENSES. The Company shall pay promptly all fees and
expenses incurred by Phoenix on behalf of the Investors in connection with the
preparation, negotiation, execution and delivery of this Agreement, the
Registration Rights Agreement and the related agreements and documents and the
transactions contemplated hereunder and thereunder (including the reasonable
fees and expenses of ▇▇▇▇ Marks & ▇▇▇▇▇ LLP). At Closing, the Company shall pay
any unpaid amounts due for such fees and expenses (which may include reasonable
fees and expenses estimated to be incurred for completion of the transaction
including post-closing matters). At or prior to Closing, the Company shall pay
all unpaid fees and/or expenses payable to Phoenix in connection with the
Commitment Letter.
Section 3.8 SECURITIES COMP1IANCE. The Company shall notify the
Commission and the NASD, in accordance with all applicable requirements, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the shares of Common Stock
issuable in connection with this Agreement and the Transaction Documents.
Section 3.9 USE OF PROCEEDS. The Company agrees that the proceeds
received by the Company from the sale of the shares of Common Stock hereunder
shall be used as provided in Section 2.1(u) of this Agreement.
Section 3.10 BOOKS AND RESERVES. From the date hereof until the
second anniversary of the Closing (the "Termination Date"), the Company shall
(i) maintain, and cause its subsidiaries to maintain, at all times, true and
complete books, records and accounts in which true and correct entries shall be
made of its transactions in accordance with GAAP consistently applied and
consistent with those applied in the preparation of the financial statements (to
the extent same are consistent with GAAP), and (ii) by means of appropriate
quarterly entries, reflect in its accounts and in all financial statements,
proper liabilities and reserves for all taxes and proper reserves for
depreciation, renewals and replacements, obsolescence and amortization of its
properties and bad debts, all in accordance with GAAP consistently applied, as
above described, and all subject to normal year end adjustments.
Section 3.11 ORDINARY COURSE OF BUSINESS. The Company shall operate
its business only in the ordinary course and will use its best efforts to
preserve the Company's business, organization, goodwill and relationships with
Persons having business dealings with them.
Section 3.12 BOARD OF DIRECTORS. The Company shall use its best
efforts to nominate and cause the election of ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to serve on
the Company's Board of Directors during the three year period commencing on the
Closing Date. The Company represents, warrants and covenants that it has the
authority to and ability to and shall increase the size of its Board of
Directors, if necessary, to comply with the provisions of this Section.
14
ARTICLE IV
CONDITIONS TO CLOSING
Section 4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF EACH PARTY.
The respective obligations of each party to effect the transactions contemplated
by this Agreement shall be subject to the fulfillment (or waiver by the Company
and Phoenix) on or prior to the Closing Date of the following conditions: No
United States or state authority or other agency or commission or United States
or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction or
other order (whether temporary, preliminary or permanent) which is in effect and
has the effect of prohibiting the consummation of the transactions contemplated
by this Agreement or restricting the operation of the business of the Company as
conducted on the date hereof in a manner that would have a Material Adverse
Effect.
Section 4.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY.
The obligations hereunder of the Company are subject to the satisfaction or
waiver, at or before the Closing, of each of the conditions set forth below.
(a) ACCURACY OF EACH INVESTOR'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of each Investor contained in
this Agreement shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a specified date,
which shall be true and correct in all material respects as of such date.
(b) PAYMENT OF PURCHASE PRICE. The Escrow Agent shall have
delivered to the Company the Purchase Price for the Common Stock to be acquired
by the Investors in accordance with Section 1.1 hereof.
(c) STANDSTILL AGREEMENT. At the Closing, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and Phoenix Enterprises LLC shall have executed and delivered a Standstill
Agreement, dated as of the Closing Date, substantially in the form attached as
EXHIBIT D hereto.
Section 4.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTORS.
The obligations hereunder of each Investor to effect the transactions
contemplated by this Agreement are subject to the satisfaction or, by Phoenix on
behalf of such Investors, waiver, at or before the Closing, of each of the
conditions set forth below.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at such time, except for representations and
warranties that are expressly made as of a specified date, which shall be true
and correct in all material respects as of such date; PROVIDED, HOWEVER, that
the representations and warranties already subject to a "materiality" qualifier
shall be true and correct in all respects.
15
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements, conditions and obligations required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing.
The Investors shall have received at the Closing a certificate signed on behalf
of the Company by an executive officer of the Company, to the effect set forth
in Sections 4.3(a) and (b) hereof.
(c) NO SUSPENSION, ETC. At any time prior to the Closing Date,
the following events shall not have occurred and there shall not be a reasonable
likelihood of an occurrence within a reasonable period of time: (i) trading in
the Company's Common Stock on The Nasdaq National Market shall have been
suspended by the Commission or The Nasdaq National Market, (ii) trading in
securities generally as reported by The Nasdaq National Market shall have been
suspended or limited, or minimum prices shall have been established on
securities whose trades are reported by The Nasdaq National Market, (iii) a
banking moratorium shall have been declared either by the United States or New
York State authorities, or (iv) there shall have occurred any material adverse
change in any financial market, in each case, in the reasonable judgment of
Phoenix, makes it impracticable or inadvisable to purchase the Common Stock to
be acquired from the Company hereunder.
(d) NO PROCEEDINGS OR LITIGATION. No action, suit or
proceeding before any arbitrator or any governmental authority shall have been
commenced, and no investigation by any governmental authority shall have been
threatened, against the Company, or any of the officers, directors or Affiliates
of the Company seeking to restrain, prevent or change the transactions
contemplated by this Agreement.
(e) NECESSARY APPROVALS. All necessary waivers or consents to,
approvals of and notices or filings as may be required to be obtained by the
Company in connection with the performance of this Agreement or any of the
transactions contemplated hereby, the failure of which would prevent the lawful
consummation of the transactions contemplated hereby, shall have been obtained.
(f) OPINION OF COUNSEL, ETC. At the Closing, the Investors and
Phoenix shall have received an opinion of counsel to the Company, dated as of
the Closing Date, in the form of EXHIBIT E hereto, and such other certificates
and documents as Phoenix shall reasonably require.
(g) RESOLUTIONS. The Board of Directors of the Company shall
have adopted and approved resolutions with respect to this Agreement and the
Transaction Documents and the transactions contemplated hereby, in the form
attached hereto as EXHIBIT F (the "RESOLUTIONS").
(h) SECRETARY'S CERTIFICATE. The Company shall have delivered
to Phoenix, on behalf of the Investors, a secretary's certificate, dated as of
the Closing Date, as to (i) the Resolutions, (ii) the Articles and the Bylaws,
each as in effect at such Closing, and (iii) the authority and incumbency of the
officers of the Company executing this Agreement, the Registration Rights
Agreement and the Warrants and any other Transaction Documents.
16
(i) CERTIFICATES. The Company shall have executed and
delivered to the Escrow Agent, for release against the Purchase Price, stock
certificates (in such denominations as the Investors shall request) representing
the shares of Common Stock being purchased by the Investors hereunder and shall
have executed and delivered to the Holders the Warrants.
(j) DUE DILIGENCE. Phoenix shall have been satisfied in its
sole discretion with its due diligence investigation of the Company and its
subsidiaries.
(k) NO MATERIAL ADVERSE CHANGE. In the sole judgment of
Phoenix, no material adverse change shall have occurred. For the purposes of
this agreement, "Material Adverse Change" shall mean any event which causes, or
may reasonably be expected to cause, a material adverse change on the business,
results of operations, assets or financial condition of the Company and its
subsidiaries 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 any of its obligations under this Agreement or the other
Transaction Documents.
(l) REFINANCING. The Company shall have entered into (i) a
definitive loan agreement (the "BANK CREDIT AGREEMENT") with Congress Financial
Corporation providing for loans to the Company of an aggregate of not less than
$20 million for the purpose of refinancing the Company's indebtedness to
Citizens Bank and providing working capital, (ii) a definitive loan agreement
with SouthTrust Bank for $1,885,000 for the purpose of refinancing the mortgage
on the Company's headquarters, and (iii) a definitive loan agreement with
Citizens Bank providing for a term loan of $5 million, in each case in form and
substance reasonably satisfactory to Phoenix, and such financings (or sufficient
alternative financings) shall have been consummated on terms reasonably
satisfactory to Phoenix.
(m) PHOENIX FEES. Phoenix shall have been paid in full for all
fees and other amounts owed to it by the Company for which it has received an
invoice, including all the Warrants.
(n) SHAREHOLDER APPROVAL. The Company shall have obtained
shareholder approval of this Agreement and the transactions contemplated hereby
in accordance with Delaware law and the applicable rules of The Nasdaq Stock
Market.
(o) REGISTRATION RIGHTS AGREEMENT. The Company shall have
executed and delivered the Registration Rights Agreement.
(p) FULL SUBSCRIPTION. The Escrow Agent shall have received
the full Purchase Price of $2,499,999.95 in immediately available funds against
delivery of the stock certificates representing the shares of Common Stock being
purchased by the Investors hereunder.
17
ARTICLE V
LEGEND AND STOCK
Each certificate representing the Common Stock shall be stamped or
otherwise imprinted with a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, DISPOSED OF, OR OFFERED FOR SALE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
The Company agrees to promptly reissue certificates representing the
Common Stock without the legend set forth above at such time as (i) the holder
thereof is permitted to dispose of such Common Stock pursuant to Rule 144(k)
under the Securities Act, (ii) such Common Stock is sold to a purchaser or
purchasers who (in the opinion of counsel to the seller or such purchaser(s))
are able to dispose of such shares publicly without registration under the
Securities Act or (iii) such Common Stock is registered under the Securities
Act.
Prior to the Registration Statement (as defined in the Registration
Rights Agreement) being declared effective, any Common Stock issued pursuant to
exercise of the Warrants shall bear a legend in the same form as the legend on
the Common Stock indicated above. Upon such Registration Statement becoming
effective, the Company agrees to promptly, but no later than three (3) business
days thereafter, issue new certificates representing such Common Stock without
such legend. Any Common Stock issued pursuant to the exercise of the Warrants
after the Registration Statement has become effective shall be free and clear of
any legends, transfer restrictions and stop orders.
ARTICLE VI
TERMINATION
Section 6.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated by the written consent of the Company and Phoenix pursuant hereto.
Section 6.2 OTHER TERMINATION. This Agreement may be terminated:
(a) By the Company or Phoenix if any court of governmental
authority of competent jurisdiction shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such order, decree or ruling or other
action shall have become final and nonappealable;
18
(b) By Phoenix if any of the conditions set forth in Section
4.1 or 4.3 shall have become incapable of fulfillment and shall not have been
waived by the Phoenix;
(c) By the Company if any of the conditions set forth in
Section 4.1 or 4.2 shall have become incapable of fulfillment and shall not have
been waived by the Company; or
(d) By the Company or Phoenix if the Closing shall not have
occurred on or prior to June 15, 2001; PROVIDED, HOWEVER, that the right to
terminate under this subsection (d) shall not be available to a party if such
party's failure to satisfy any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or prior to
such date (unless such date is extended by mutual agreement of the parties).
Section 6.3 EFFECT OF TERMINATION. In the event of termination by
the Company or Phoenix, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated and the transactions contemplated hereby shall be abandoned without
further action by either party. If this Agreement is terminated, this Agreement
shall become void and of no further force and effect, except for Sections 8.1,
8.2(b), 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9 and 8.12, which shall survive
indefinitely.
ARTICLE VII
INDEMNIFICATION
Section 7.1 GENERAL INDEMNITY. The Company agrees to indemnify and
hold harmless each Investor (and its directors, officers, Affiliates, agents,
successors and assigns) from and against any and all actual losses, liabilities,
deficiencies, costs, damages and expenses (including, without limitation,
reasonable attorneys' fees, charges and disbursements but excluding
consequential damages) incurred by an Investor as a result of any breach of any
of the representations and warranties or covenants made by the Company herein.
Each Investor, severally and jointly, agrees to indemnify and hold harmless the
Company and its directors, officers, Affiliates, agents, successors and assigns
from and against any and all actual losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, reasonable attorneys' fees,
charges and disbursements but excluding consequential damages) incurred by the
Company as result of any of the representations and warranties or covenants made
by such Investor herein.
Section 7.2 INDEMNIFICATION PROCEDURE. Any party entitled to
indemnification under this Article VII (an "INDEMNIFIED PARTY") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VII. In case any
action, proceeding or claim which is brought against an indemnified party with
respect to which indemnification is sought hereunder, the indemnifying party
shall be entitled to assume upon written notice delivered to the indemnified
party within thirty (30) days of receipt of any indemnification notice the
defense thereof with counsel reasonably satisfactory to the indemnified party.
The indemnified party may not settle or otherwise compromise or pay such action
or claim, without
19
the consent of the indemnifying party which consent shall not be unreasonably
withheld or delayed. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall at all times use reasonable efforts to keep the indemnified party
reasonably apprised as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written consent which
consent shall not be unreasonably withheld or delayed. Notwithstanding anything
in this Article VII to the contrary, the indemnifying party shall not, without
the indemnified party's prior written consent (which consent shall not be
unreasonably withheld), settle or compromise any claim or consent to entry of
any judgment with respect thereto which imposes any future obligation on the
indemnified party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability with respect to such claim. The indemnification
required by this Article VII shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to indemnification. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
Section 7.3 NON-EXCLUSIVE REMEDY. The Company and each of the
Investor agree that the indemnity provisions hereunder shall be in addition to
any and all liabilities that the Company may otherwise have. In addition, the
amount collectible pursuant to this Article VII shall not be limited to the
amount actually paid by the Investors to the Company pursuant to Article I.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 STAMP TAXES; PLACEMENT AGENT FEES. The Company shall pay
all stamp and other taxes and duties levied in connection with the issuance of
the Common Stock pursuant hereto and the Warrant Shares issued upon exercise of
the Warrants.
Section 8.2 SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION
(a) The Company and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement or the
20
Registration Rights 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 specific performance of the provisions of this
Agreement or the Registration Rights Agreement in addition to any other remedy
to which any of them may be entitled at law or in equity.
(b) Each of the Company and the Investors (i) hereby
irrevocably submits to the jurisdiction of the United States District Court and
other courts of the United States sitting in the Southern District of New York,
and if the jurisdiction of such federal courts is not available, the state
courts of New York, for the purposes of any suit, action or proceeding arising
out of or relating to this Agreement or the Registration Rights 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. Each of
the Company and the Investors 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 Section 8.2 shall affect or limit any right to serve process in any other
manner permitted by law.
Section 8.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement (including
all schedules and exhibits hereto) contains the entire understanding of the
parties with respect to the matters covered hereby, and supersedes all prior
agreements with respect to the subject matter hereof. This Agreement may be
amended only by written agreement between the parties hereto. Notwithstanding
the foregoing, the Investors acknowledge and agree that the Company and Phoenix,
without the consent of the Investors, may amend or supplement this Agreement,
the Registration Rights Agreement or any other agreement in connection with the
transactions contemplated hereby, to (i) cure any ambiguity, defect or
inconsistency or (ii) make any change that would provide any additional rights
or benefits to the Investors that do not materially and adversely affect the
legal rights of the Investors hereunder.
Section 8.4 NOTICES. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be deemed to have been given or made (a) upon hand 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 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:
21
If to the Company:
JLM Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Holland & Knight LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investors:
Phoenix Enterprises LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to the Investors at the addresses set forth
on the counterpart execution pages of this Agreement.
with copies to:
▇▇▇▇ Marks & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 8.5 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
22
any delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right accruing to it thereafter.
Section 8.6 HEADINGS. The article, section and subsection headings
in this Agreement are for convenience only and shall not constitute a part of
this Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof.
Section 8.7 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The parties hereto may amend
this Agreement without notice to or the consent of any third party. The Company
may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of Phoenix (which consent may be withheld for any reason
in its sole discretion), except that the Company may assign this Agreement in
connection with the sale of all or substantially all of its assets, provided
that the Company is not released from any of its obligations hereunder, such
assignee assumes all obligations of the Company hereunder, and appropriate
adjustment of the provisions contained in this Agreement, the Registration
Rights Agreement and the Warrants to place the Investors and the Holders in the
same position as they would have been but for such assignment. Any Investor may
assign this Agreement (in whole or in part) or any rights or obligations
hereunder without the consent of the Company to any Person (a "Permitted
Assign") in connection with any sale or transfer all or any portion of the
Common Stock held by such Investor, provided that no Investor may assign this
Agreement prior to the Closing Date without the Company's prior written consent
except to an Affiliate or Affiliates of such Investor.
Section 8.8 NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.
Section 8.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
Section 8.10 SURVIVAL. The representations and warranties of the
Company and the Investors contained in Article II shall survive the execution
and delivery hereof and the Closing until eighteen (18) months from the Closing
Date, and the agreements and covenants set forth in Articles I, III, V, VII and
VIII of this Agreement shall survive the execution and delivery hereof and the
Closing hereunder.
Section 8.11 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered hereunder, it being understood that all parties need
not sign the same counterpart.
Section 8.12 PUBLICITY. The Company and Phoenix will agree upon the
language of any press release or other written public statements with respect to
the transactions contemplated by this Agreement, and shall not issue any such
press release or make any such written public statement prior to such agreement,
except as may be required by applicable law,
23
court process or by obligations pursuant to any listing agreement with any
national securities exchange.
Section 8.13 SEVERABILITY. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, and this Agreement shall be construed as if such invalid or
illegal or unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid, legal and enforceable
to the maximum extent possible.
Section 8.14 FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of Phoenix or the Company, each of the Company and
the Investors shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement and the
Registration Rights Agreement.
Section 8.15 CERTAIN DEFINITIONS. For purposes of this Agreement,
"Affiliate" means, with respect to any Person (as defined below), any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control", when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled' have
meanings correlative to the foregoing. "Person" means an individual or a
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or political subdivision thereof) or other entity of any kind.
Section 8.16 CONFIDENTIALITY. Each Investor acknowledges and agrees
that any information or data it has acquired or hereafter shall acquire pursuant
to this Agreement or the Registration Rights Agreement from the Company was
received and shall be received by such Investor in confidence except any such
information or data which at the time of disclosure was in the public domain or
was readily available through public sources other than as a result of any
breach of the terms hereof or the Registration Rights Agreement or was known to
the Investor prior to receipt from the Company or was obtained from a third
party not in violation of any confidentiality, non-disclosure or similar
obligations of such third party or the Investor (the "CONFIDENTIAL
INFORMATION"). Except to the extent authorized by the Company or required by any
federal or state law, rule or regulation or any decision or order of any court
or regulatory authority, each Investor agrees that it will refrain from
disclosing any such Confidential Information to any Person other than to any
agent, attorneys, accountants, employees, officers and directors of the
Investors (collectively, "AGENTS") who need to know such information in
connection with the Investor's purchase of the Common Stock, and such other
Persons who agree to be bound by the confidentiality provisions of this
Agreement. Each Investor agrees not to use to the detriment of the Company or
for the benefit of any other Person or Persons, or misuse in any way, any
Confidential Information of the Company.
24
Section 8.17 ACCEPTANCE OF INVESTMENT. Each Investor hereby
acknowledges and agrees that at any time prior to the Closing Date Phoenix, in
its sole discretion, reserves the right to (i) accept or reject any Investor's
purchase of Shares in whole or in part or (ii) allot to any Investor a lesser
number of Shares than the number of Shares set forth on the Investor's signature
page attached hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officer as of the date first
above written.
JLM INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
25
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ LLC
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ Tick
--------------------------------------
Name: ▇▇▇▇▇▇ Tick
195,000 Title: Partner
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇ BROTHERS LIMITED PARTNERSHIP
Number of Shares being purchased: By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
195,000 Title: Partner
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 4/8/71 TRUST
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
195,000 Title: Trustee
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ JLM GRAT
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
195,000 Title: Trustee
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
195,000 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
195,000 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
JAM CAPITAL ASSOC. LLC
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
110,000 Title: Manager
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
SACHS INVESTING CO.
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
110,000 Title: Partner
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ SACK
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Sack
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Sack
105,000 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
Number of Shares being purchased: By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
85,000 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
75,000 Title: Trustee
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
EURYCLEIA PARTNERS, L.P.
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: Marchessini & Company, General
Part.
Title: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
75,000 Chairman
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
RAVICH REVOCABLE TRUST
Number of Shares being purchased: By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
75,000 Title: Trustee
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Sassower
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
74,729 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ SASSOWER
Number of Shares being purchased: By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Sassower
74,728 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ SACK
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Sack
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Sack
74,728 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ SASSOWER
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Sassower
74,728 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
PURCHASE AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Purchase Agreement
and to purchase the number of Shares set forth below.
INVESTOR:
▇▇▇▇▇▇ ▇▇▇▇▇▇ LESSER
Number of Shares being purchased: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Lesser
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Lesser
70,000 Title:
-------------------------------------
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your Share
certificate(s)). You may use a nominee
name if appropriate: __________________________
2. The relationship between the Investors
of the Shares and the Registered Holder
listed in response to item 1 above: __________________________
3. The mailing address and facsimile __________________________
number of the Registered Holder listed __________________________
in response to item 1 above (if
different from above): Facsimile:________________
4. (FOR UNITED STATES INVESTORS:) The
Social Security Number or Tax
Identification Number of the Registered
Holder listed in the response to item 1
above: __________________________
EXHIBIT A
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
JLM INDUSTRIES, INC.
Expires _________, 2006
No.: W-__ Number of Shares: __________
Date of Issuance: __________, 2001
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, JLM Industries, Inc., a Delaware corporation (together with its
successors and assigns, the "ISSUER"), hereby certifies that Phoenix Enterprises
LLC or its registered assigns is entitled to subscribe for and purchase, during
the period specified in this Warrant, up to _________ shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and nonassessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. Capitalized
terms used in this Warrant and not otherwise defined herein shall have the
respective meanings specified in Section 7 hereof.
1. TERM. The right to subscribe for and purchase shares of Warrant Stock
represented hereby shall commence on the date of issuance of this Warrant and
shall expire at 5:00 p.m., New York City time, on ________, 2006 (such period
being the "TERM").
2. METHOD OF EXERCISE PAYMENT; ISSUANCE OF NEW WARRANT; TRANSFER AND
EXCHANGE.
(a) TIME OF EXERCISE. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and from time to time
during the Term.
(b) METHOD OF EXERCISE. The Holder hereof may exercise this Warrant,
in whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election by (i) certified or official bank
check or wire transfer of immediately available funds or (ii) surrender to the
Issuer for cancellation of a portion of this Warrant representing that number of
unissued shares of Warrant Stock which is equal to the quotient obtained by
dividing (A) the product obtained by multiplying the Warrant Price by the number
of shares of Warrant Stock being purchased upon such exercise by (B) the
difference obtained by subtracting the Warrant Price from the Per Share Market
Value as of the date of such exercise, or (iii) by a combination of the
foregoing methods of payment selected by the Holder of this Warrant. In any case
where the consideration payable upon such exercise is being paid in whole or in
part pursuant to the provisions of clause (ii) of this subsection (b), such
exercise shall be accompanied by written notice from the Holder of this Warrant
specifying the manner of payment thereof and containing a calculation showing
the number of shares of Warrant Stock
with respect to which rights are being surrendered thereunder and the net number
of shares to be issued after giving effect to such surrender.
(c) ISSUANCE OF STOCK CERTIFICATES. In the event of any exercise
of the rights represented by this Warrant in accordance with and subject to the
terms and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.
(d) TRANSFERABILITY OF WARRANT. Subject to Section 2(e), this
Warrant may be transferred by a Holder without the consent of the Company. If
transferred pursuant to this paragraph and subject to the provisions of
subsection (e) of this Section 2, this Warrant may be transferred on the books
of the Issuer by the Holder hereof, upon surrender of this Warrant at the
principal office of the Issuer, properly endorsed (by the Holder executing an
assignment in the form attached hereto). This Warrant is exchangeable at the
principal office of the Issuer for Warrants for the purchase of the same
aggregate number of shares of Warrant Stock, each new Warrant to represent the
right to purchase such number of shares of Warrant Stock as the Holder hereof
shall designate at the time of such exchange. All Warrants issued on transfers
or exchanges shall be dated the Original Issue Date and shall be identical with
this Warrant except as to the number of shares of Warrant Stock issuable
pursuant hereto.
(e) COMPLIANCE WITH SECURITIES LAWS.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be issued upon
exercise hereof are being acquired solely for the Holder's own account and not
as a nominee for any other party, and for investment, and that the Holder will
not offer, sell, pledge or otherwise dispose of this Warrant or any shares of
Warrant Stock to be issued upon exercise hereof except pursuant to an effective
registration statement, or an exemption from registration, under the Securities
Act and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this Warrant
and all certificates representing shares of Warrant Stock issued upon exercise
hereof shall be stamped or imprinted with a legend in substantially the
following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF 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, PLEDGED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR JLM INDUSTRIES,
2
INC. 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.
(iii) The restrictions imposed by this subsection (e) upon the
transfer of this Warrant and the shares of Warrant Stock to be purchased upon
exercise hereof shall terminate (A) when such securities shall have been
effectively registered under the Securities Act, (B) upon the Issuer's receipt
of an opinion of counsel, in form and substance reasonably satisfactory to the
Issuer, addressed to the Issuer to the effect that such restrictions are no
longer required to ensure compliance with the Securities Act and state
securities laws or (C) upon the Issuer's receipt of other evidence reasonably
satisfactory to the Issuer that such registration and qualification under state
securities laws is not required. Whenever such restrictions shall cease and
terminate as to any such securities, the Holder thereof shall be entitled to
receive from the Issuer (or its transfer agent and registrar), without expense
(other than applicable transfer taxes, if any), new Warrants (or, in the case of
shares of Warrant Stock, new stock certificates) of like tenor not bearing the
applicable legend required by paragraph (ii) above relating to the Securities
Act and state securities laws.
(f) CONTINUING RIGHTS OF HOLDER. The Issuer will, at the time of or
at any time after each exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing the extent, if any, of its continuing obligation
to afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.
3. STOCK FULLY PAID; RESERVATION AND LISTING OF SHARES; COVENANTS.
(a) STOCK FULLY PAID. The Issuer represents, warrants, covenants and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges created by or through Issuer. The Issuer further covenants and agrees
that during the period within which this Warrant may be exercised, the Issuer
will at all times have authorized and reserved for the purpose of the issue upon
exercise of this Warrant a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
(b) RESERVATION. If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any governmental authority
under any Federal or state law before such shares may be so issued, the Issuer
shall in good faith use its best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or qualified. If the Issuer
shall list any shares of Common Stock on any securities exchange or market it
shall, at its expense, list thereon, maintain and increase when necessary such
listing of, all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided hereunder, and, to the extent
permissible under the applicable securities exchange rules, all unissued shares
of Warrant
3
Stock which are at any time issuable hereunder, so long as any shares of Common
Stock shall be so listed. The Issuer shall also so list on each securities
exchange or market, and shall maintain such listing of, any other securities
which the Holder of this Warrant shall be entitled to receive upon the exercise
of this Warrant if at the time any securities of the same class shall be listed
on such securities exchange or market by the Issuer.
(c) COVENANTS. The Issuer shall not by any action including, without
limitation, amending the Restated Certificate of Incorporation or the By-laws of
the Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Restated Certificate of Incorporation or By-laws of
the Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.
(d) LOSS, THEFT, DESTRUCTION OF WARRANTS. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
(e) RIGHTS AND OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT.
The shares of Warrant Stock are entitled to the benefits and subject to the
terms of the Registration Rights Agreement, in the form attached hereto as
EXHIBIT A, between the Issuer and the Holders listed on the signature pages
thereof, in the form attached hereto as EXHIBIT A (as amended from time to time,
the "REGISTRATION RIGHTS AGREEMENT"). The Issuer shall keep or cause to be kept
a copy of the Registration Rights Agreement, and any amendments thereto, at its
chief executive office and shall furnish, without charge, copies thereof to the
Holder upon request.
4. ADJUSTMENT OF WARRANT PRICE AND WARRANT SHARE NUMBER. The number and
kind of Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events as follows:
4
(a) RECAPITALIZATION; REORGANIZATION; RECLASSIFICATION;
CONSOLIDATION; MERGER OR SALE.
(i) In case the Issuer after the Original Issue Date shall do
any of the following (each, a "TRIGGERING EVENT"): (a) consolidate with or merge
into any other Person and the Issuer shall not be the continuing or surviving
corporation of such consolidation or merger, or (b) permit any other Person to
consolidate with or merge into the Issuer and the Issuer shall be the continuing
or surviving Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for Securities of
any other Person or cash or any other property, or (c) transfer, sell or
otherwise dispose all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or reclassification of its
Capital Stock, then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this Warrant shall be entitled (x) upon
the exercise hereof at any time after the consummation of such Triggering Event,
to the extent this Warrant is not exercised prior to such Triggering Event, or
is redeemed in connection with such Triggering Event, to receive at the Warrant
Price in effect at the time immediately prior to the consummation of such
Triggering Event in lieu of the Common Stock issuable upon such exercise of this
Warrant prior to such Triggering Event, the Securities, cash and property to
which such Holder would have been entitled upon the consummation of such
Triggering Event if such Holder had exercised the rights represented by this
Warrant immediately prior thereto, subject to adjustments and increases
(subsequent to such corporate action) as nearly equivalent as possible to the
adjustments provided for in Section 4 hereof or (y) to sell this Warrant (or, at
such Holder's election, a portion hereof) concurrently with the Triggering Event
to the Person continuing after or surviving such Triggering Event, or to the
Issuer (if Issuer is the continuing or surviving Person) at a sales price equal
to the amount of cash, property and/or Securities to which a holder of the
number of shares of Common Stock which would otherwise have been delivered upon
the exercise of this Warrant would have been entitled upon the effective date or
closing of any such Triggering Event (the "EVENT CONSIDERATION"), less the
amount or portion of such Event Consideration having a fair value equal to the
aggregate Warrant Price applicable to this Warrant or the portion hereof so
sold.
(ii) Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event unless, prior to the
consummation thereof, each Person (other than the Issuer) which may be required
to deliver any Securities, cash or property upon the exercise of this Warrant as
provided herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer
under this Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall not release
the Issuer from, any continuing obligations of the Issuer under this Warrant)
and (B) the obligation to deliver to such Holder such shares of Securities, cash
or property as, in accordance with the foregoing provisions of this subsection
(a), such Holder shall be entitled to receive, and such Person shall have
similarly delivered to such Holder an opinion of counsel for such Person, which
counsel shall be reasonably satisfactory to such Holder, stating that this
Warrant shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this subsection (a))
shall be applicable to the Securities, cash or property
5
which such Person may be required to deliver upon any exercise of this Warrant
or the exercise of any rights pursuant hereto.
(iii) If with respect to any Triggering Event, the Holder of
this Warrant has exercised its right as provided in clause (y) of subparagraph
(i) of this subsection (a) to sell this Warrant or a portion thereof, the Issuer
agrees that as a condition to the consummation of any such Triggering Event the
Issuer shall secure such right of Holder to sell this Warrant to the Person
continuing after or surviving such Triggering Event and the Issuer shall not
effect any such Triggering Event unless upon or prior to the consummation
thereof the amounts of cash, property and/or Securities required under such
clause (y) are delivered to the Holder of this Warrant. The obligation of the
Issuer to secure such right of the Holder to sell this Warrant shall be subject
to such Holder's reasonable cooperation with the Issuer, including, without
limitation, the giving of customary representations and warranties to the
purchaser in connection with any such sale. Prior notice of any Triggering Event
shall be given to the Holder of this Warrant in accordance with Section 11
hereof.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Issuer, at any
time while this Warrant is outstanding, shall subdivide or combine any shares of
Common Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as at the effective date of
such combination or, if the Issuer shall take a record of Holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares of
Common Stock outstanding as a result of such combination.
(c) CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the Issuer, at any
time while this Warrant is outstanding, shall:
(i) STOCK DIVIDENDS. Pay a dividend in, or make any other
distribution to its stockholders of, shares of Common Stock, the Warrant Price
shall be adjusted, as at the date the Issuer shall take a record of the Holders
of the Issuer's Capital Stock for the purpose of receiving such dividend or
other distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying the
Warrant Price in effect immediately prior to such record date (or if no such
record is taken, then immediately prior to such payment or other distribution),
by a fraction (1) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(2) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (plus in the event
that the Issuer paid cash for fractional shares, the number of additional shares
which would have been outstanding had the Issuer issued fractional shares in
connection with said dividends); or
(ii) OTHER DIVIDENDS. Pay a dividend on, or make any
distribution of its assets upon or with respect to (including, but not limited
to, a distribution of its property as a
6
dividend in liquidation or partial liquidation or by way of return of capital),
the Common Stock (other than as described in clause (i) of this subsection (c)),
or in the event that the Company shall offer options or rights to subscribe for
shares of Common Stock, or issue any Common Stock Equivalents, to all of its
holders of Common Stock, then on the record date for such payment, distribution
or offer or, in the absence of a record date, on the date of such payment,
distribution or offer, the Holder shall receive what the Holder would have
received had it exercised this Warrant in full immediately prior to the record
date of such payment, distribution or offer or, in the absence of a record date,
immediately prior to the date of such payment, distribution or offer.
(d) ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If the Issuer,
at any time while this Warrant is outstanding, shall issue any Additional Shares
of Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the Warrant Price
then in effect or without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price (rounded to the nearest cent)
determined by multiplying the Warrant Price then in effect by a fraction:
(i) the numerator of which shall be equal to the sum of (A)
the number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus (B) the number of shares
of Common Stock (rounded to the nearest whole share) which the aggregate
consideration for the total number of such Additional Shares of Common Stock so
issued would purchase at a price per share equal to the Warrant Price then in
effect, and
(ii) the denominator of which shall be equal to the number of
shares of Common Stock outstanding immediately after the issuance of such
Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsection (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (Y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
(e) ISSUANCE OF COMMON STOCK EQUIVALENTS. If the Issuer, at any
time while this Warrant is outstanding, shall issue any Common Stock Equivalent
and the price per share for
7
which Additional Shares of Common Stock may be issuable thereafter pursuant to
such Common Stock Equivalent shall be less than the Warrant Price then in
effect, or if, after any such issuance of Common Stock Equivalents, the price
per share for which Additional Shares of Common Stock may be issuable thereafter
is amended or adjusted, and such price as so amended shall be less than the
Warrant Price in effect at the time of such amendment, then the Warrant Price
upon each such issuance or amendment shall be adjusted as provided in the first
sentence of subsection (d) of this Section 4 on the basis that (1) the maximum
number of Additional Shares of Common Stock issuable pursuant to all such Common
Stock Equivalents shall be deemed to have been issued (whether or not such
Common Stock Equivalents are actually then exercisable, convertible or
exchangeable in whole or in part) as of the earlier of (A) the date on which the
Issuer shall enter into a firm contract for the issuance of such Common Stock
Equivalent, or (B) the date of actual issuance of such Common Stock Equivalent,
and (2) the aggregate consideration for such maximum number of Additional Shares
of Common Stock shall be deemed to be the minimum consideration received or
receivable by the Issuer for the issuance of such Additional Shares of Common
Stock pursuant to such Common Stock Equivalent. No adjustment of the Warrant
Price shall be made under this subsection (e) upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, if any adjustment shall
previously have been made in the Warrant Price then in effect upon the issuance
of such warrants or other rights pursuant to this subsection (e).
(f) PURCHASE OF COMMON STOCK BY THE ISSUER. If the Issuer at any
time while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value then
in effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(g) OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION 4.
The following provisions shall be applicable to the making of adjustments in the
Warrant Price hereinbefore provided in Section 4:
8
(i) COMPUTATION OF CONSIDERATION. The consideration received
by the Issuer shall be deemed to be the following: to the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents shall be
issued for a cash consideration, the consideration received by the Issuer
therefor, or if such Additional Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription, the subscription price,
or, if such Additional Shares of Common Stock or Common Stock Equivalents are
sold to underwriters or dealers for public offering without a subscription
offering, the public offering price, in any such case excluding any amounts paid
or receivable for accrued interest or accrued dividends and without deduction of
any compensation, discounts, commissions, or expenses paid or incurred by the
Issuer for or in connection with the underwriting thereof or otherwise in
connection with the issue thereof; to the extent that such issuance shall be for
a consideration other than cash, then, except as herein otherwise expressly
provided, the fair market value of such consideration at the, time of such
issuance as determined in good faith by the Board. The consideration for any
Additional Shares of Common Stock issuable pursuant to any Common Stock
Equivalents shall be the consideration received by the Issuer for issuing such
Common Stock Equivalents, plus the additional consideration payable to the
Issuer upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional Shares of
Common Stock or Common Stock Equivalents in payment or satisfaction of any
dividend upon any class of Capital Stock of the Issuer other than Common Stock,
the Issuer shall be deemed to have received for such Additional Shares of Common
Stock or Common Stock Equivalents a consideration equal to the amount of such
dividend so paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall notify the Holder of
this Warrant of its determination of the fair market value of such consideration
prior to payment or accepting receipt thereof. If, within thirty days after
receipt of said notice, the Majority Holders shall notify the Board in writing
of their objection to such determination, a determination of the fair market
value of such consideration shall be made by an Independent Appraiser selected
by the Majority Holders with the approval of the Board (which approval shall not
be unreasonably withheld), whose fees and expenses shall be paid by the Issuer.
(ii) READJUSTMENT OF WARRANT PRICE. Upon the expiration or
termination of the right to convert, exchange or exercise any Common Stock
Equivalent the issuance of which effected an adjustment in the Warrant Price, if
such Common Stock Equivalent shall not have been converted, exercised or
exchanged in its entirety, the number of shares of Common Stock deemed to be
issued and outstanding by reason of the fact that they were issuable upon
conversion, exchange or exercise of any such Common Stock Equivalent shall no
longer be computed as set forth above, and the Warrant Price shall forthwith be
readjusted and thereafter be the price which it would have been (but reflecting
any other adjustments in the Warrant Price made pursuant to the provisions of
this Section 4 after the issuance of such Common Stock Equivalent) had the
adjustment of the Warrant Price been made in accordance with the issuance or
sale of the number of Additional Shares of Common Stock actually issued upon
conversion, exchange or issuance of such Common Stock Equivalent and thereupon
only the number of Additional Shares of Common Stock actually so issued shall be
deemed to have been issued and only the consideration actually received by the
Issuer (computed as in clause (i) of this subsection (g)) shall be deemed to
have been received by the Issuer.
9
(iii) OUTSTANDING COMMON STOCK. The number of shares of Common
Stock at any time outstanding shall (A) not include any shares thereof then
directly or indirectly owned or held by or for the account of the Issuer or any
of its Subsidiaries, and (B) be deemed to include all shares of Common Stock
then issuable upon conversion, exercise or exchange of any then outstanding
Common Stock Equivalents or any other evidences of indebtedness, shares of
Capital Stock or other Securities which are or may be at any time convertible
into or exchangeable for shares of Common Stock or Other Common Stock.
(h) OTHER ACTION AFFECTING COMMON STOCK. In case after the Original
Issue Date the Issuer shall take any action affecting its Common Stock, other
than an action described in any of the foregoing subsections (a) through (g) of
this Section 4, inclusive, and the failure to make any adjustment would not
fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principle of this Section 4, then the Warrant
Price shall be adjusted in such manner and at such time as the Board may in good
faith determine to be equitable in the circumstances.
(i) ADJUSTMENT OF WARRANT SHARE NUMBER. Upon each adjustment in the
Warrant Price pursuant to any of the foregoing provisions of this Section 4, the
Warrant Share Number shall be adjusted, to the nearest one hundredth of a whole
share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
(j) FORM OF WARRANT AFTER ADJUSTMENTS. The form of this Warrant need
not be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.
5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "ADJUSTMENT"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), the calculations
made in connection therewith and the Warrant Price and Warrant Share Number
after giving effect to such adjustment, and shall cause copies of such
certificate to be delivered to the Holder of this Warrant promptly after each
adjustment. Any dispute between the Issuer and the Holder of this Warrant with
respect to the matters set forth in such certificate may at the option of the
Holder of this Warrant be submitted to one of the national or regional
accounting firms selected by the
10
Holder, provided that the Issuer shall have ten days after receipt of notice
from such Holder of its selection of such firm to object thereto, in which case
such Holder shall select another such firm and the Issuer shall have no such
right of objection. The firm selected by the Holder of this Warrant as provided
in the preceding sentence shall be instructed to deliver a written opinion as to
such matters to the Issuer and such Holder within thirty days after submission
to it of such dispute. Such opinion shall be final and binding on the parties
hereto. The fees and expenses of such accounting firm shall be paid by the
Issuer.
6. FRACTIONAL SHARES. No fractional shares of Warrant Stock will be
issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. DEFINITIONS. For the purposes of this Warrant, the following terms
have the following meanings:
"ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common Stock
issued by the Issuer after the Original Issue Date, and all shares of Other
Common, if any, issued by the Issuer after the Original Issue Date, except the
Warrant Stock, Common Stock reserved for issuance upon exercise of existing
stock options issued under any employee incentive stock option, and Common Stock
issued upon exercise of options and warrants authorized by the Board prior to
the Closing Date.
"BOARD" shall mean the Board of Directors of the Issuer.
"CAPITAL STOCK" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in (however
designated) corporate stock, including, without limitation, shares of preferred
or preference stock, (ii) all partnership interests (whether general or limited)
in any Person which is a partnership, (iii) all membership interests or limited
liability company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
"RESTATED CERTIFICATE OF INCORPORATION" means the Restated
Certificate of Incorporation of the Issuer as in effect on the Original Issue
Date, and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant to
applicable law.
"COMMON STOCK" means the Common Stock, $.01 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter be
changed.
"COMMON STOCK EQUIVALENT" means any Convertible Security or warrant,
option or other right to subscribe for or purchase any Additional Shares of
Common Stock or any Convertible Security.
"CONVERTIBLE SECURITIES" means evidences of indebtedness, shares of
Capital Stock or other Securities which are or may be at any time convertible
into or exchangeable for
11
Additional Shares of Common Stock. The term "Convertible Security" means one of
the Convertible Securities.
"GOVERNMENTAL AUTHORITY" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority, commission,
board, agency or instrumentality, whether Federal, state or local, and whether
domestic or foreign.
"HOLDERS" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"INDEPENDENT APPRAISER" means a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may not include the firm that
regularly examines the financial statements of the Issuer) that is regularly
engaged in the business of appraising the Capital Stock or assets of
corporations or other entities as going concerns, and which is not affiliated
with either the Issuer or the Holder of any Warrant.
"ISSUER" means JLM Industries, Inc., a Delaware corporation, and its
successors.
"MAJORITY HOLDERS" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable under the
Warrants at the time outstanding.
"ORIGINAL ISSUE DATE" means _______________, 2001.
"OTHER COMMON STOCK" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this Warrant
(other than Common Stock) and which shall have the right to participate in the
distribution of earnings and assets of the Issuer without limitation as to
amount.
"OTC BULLETIN BOARD" means the over-the-counter electronic bulletin
board.
"PERSON" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated organization,
joint venture, Governmental Authority or other entity of whatever nature.
"PER SHARE MARKET VALUE" means on any particular date (a) the last
sales price per share of the Common Stock on such date the Nasdaq National
Market or other registered national stock exchange on which the Common Stock is
then listed or if there is no such price on such date, then the closing bid
price on such exchange or quotation system on the date nearest proceeding such
date, or (b) if the Common Stock is not listed then on The Nasdaq National
Market or any registered national stock exchange, the closing bid price for a
share of Common Stock in the over-the-counter market, as reported by the OTC
Bulletin Board or in the National Quotation Bureau Incorporated (or similar
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the Common Stock is not then reported
by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the "Pink Sheet" quotes for the relevant conversion period,
as determined in good faith by the
12
holder, or (d) if the Common Stock is not then publicly traded, the fair market
value of a share of Common Stock as determined by an Independent Appraiser
selected in good faith by the Majority Holders; provided, however, that the
Issuer, after receipt of the determination by such Independent Appraiser, shall
have the right to select an additional Independent Appraiser, in which case, the
fair market value shall be equal to the average of the determinations by each
such Independent Appraiser; and provided, further that all determinations of the
Per Share Market Value shall be appropriately adjusted for any stock dividends,
stock splits or other similar transactions during such period. The Issuer shall
pay all costs and expenses of each Independent Appraiser. The determination of
fair market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as between a
willing buyer and a willing seller and taking into account all relevant factors
determinative of value, and shall be final and binding on all parties. In
determining the fair market value of any shares of Common Stock, no
consideration shall be given to any restrictions on transfer of the Common Stock
imposed by agreement or by Federal or state securities laws, or to the existence
or absence of, or any limitations on, voting rights.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of May
___, 2001, by and among the Issuer and the Investors party hereto.
"REGISTRATION RIGHTS AGREEMENT" has the meaning specified in Section
3(e) hereof.
"SECURITIES" means any debt or equity securities of the Issuer,
whether now or hereafter authorized, any instrument convertible into or
exchangeable for Securities or a Security, and any option, warrant or other
right to purchase or acquire any Security.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal statute then in effect.
"SECURITY" means one of the Securities.
"SUBSIDIARY" means any corporation a majority of whose outstanding
Voting Stock shall at the time be owned directly or indirectly by the Issuer or
by one or more of its Subsidiaries, or by the Issuer and one or more of its
Subsidiaries.
"TRADING DAY" means (a) a day on which the Common Stock is traded on
The Nasdaq National Market as reported by Bloomberg L.P., or (b) if the Common
Stock is not listed on The Nasdaq National Market, a day on which the Common
Stock is traded on any other registered national stock exchange, or (c) if the
Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the event that
the Common Stock is not listed or quoted as set forth in (a), (b) and (c)
hereof, then Trading Day shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.
13
"TERM" has the meaning specified in Section 1 hereof.
"VOTING STOCK", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) having ordinary
voting power for the election of a majority of the members of the Board of
Directors (or other governing body) of such corporation, other than Capital
Stock having such power only by reason of the happening of a contingency.
"WARRANT PRICE" means $____ per share, provided, however, that if
the Registration Statement (as defined in the Registration Rights Agreement) is
not declared effective within one hundred twenty (180) days after the Closing
Date, the Warrant Price shall be reduced by 1.5% and by an additional 1.5% for
each thirty day period thereafter until the Registration Statement has been
declared effective, which shall be pro rated for such periods less than thirty
(30) days.
"WARRANT SHARE NUMBER" means at any time the aggregate number of
shares of Warrant Stock which may at such time be purchased upon exercise of
this Warrant, after giving effect to all prior adjustments and increases to such
number made or required to be made under the terms hereof.
"WARRANT STOCK" means Common Stock issuable upon exercise of any
Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.
"WARRANTS" means the Warrants issued pursuant to the Purchase
Agreement and the Commitment Letter dated April 11, 2001 between the Issuer and
Phoenix Enterprises LLC, including, without limitation, this Warrant, and any
other warrants of like tenor issued in substitution or exchange for any thereof
pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of
such other Warrants.
8. OTHER NOTICES. In case at any time:
(A) the Issuer shall make any distributions to the
holders of Common Stock; or
(B) the Issuer shall authorize the granting to all
holders of its Common Stock of rights to subscribe for or purchase any shares of
Capital Stock of any class or of any Common Stock Equivalents or Convertible
Securities or other rights; or
(C) there shall be any reclassification of the Capital
Stock of the Issuer; or
(D) there shall be any capital reorganization by the
Issuer; or
(E) there shall be any (i) consolidation or merger
involving the Issuer or (ii) sale, transfer or other disposition of all or
substantially all of the Issuer's property, assets or business (except a merger
or other reorganization in which the Issuer shall be the surviving corporation
and its shares of Capital Stock shall continue to be outstanding and
14
unchanged and except a consolidation, merger, sale, transfer or other
disposition involving a wholly-owned Subsidiary); or
(F) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Issuer or any partial liquidation
of the Issuer or distribution to holders of Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
days prior to the action in question and not less than twenty days prior to the
record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such requires no notice, then
two Trading Days written notice thereof describing the matters upon which action
is to be taken). The Holder shall have the right to send two representatives
selected by it to each meeting, who shall be permitted to attend, but not vote
at, such meeting and any adjournments thereof. This Warrant entitles the Holder
to receive copies of all financial and other information distributed or required
to be distributed to the holders of the Common Stock.
9. AMENDMENT AND WAIVER. Except as provided in Section 8.3 of the
Purchase Agreement, any term, covenant, agreement or condition in this Warrant
may be amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), by a written
instrument or written instruments executed by the Issuer and the Majority
Holders; provided, however, that no such amendment or waiver shall reduce the
Warrant Share Number, increase the Warrant Price, shorten the period during
which this Warrant may be exercised or modify any provision of this Section 9
without the consent of the Holder of this Warrant.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for
15
notice later than 5:00 p.m., New York City time, on any date and earlier than
11:59 p.m., New York City time, on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service
or (iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to the Holder of
this Warrant or of Warrant Stock issued pursuant hereto, addressed to such
Holder at its last known address or facsimile number appearing on the books of
the Issuer maintained for such purposes, or with respect to the Issuer,
addressed to:
JLM Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Issuer shall be sent to Holland &
Knight LLP, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇.
Copies of notices to the Holder shall be sent to ▇▇▇▇ Marks & ▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.,
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇.
12. WARRANT AGENT. The Issuer shall, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
13. REMEDIES. The Issuer stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
14. SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.
15. MODIFICATION AND SEVERABILITY. If, in any action before any court or
agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of
16
this Warrant, but this Warrant shall be construed as if such unenforceable
provision had never been contained herein.
16. HEADINGS. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and
year first above written.
JLM INDUSTRIES, INC.
By:
---------------------------------------
Name:
Title:
17
EXERCISE FORM
JLM INDUSTRIES, INC.
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated: Signature:_________________________
Address:___________________________
___________________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: Signature:_________________________
Address:___________________________
___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: Signature:_________________________
Address:___________________________
___________________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ cancelled (or transferred or exchanged) this _____
day of ___________, _____, shares of Common Stock issued therefor in the name
of _______________, Warrant No. W-_____ issued for ____ shares of Common
Stock in the name of _______________.
EXHIBIT B
ESCROW AGREEMENT
ESCROW AGREEMENT (the "ESCROW AGREEMENT") made as of the __ day of
May, 2001, by and among JLM Industries, Inc., a Delaware corporation, with
offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY"), each
of the investors listed on the signature pages hereto (each an "Investor" and
collectively the "INVESTORS"), and ▇▇▇▇ Marks & ▇▇▇▇▇ LLP, a New York limited
liability partnership with offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as escrow agent (the "ESCROW AGENT").
WITNESSETH:
WHEREAS, the Company desires to raise capital in connection with its
refinancing;
WHEREAS, the Company has entered into a Purchase Agreement (the
"PURCHASE AGREEMENT") with the Investors of even date herewith;
WHEREAS, pursuant to the Purchase Agreement, the Company and the
Investors have agreed that (i) the Company shall issue and sell to the Investors
an aggregate of 2,173,913 shares (the "SHARES") of the Company's common stock,
$0.01 par value per share (the "COMMON STOCK"), for an aggregate purchase price
of $2,499,999.95 (the "TOTAL PURCHASE PRICE") and (ii) the Company shall issue
warrants to purchase up to 675,000 shares of Common Stock (the "Warrants") to
Phoenix and/or its designees; and
WHEREAS, the Purchase Agreement contemplates that the Purchase Price
to be paid for the Shares and the Certificates (as defined below) shall be
placed into escrow and shall be held in escrow prior to the Closing Date (as
defined in the Purchase Agreement) and the Escrow Agent has agreed to receive,
hold and pay such funds to the Company against delivery to the Investors of
certificates representing the Shares purchased by the Investors (the
"CERTIFICATES") and delivery to the Holders of a warrant certificate
representing the Warrants issued to the Holders, upon the terms and subject to
the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Escrow
Agreement hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used and not otherwise defined
herein shall have the meanings respectively assigned to them in the Purchase
Agreement.
2. ESCROW OF FUNDS. Pursuant to the terms of the Purchase Agreement
and the terms hereof, on or prior to the Closing Date, each Investor shall remit
to the Escrow Agent in the account set forth on SCHEDULE 1 attached hereto by
wire transfer in immediately available funds or certified or official bank
check, an amount equal to $1.15 multiplied by the number of shares being
purchased by such Investor pursuant to the Purchase Agreement (with respect to
each Investor the "ESCROW AMOUNT" and, collectively, the Total Purchase Price).
The Escrow
Agent shall hold the Escrow Amount and the Total Purchase Price, as the case may
be, in escrow in accordance with the terms and conditions of this Escrow
Agreement.
3. INVESTMENT OF FUNDS. The Escrow Agent shall invest the monies
held in escrow in an interest bearing bank account with, or certificates of
deposit or time deposits with maturities of no more than thirty (30) days,
issued by a domestic commercial bank or such other bank or other financial
institution as it normally holds such funds. The disbursement of the interest
shall be governed by Section 4 hereof.
4. RELEASE OF FUNDS. (a) The Escrow Agent shall release the Total
Purchase Price or any portion thereof upon receipt, at any time, of joint
written instructions from the Company and Phoenix directing the manner in which
the distribution of the funds held in escrow is to be made.
(b) Immediately following notification to the Escrow Agent in
writing by Phoenix that the Closing has occurred pursuant to the terms of the
Purchase Agreement, the Escrow Agent shall pay the Total Purchase Price to the
Company and shall deliver the Certificates to the Investors, plus any interest
earned on the Escrow Amount.
(c) If no Closing occurs prior to 11:59 p.m. New York City
time on June 15, 2001 and the Escrow Agent does not receive joint written
instructions of the Company and the Phoenix regarding an extension of such date,
the Escrow Agent shall return the Escrow Amount plus the interest earned thereon
to each Investor.
(d) Any interest earned on the Escrow Amount shall be paid to
the party receiving the Escrow Amount.
5. FURTHER ASSURANCES. The Company and the Investors agree to do
such further acts and to execute and deliver such statements, assignments,
agreements, instruments and other documents as the Escrow Agent from time to
time may reasonably request in connection with the administration, maintenance,
enforcement or adjudication of this Escrow Agreement in order (a) to give the
Escrow Agent confirmation and assurance of the Escrow Agent's rights, powers,
privileges, remedies and interests under this Escrow Agreement and applicable
law, (b) to better enable the Escrow Agent to exercise any such right, power,
privilege, remedy or interest, or (c) to otherwise effectuate the purpose and
the terms and provisions of this Escrow Agreement, each in such form and
substance as may be reasonably acceptable to the Escrow Agent.
6. CONFLICTING DEMANDS. If conflicting or adverse claims or
demands are made or notices served upon the Escrow Agent with respect to the
escrow provided for herein, the Company and the Investors agree that the Escrow
Agent may refuse to comply with any such claim or demand and withhold and stop
all further performance of this escrow so long as such disagreement shall
continue. In so doing, the Escrow Agent shall not be or become liable for
damages, losses, costs, expenses or interest to any party or any other person
for its failure to comply with such conflicting or adverse demands. The Escrow
Agent shall be entitled to continue to so refrain and refuse to so act until
such conflicting claims or demands shall have been finally determined by a court
or arbitrator of competent jurisdiction or shall have been
2
settled by agreement of the parties to such controversy, in which case the
Escrow Agent shall be notified thereof in a notice signed by such parties. The
Escrow Agent may also elect to commence an interpleader or other action for
declaratory judgment for the purpose of having the respective rights of the
claimants adjudicated, and may deposit with the court all funds and securities
held hereunder pursuant to this Escrow Agreement; and if it so commences and
deposits, the Escrow Agent shall be relieved and discharged from any further
duties and obligations under this Escrow Agreement.
7. EXPENSES OF THE ESCROW AGENT. The Company agrees to promptly pay
any and all costs and expenses (including reasonable attorneys' fees) incurred
by the Escrow Agent in connection with this Escrow Agreement, the administration
and holding of the Escrow Amount and the investment of such funds, and the
enforcement, protection and adjudication of the Escrow Agent's rights hereunder
by the Escrow Agent. The Company shall be liable to the Escrow Agent for any
expenses payable by the Escrow Agent.
8. RELIANCE ON DOCUMENTS AND EXPERTS. The Escrow Agent shall be
entitled to rely upon any notice, consent, certificate, affidavit, statement,
paper, document, writing or communication (which to the extent permitted
hereunder may be by telegram, cable, telex, telecopier, or telephone) reasonably
believed by it to be genuine and to have been signed, sent or made by the proper
person or persons, and upon opinions and advice of legal counsel (including
itself or counsel for any party hereto), independent public accountants and
other experts selected by the Escrow Agent and mutually acceptable to each of
the Company and Phoenix.
9. STATUS OF THE ESCROW AGENT, ETC. The Escrow Agent is acting under
this Escrow Agreement as a stakeholder only. No term or provision of this Escrow
Agreement is intended to create, nor shall any such term or provision be deemed
to have created, any joint venture, partnership or attorney-client relationship
between or among the Escrow Agent and the Company or the Investors.
Notwithstanding anything contained herein to the contrary, the Company and the
Investors expressly acknowledge that ▇▇▇▇ Marks & ▇▇▇▇▇ LLP is presently serving
as counsel to Phoenix Enterprises LLC. Accordingly, the parties expressly
acknowledge and agree that neither the Escrow Agent's services as Escrow Agent
hereunder nor any provision hereof, either express or implied, shall restrict or
inhibit the Escrow Agent in any way from representing the Investors or any of
their affiliates in any action, dispute, controversy, arbitration, suit or
negotiation arising under (i) the Purchase Agreement, any other agreement or
transaction contemplated thereunder, including this Escrow Agreement or (ii)
under any other agreement or in any other manner or context whatsoever,
regardless of whether involving the Investors or their affiliates, directly or
indirectly. The Investors hereby waive any conflict of interest and irrevocably
authorize and direct the Escrow Agent to carry out the terms and provisions of
this Escrow Agreement fairly as to all parties, without regard to any such
representation and irrespective of the impact upon the Investors. The Escrow
Agent's only duties are those expressly set forth in this Escrow Agreement, and
each of the Company and the Investors authorize the Escrow Agent to perform
those duties in accordance with its usual practices in holding funds of its own
or those of other escrows. The Escrow Agent may exercise or otherwise enforce
any of its rights, powers, privileges, remedies and interests under this Escrow
Agreement and applicable law or perform any of its duties under this Escrow
Agreement by or through its partners, employees, attorneys, agents or designees.
3
10. DUTIES; EXCULPATION. (a) The Escrow Agent shall have no duties
or responsibilities other than those expressly set forth in the provisions of
this Escrow Agreement and any amendments hereto.
(b) The Escrow Agent and its designees, and their respective
partners, employees, attorneys and agents, shall not incur any liability
whatsoever for the investment or disposition of funds or the taking of any other
action in accordance with the terms and provisions of this Escrow Agreement, or
for any mistake or error in judgment, or for compliance with any applicable law
or any attachment, order or other directive of any court or other authority
(irrespective of any conflicting term or provision of this Escrow Agreement), or
for any act or omission of any other person selected with reasonable care and
engaged by the Escrow Agent in connection with this Escrow Agreement (other than
for such Escrow Agent's own acts or omissions breaching an express obligation
owed under this Escrow Agreement and amounting to gross negligence or willful
misconduct as finally determined pursuant to applicable law by a court or
governmental authority having jurisdiction); and each of the Company and the
Investors hereby waives any and all claims and actions whatsoever against the
Escrow Agent and its designees, and their respective partners, employees,
attorneys and agents, arising out of or related directly or indirectly to any
and all of the foregoing acts, omissions and circumstances. Furthermore, the
Escrow Agent and its designees, and their respective partners, employees,
attorneys and agents, shall not incur any liability (other than for the Escrow
Agent's own acts or omissions breaching an express obligation owed to the
claimant under this Escrow Agreement and amounting to gross negligence or
willful misconduct as finally determined pursuant to applicable law by a court
or governmental authority having jurisdiction) for other acts and omissions
arising out of or related directly or indirectly to this Escrow Agreement or the
Total Purchase Price (or any portion thereof); and each of the Company and the
Investors hereby expressly waives any and all claims and actions (other than
those attributable to the Escrow Agent's own acts or omissions breaching an
express obligation owed to the claimant and amounting to gross negligence or
willful misconduct as finally determined pursuant to applicable law by a court
or governmental authority having jurisdiction) against the Escrow Agent and its
designees, and their respective partners, employees, attorneys and agents,
arising out of or related directly or indirectly to any and all of the foregoing
acts, omissions and circumstances. The Escrow Agent's designees excludes the
Investors for purposes hereof.
11. INDEMNIFICATION. The Escrow Agent and its designees (excluding
the Investors), and their respective partners, employees, attorneys and agents,
shall be indemnified, reimbursed, held harmless and, at the request of the
Escrow Agent, defended, by the Company from and against any and all claims,
liabilities, losses and expenses (including, without imitation, the reasonable
disbursements, expenses and fees of their respective attorneys) that may be
imposed upon, incurred by, or asserted against any of them, arising out of or
related directly or indirectly to this Escrow Agreement or the Total Purchase
Price (or any portion thereof), except such as are occasioned by the indemnified
person's own acts and omissions breaching a duty owed to the claimant under this
Escrow Agreement and amounting to gross negligence or willful misconduct as
finally determined pursuant to applicable law by a court or governmental
authority having jurisdiction.
4
12. NOTICES. Any notice, request, demand or other communication
permitted or required to be given hereunder shall be in writing, shall be sent
by one of the following means to the addressee at the address set forth below
(or at such other address as shall be designated hereunder by notice to the
other parties and persons receiving copies, effective upon actual receipt) and
shall be deemed conclusively to have been given: (a) on the first business day
following the day timely deposited with Federal Express (or other equivalent
national overnight courier) or United States Express Mail, with the cost of
delivery prepaid; (b) on the fifth business day following the day duly sent by
certified or registered United States mail, postage prepaid and return receipt
requested; or (c) when otherwise actually delivered to the addressee.
If to the Company: JLM Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Holland & Knight LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investors: Phoenix Enterprises LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ Marks & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
13. SECTION AND OTHER HEADINGS. The Section and other headings
contained in this Escrow Agreement are for convenience only, shall not be deemed
a part of this Escrow Agreement and shall not affect the meaning or
interpretation of this Escrow Agreement.
14. GOVERNING LAW. This Escrow Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to principles of conflicts of law. Each of the Company and the
Investors (i) hereby irrevocably submits to the jurisdiction of the United
States District Court sitting in the Southern District of
5
New York for the purposes of any suit, action or proceeding arising out of or
relating to this Escrow Agreement or the Purchase 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. Each of the Company and the
Investors 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 Escrow Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in
this Section 15 shall affect or limit any right to serve process in any other
manner permitted by law.
15. COUNTERPARTS. This Escrow Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original but all such counterparts shall together
constitute one and the same agreement.
16. RESIGNATION OF ESCROW AGENT. The Escrow Agent may, at any time,
at its option, elect to resign its duties as Escrow Agent under this Escrow
Agreement by providing notice thereof to each of the Company and the Investors.
In such event, the Escrow Agent shall deposit the Total Purchase Price (or any
portion thereof) with a successor independent escrow agent to be appointed by
(a) the Company and Phoenix within thirty (30) days following the receipt of
notice of resignation from the Escrow Agent, or (b) the Escrow Agent if the
Company and Phoenix shall have not agreed on a successor escrow agent within the
aforesaid 30-day period, upon which appointment by the Escrow Agent and delivery
of the Total Purchase Price the Escrow Agent shall be released of and from all
liability under this Escrow Agreement.
17. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Whenever in this Escrow
Agreement reference is made to any party, such reference shall be deemed to
include the successors, assigns and legal representatives of such party, and,
without limiting the generality of the foregoing, all representations,
warranties, covenants and other agreements made by or on behalf of each of the
Company and the Investors in this Escrow Agreement shall inure to the benefit of
any successor escrow agent hereunder.
18. NO THIRD PARTY RIGHTS. The representations, warranties and other
terms and provisions of this Escrow Agreement are for the exclusive benefit of
the parties hereto, and no other person, including the creditors of the Company
or the Investors, shall have any right or claim against any party by reason of
any of those terms and provisions or be entitled to enforce any of those terms
and provisions against any party.
19. NO WAIVER BY ACTION, ETC. Any waiver or consent respecting any
representation, warranty, covenant or other term or provision of this Escrow
Agreement shall be effective only in the specific instance and for the specific
purpose for which given and shall not be deemed, regardless of frequency given,
to be a further or continuing waiver or consent. The failure or delay of a party
at any time or times to require performance of, or to exercise its rights with
respect to, any representation, warranty, covenant or other term or provision of
this Escrow Agreement in no manner (except as otherwise expressly provided
herein) shall affect its right at a later time to enforce any such term or
provision. No notice to or demand on either the Company
6
or the Investors in any case shall entitle such party to any other or further
notice or demand in the same, similar or other circumstances. All rights,
powers, privileges, remedies and interests of the parties under this Escrow
Agreement are cumulative and not alternatives, and they are in addition to and
shall not limit (except as otherwise expressly provided herein) any other right,
power, privilege, remedy or interest of the parties under this Escrow Agreement
or applicable law.
20. MODIFICATION, AMENDMENT, ETC. Except as provided in Section 8.3
of the Purchase Agreement, each and every modification and amendment of this
Escrow Agreement shall be in writing and signed by all of the parties hereto,
and each and every waiver of, or consent to any departure from, any covenant,
representation, warranty or other provision of this Escrow Agreement shall be in
writing and signed by the party granting such waiver or consent.
21. ENTIRE AGREEMENT. This Escrow Agreement contains the entire
agreement of the parties with respect to the matters contained herein and
supersedes all prior representations, agreements and understandings, oral or
otherwise, among the parties with respect to the matters contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
JLM INDUSTRIES, INC.
By:
------------------------------------
Name:
Title:
▇▇▇▇ MARKS & ▇▇▇▇▇ LLP,
as Escrow Agent
By:
------------------------------------
Name:
Title:
7
ESCROW AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Escrow
Agreement.
INVESTOR:
_______________________________________
Number of Shares issued: By:____________________________________
Name:
____________________________ Title:
Address:____________________________
____________________________
____________________________
Facsimile:__________________________
8
SCHEDULE 1
Chase Manhattan Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Account Name: ▇▇▇▇ Marks & ▇▇▇▇▇ LLP
Attorney Trust Account
Account Number: 967-111188
ABA Routing Number: ▇▇▇▇▇▇▇▇▇
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of May __, 2001, by and among JLM Industries, Inc., a Delaware
corporation (the "COMPANY"), each of the investors listed on the signature pages
hereto as an investor (each an "INVESTOR" and collectively, the "INVESTORS") and
each of the warrant holders listed on the signature page hereto as a warrant
holder (each a "WARRANT HOLDER" and collectively, the "WARRANT HOLDERS").
WHEREAS, the Company is issuing and selling to the Investors and the
Investors are purchasing from the Company, pursuant to that certain Purchase
Agreement, dated as of May __, 2001 (the "PURCHASE AGREEMENT"), by and among the
Company and the Investors, an aggregate of 2,173,913 shares of the Company's
Common Stock (as defined below) for an aggregate purchase price of
$2,499,999.95;
WHEREAS, the Company has also issued to the Warrant Holders warrants
(the "WARRANTS") to purchase an aggregate of up to 675,000 shares of Common
Stock (the "WARRANT SHARES");
WHEREAS, the Company desires to grant registration rights as set
forth herein with respect to the shares of Common Stock being purchased under
the Purchase Agreement; and
WHEREAS, the Company desires to grant registration rights as set
forth herein with respect to the shares of Common Stock issuable upon exercise
of the Warrants.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the sufficiency of which is hereby acknowledged, the Company, the
Investors and the Warrant Holders hereby agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein shall have the meanings given such terms in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For purposes of this definition, "CONTROL," when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "AFFILIATED," "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"BLACKOUT PERIOD" shall have the meaning set forth in Section
3(n).
"BOARD" shall have the meaning set forth in Section 3(n).
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York generally are authorized or required by law or other
government actions to close.
"CLOSING" shall have the meaning set forth in the Purchase
Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's Common Stock, par value
$.01 per share.
"EFFECTIVENESS DATE" means the 180th day following the date of
the Closing.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2.
"EVENT" shall have the meaning set forth in Section 8(e).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FILING DATE" means the 30th calendar day following the
Closing Date.
"HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"HOLDERS' REPRESENTATIVE" shall mean Phoenix Enterprises LLC.
"INDEMNIFIED PARTY" shall have the meaning set forth in
Section 6(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in
Section 6(c).
"LOSSES" shall have the meaning set forth in Section 6(a).
"PERSON" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the
2
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
"REGISTRABLE SECURITIES" means (i) the Common Stock issued to
the Investors pursuant to the Purchase Agreement, (ii) the shares of Common
Stock issuable to the Warrant Holders upon exercise of the Warrants, and (iii)
any other dividend or other distribution with respect to, conversion or exchange
of, or in replacement of, the foregoing (i) and (ii).
"REGISTRATION STATEMENT" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar Rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"RULE 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar Rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar Rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SPECIAL COUNSEL" means ▇▇▇▇ Marks & ▇▇▇▇▇ LLP, counsel to the
Holders.
2. REGISTRATION RIGHTS. The Company shall prepare and file with
the Commission, on or prior to the Filing Date, a "shelf" registration statement
covering all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. Such shelf registration statement shall be on Form
S-3 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate Form in accordance herewith).
The Company shall (i) not permit any securities other than the
Registrable Securities to be included in the Registration Statement and (ii) use
its best efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event prior to the Effectiveness Date, and to keep such Registration
Statement continuously effective under the Securities Act until such date as is
the earlier of (x) the date when all Registrable Securities covered by such
Registration Statement
3
have been sold or (y) the date on which all of the Registrable Securities may be
sold without any restriction pursuant to Rule 144(k) or any successor provision
as determined by the counsel to the Company pursuant to a written opinion
letter, addressed to the Company's transfer agent to such effect (the
"EFFECTIVENESS PERIOD"). If the Company is notified orally or in writing by the
Commission that the Commission has no comments with respect to the Registration
Statement (the "COMMISSION NOTICE"), the Company shall use its best efforts to
cause the Registration Statement to be declared effective no later than five (5)
business days after receipt of the Commission Notice. If an additional
Registration Statement is required to be filed because the actual number of
shares of Common Stock into which the Warrants are exercisable exceeds the
number of shares of Common Stock initially registered in respect of the Warrant
Shares based upon the computation on the Closing Date or the Filing Date, the
Company shall have twenty (20) Business Days to file such additional
Registration Statement, and the Company shall use its best efforts to cause such
additional Registration Statement to be declared effective by the Commission as
soon as possible, but in no event later than thirty (30) days after filing.
If, during the three (3) year period immediately following the
Effectiveness Period, any of the Registrable Securities have not been sold
pursuant to the shelf registration statement contemplated in the two preceding
paragraphs and such Registrable Securities may not be sold without any
restriction pursuant to the Securities Act or the rules and regulations
promulgated thereunder (by virtue of the fact that such person may be deemed to
be an "affiliate" of the Company), then Holders of a then majority in interest
of outstanding Registrable Securities may exercise one (1) demand registration
right with respect thereto by delivering to the Company a written notice (a
"DEMAND REGISTRATION NOTICE") informing the Company of such exercise and
specifying the number of Registrable Securities to be offered by such Holder.
Upon receipt of a Demand Registration Notice, the Company will notify all other
Holders of Registrable Securities and cause to be filed with the Commission as
soon as reasonably practicable after receiving the Demand Registration Notice
(but in no event later than thirty (30) days after the receipt of such notice) a
new registration statement and related prospectus (a "NEW REGISTRATION
STATEMENT") that complies as to Form in all material respects with applicable
Commission rules providing for the sale by all such Holders of then outstanding
Registrable Securities, and agrees to use its best efforts to cause such new
Registration Statement to be declared effective by the Commission as soon as
practicable.
3. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form S-3 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3 such
registration shall be on another appropriate Form in accordance herewith) and
use its best efforts to cause the Registration Statement to become effective and
remain effective as provided herein; provided, however, that not less than ten
(10) Business Days prior to the filing of the Registration Statement or any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated therein by reference), the Company shall (i)
furnish to the Holders and Special Counsel, copies of all such documents
proposed to be filed and shall use its reasonable best efforts to reflect in
each such document, when so filed with the Commission, such comments as any
Holder may
4
reasonably propose and (ii) at the request of any Holder cause its officers and
directors, counsel and independent certified public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of counsel to
such Holders, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file the Registration Statement or any
such Prospectus or any amendments or supplements thereto to which the Holders'
Representative or the Special Counsel shall reasonably object in writing within
five (5) Business Days of their receipt thereof.
(b)(i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such amendments in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as possible to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and as
promptly as possible provide the Holders' Representative and Special Counsel
true and complete copies of all correspondence from and to the Commission
relating to the Registration Statement; and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the Holders thereof set forth in the Registration Statement as
so amended or in such Prospectus as so supplemented.
(c) Notify the Holders' Representative (and in the case of
(c)(i), (iii), (iv) and (v) hereof the Holders) and Special Counsel as promptly
as possible (and, in the case of (i)(A) below, not less than five (5) Business
Days prior to such filing) and (if requested by any such Person) confirm such
notice in writing no later than one (1) Business Day following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed; (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement and (C) with respect to the Registration Statement or any
post-effective amendment thereto, when the same has become effective; (ii) of
any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) of the receipt by the Company 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; and (v) of the occurrence of any event that requires any revisions to
the Registration Statement, Prospectus or other documents so that, in the case
of the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or
5
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) If requested by any Holder of the Registrable Securities,
(i) promptly incorporate in a Prospectus supplement or post-effective amendment
to the Registration Statement such information as should be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(f) Furnish to each Holder and Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(g) Promptly deliver to each Holder and Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
Form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(h) Promptly use its reasonable best efforts to register or
qualify or cooperate with the selling Holders and Special Counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing the Registrable Securities
to be sold pursuant to a Registration Statement, which certificates shall be
free of all restrictive legends when sold or transferred pursuant to the
Registration Statement, and to enable such Registrable Securities to be in such
denominations and registered in such names as any Holder may request within two
(2) Business Days after such request.
6
(j) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as possible, (i) prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a 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 (ii) advise the Holders as to when they may resume
distribution of the Registrable Securities.
(k) Use its best efforts to maintain the listing of the Common
Stock on The Nasdaq National Market and cause all Registrable Securities
relating to such Registration Statement to be listed on The Nasdaq National
Market or any such other securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which the Common Stock is then
listed.
(l) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
(m) Request each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration Statement.
(n) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the "BOARD") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may suspend use of a
registration statement for a period not to exceed twenty (20) consecutive days,
provided that the Company may not suspend its obligation under this Section 3(n)
for more than forty-five (45) days in the aggregate during any 12-month period
(each, a "BLACKOUT PERIOD"); provided, however, that no such suspension shall be
permitted for consecutive twenty (20) day periods, arising out of the same set
of facts, circumstances or transactions; and provided further, that if the
Company decides to suspend its obligation pursuant to this sentence, it shall
give written notice of such suspension to the Holders and Special Counsel to
that effect. If the Company shall give notice of the occurrence of any event of
the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) and 3(c)(v) or of
the postponement or suspension of the Registration Statement pursuant to this
Section 3(n), then the Effectiveness Period shall be
7
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each Holder shall have
received (i) the copies of the supplement or amendment to the Registration
Statement contemplated by Section 3(j) (if an amended or supplemental prospectus
is required) or (ii) the Advice (as defined below) (if no supplement or
amendment to the Registration Statement is required).
(o) Each Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as applicable to them
in connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Holder further agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(n),
such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the "ADVICE")
by the Company that the use of the applicable Prospectus may be resumed.
4. REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not the Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to the
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with The Nasdaq National Market and each other securities
exchange or market on which Registrable Securities are required hereunder to be
listed, (B) with respect to filings required to be made with the Commission, (C)
with respect to filings required to be made under the NASD and the NASD
Regulation, Inc. and (D) in compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel for
the Holders in connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the Holders'
Representative may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and Special Counsel, (v)
Securities Act liability insurance, if the Company so desires such insurance,
and (vi) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement, including, without limitation, the Company's independent public
accountants (including the expenses of any comfort letters or costs associated
with the delivery by independent public accountants of a comfort letter or
comfort letters). In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
8
5. UNDERWRITTEN REGISTRATIONS. If any of the Registrable
Securities covered by a Registration Statement are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering must be acceptable to the Holders'
Representative, subject to the consent of the Company (which shall not be
unreasonably withheld or delayed). Notwithstanding anything else herein to the
contrary, such Holders shall be responsible for all underwriting commissions and
discounts in connection therewith.
No Holder may participate in any underwritten registration hereunder
unless such person (i) agrees to sell its Registrable Securities on the basis
reasonably provided in any underwriting arrangements agreed to by the Holders'
Representative and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents agreed to by
the Holders' Representative reasonably required under the terms of such
underwriting arrangements.
6. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. The
Company shall, notwithstanding any termination of this Agreement, indemnify and
hold harmless each Holder, the officers, directors, agents and employees of each
of them, each Person who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) any such Holder and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable attorneys' fees) and expenses
(collectively, "LOSSES"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any Form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or Form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such Form of Prospectus or in any amendment or supplement thereto.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of an Indemnified Party and shall survive the
transfer of the Registrable Securities by the Holders.
(b) INDEMNIFICATION BY HOLDERS. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
Form of prospectus, or
9
arising solely out of or based solely upon any omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or Form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus or such Form of
prospectus. Notwithstanding anything to the contrary contained herein, a Holder
shall be liable under this Section 6(b) for only that amount as does not exceed
the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and
the Indemnifying Party may assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
(d) CONTRIBUTION. If a claim for indemnification under Section
6(a) or 6(b) is unavailable or insufficient to an Indemnified Party, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions,
10
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in this Agreement,
any reasonable attorneys' or other reasonable fees or expenses reasonably
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. Notwithstanding anything to the contrary contained
herein, none of the Holders shall not be liable or required to contribute under
this Section 6(d) for any amount in excess of the net proceeds received by such
Holder as a result of the sale of Registrable Securities pursuant to such
Registration Statement. No party shall be liable for contribution with respect
to any action or claim settled without its written consent; provided however,
that such written consent was not unreasonably withheld.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
7. RULE 144. As long as any Holder owns any Registrable Securities,
the Company shall timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act and to promptly furnish such Holders with true and complete copies of all
such filings. As long as any Holder owns any Registrable Securities, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
shall take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Person to sell the Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 promulgated under the Securities Act,
including providing any legal opinions referred to in the Purchase Agreement.
Upon the written request of any Holder,
11
the Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such requirements.
8. MISCELLANEOUS. (a) REMEDIES. In the event of a breach by the
Company or by a Holder, of any of their obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement. It is accordingly agreed that the
parties shall be entitled to specific performance of the provisions of this
Agreement in addition to any other remedy to which any of them may be entitled
at law or in equity.
(b) NO INCONSISTENT AGREEMENTS. The Company has not, as of the
date hereof entered into any agreement that is currently in effect, nor shall
the Company, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Without limiting the generality of the foregoing, without the written consent of
the Holders of a majority of the then outstanding Registrable Securities, the
Company shall not grant to any Person the right to request the Company to
register any securities of the Company under the Securities Act unless the
rights so granted are subject in all respects to the prior rights in full of the
Holders set forth herein, and are not otherwise in conflict with the provisions
of this Agreement.
(c) NO PIGGYBACK ON REGISTRATIONS. Neither the Company nor any
of its security holders (other than the Holders of Registrable Securities) may
include securities of the Company in the Registration Statement, and the Company
shall not after the date hereof enter into any agreement providing such right to
any of its security holders, unless the right so granted is subject in all
respects to the prior rights in full of the Holders set forth herein, and is not
otherwise in conflict with the provisions of this Agreement.
(d) PIGGY-BACK REGISTRATIONS. If at any time when there is not
an effective Registration Statement covering (i) shares of Common Stock issued
pursuant to the Purchase Agreement or (ii) Warrant Shares issuable upon exercise
of the Warrants, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or its then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each Holder of Registrable Securities
written notice of such determination and, if within thirty (30) days after
receipt of such notice, any such Holder shall so request in writing (which
request shall specify the Registrable Securities intended to be disposed of by
the Holders), the Company will use its best efforts to cause the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register by such Holder, to the extent necessary to permit
the disposition of the Registrable Securities so to be registered, provided that
if at any time after giving written
12
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to such Holder and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration pursuant to this
Section 8(d) (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 8(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that, subject to Section 2
hereof, the Company shall not be required to register any Registrable Securities
pursuant to this Section 8(d) that are eligible for sale pursuant to Rule 144(k)
of the Securities Act. In the case of an underwritten public offering, if the
managing underwriter should reasonably object to the inclusion of the
Registrable Securities in such registration statement, and reasonably determine
that the inclusion of such Registrable Securities would materially adversely
affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer
or none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration) if the
underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement if the underwriter(s) recommends the inclusion of none of
such Registrable Securities; provided, however, that if securities are being
offered for the account of other persons or entities as well as the Company,
such reduction shall not represent a greater fraction of the number of
Registrable Securities intended to be offered by the Holders than the fraction
of similar reductions imposed on such other persons or entities (other than the
Company).
(e) DEFAULT PAYMENT; REDEMPTION. (i) The Company and the
Investors agree that the Investors will suffer damages if the Registration
Statement is not filed on or prior to the Filing Date, or not declared effective
by the Commission on or prior to the Effectiveness Date or not maintained in the
manner contemplated herein during the Effectiveness Period or if certain other
events occur. The Company and the Investors further agree that if (i) the
Registration Statement is not filed on or prior to the Filing Date, or is not
declared effective by the Commission on or prior to the Effectiveness Date (or
in the event an additional Registration Statement is filed because the actual
number of shares of Common Stock into which the Warrants are exercisable exceeds
the number of shares of Common Stock initially registered and is not filed and
declared effective within the time periods set forth in Section 2), or (ii) the
Company fails to file with the Commission a request for acceleration within five
(5) Business Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that a Registration Statement
will not be "reviewed," or not subject to further review, or (iii) the
Registration Statement is filed with and declared effective by the Commission
but thereafter ceases to be effective as to all Registrable Securities at any
time prior to the expiration of the Effectiveness Period for more than 90 days
in the aggregate, without being succeeded within 30 days by a subsequent
Registration Statement filed with and declared
13
effective by the Commission or within two (2) calendar days following written
notice by a Holder of its intent to sell, or (iv) the Company breaches in a
material respect any covenant or other material term or condition to this
Agreement, and such breach continues for a period of thirty (30) days after
written notice thereof to the Company, or (v) the Company has breached Section
3(n) of this Agreement (any such failure or breach being referred to as an
"EVENT"), the Company shall promptly (but in no event later than 35 days after
such event) pay a default payment for such failure to each Holder an amount
equal to 1.5% of such Holder's pro rata share of the purchase price paid by such
Holder for all of the shares of Common Stock purchased under the Purchase
Agreement and then owned by such Holder on the date of such Event for each
30-day period (or any portion thereof) such Event shall be continuing (the
"DEFAULT AMOUNT"). Payments to be made pursuant to this Section 8(e) shall be
due and payable in cash or in shares of Common Stock based upon the then Market
Price on the due date of each payment. In the event such payment is not made on
such respective due date, such Default Payment shall accrue interest at the rate
of 15% per annum. For purposes of this Agreement, "MARKET PRICE" shall mean the
average of the closing sales prices per share of the Common Stock on The Nasdaq
National Market (or such other registered national stock exchange on which the
Common Stock is then listed) for the twenty (20) consecutive trading days
immediately preceding such measurement date, or if the Common Stock is not
listed then on The Nasdaq National Market or any registered national stock
exchange, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the OTC Bulletin Board or in the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or if the Common Stock is not then reported by the OTC Bulletin Board
or the National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
the holder, or if the Common Stock is not then publicly traded the fair market
value of a share of Common Stock as determined by an Independent Appraiser (as
defined below) selected in good faith by the Holders' Representative; provided,
however, that the Issuer, after receipt of the determination by such Independent
Appraiser, shall have the right to select an additional Independent Appraiser,
in which case, the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser; and provided, further that
all determinations of the Market Price shall be appropriately adjusted for any
stock dividends, stock splits or other similar transactions during such period.
The Company shall pay all costs and expenses of each Independent Appraiser. The
determination of fair market value by an Independent Appraiser shall be based
upon the fair market value of the Company determined on a going concern basis as
between a willing buyer and a willing seller and taking into account all
relevant factors determinative of value, and shall be final and binding on all
parties. In determining the fair market value of any shares of Common Stock, no
consideration shall be given to any restrictions on transfer of the Common Stock
imposed by agreement or by federal or state securities laws, or to the existence
or absence of, or any limitations on, voting rights. For purposes of this
Agreement, the term "Independent Appraiser" shall mean an independent investment
banking firm or accounting firm of national or regional reputation.
(ii) If the Registration Statement has not been declared
effective by the first anniversary of the Closing Date, each holder of
Registrable Securities shall have the right, subject to Delaware law and then
applicable bank restrictions, if any, to cause the
14
Company to redeem the Registrable Securities held by such holder for a period of
30 calendar days following such first anniversary at a redemption price equal to
the higher of (a) 130% of the Purchase Price per Share and (b) the Market Price.
(f) SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION. Each of the
Company and the Holders (A) hereby irrevocably submits to the jurisdiction of
the United States District Court sitting in the Southern District of New York
and if jurisdiction of such Federal courts is not available, the state courts of
New York, for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement or the Purchase Agreement and (B) 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. Each of the Company and the Holders
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 Section 8(f)
shall affect or limit any right to serve process in any other manner permitted
by law.
(g) AMENDMENTS AND WAIVERS. Except as provided in Section 8.3
of the Purchase Agreement, the provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and each of the
Holders. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that does not directly or indirectly affect the rights of
any other Holders may be given by Holders to which such waiver or consent
relates; provided, however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(h) NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed to have been given on (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice prior to 5:00 p.m., eastern standard time, on a
Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice later than 5:00 p.m., eastern standard time, on any
date and earlier than 11:59 p.m., eastern standard time, on such date, (iii) the
second Business Day following the date of mailing, if sent by nationally
recognized overnight courier service or (iv) actual receipt by the party to whom
such notice is required to be given, whichever shall first occur. The addresses
for such communications shall be with respect to each Holder at its address set
forth under its name on the signature page attached hereto, or with respect to
the Company, addressed to:
15
JLM Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Holland &
Knight LLP, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
Copies of notices to any Holder shall be sent to (i) ▇▇▇▇ Marks & ▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.,
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
(i) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder. Each
Investor may assign its rights hereunder in the manner and to the Persons as
permitted hereunder and under the Purchase Agreement.
(j) ASSIGNMENT OF REGISTRATION RIGHTS. The rights of each
Holder hereunder, including the right to have the Company register for resale
the Registrable Securities in accordance with the terms of this Agreement, shall
be automatically assignable by each Holder to any transferee of such Holder of
all or a portion of the Registrable Securities if: (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company as promptly as possible after such
assignment, (ii) the Company is, as promptly as possible after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement. In addition, each Holder shall have the right to assign its
rights hereunder to any other Person with the prior written consent of the
Company, which consent shall not be unreasonably withheld. Additionally, each
Holder shall have the right to assign its rights hereunder to any Affiliate of
such Holder without the consent to the Company. The rights to assignment shall
apply to the Holders (and to subsequent) successors and assigns.
(k) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
16
(l) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(m) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(n) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(o) 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.
(p) OPINION. Within two (2) business days after any
Registration Statement which includes the Registrable Securities is declared
effective by the Commission, the Company shall deliver, or shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement) confirmation that such Registration Statement
has been declared effective by the Commission in the Form attached hereto as
EXHIBIT A.
17
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
JLM INDUSTRIES, INC.
By:
---------------------------------
Name:
Title:
18
REGISTRATION RIGHTS AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the
Registration Rights Agreement.
INVESTOR:
__________________________________
Number of Shares purchased: By:_______________________________
Name:
____________________________ Title:
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
REGISTRATION RIGHTS AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the
Registration Rights Agreement.
WARRANT HOLDER:
____________________________________
Number of Warrants issued: By:_________________________________
Name:
____________________________ Title:
Address:______________________________
______________________________
______________________________
Facsimile:____________________________
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
EquiServe
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Re: JLM INDUSTRIES, INC.
Ladies and Gentlemen:
We are counsel to JLM Industries, Inc., a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Purchase Agreement (the "PURCHASE AGREEMENT") entered into by and among the
Company and the other signatures thereto (the "INVESTORS") pursuant to which the
Company issued to the Investors 2,173,913 shares of its common stock, par value
$.01 per share (the "COMMON STOCK"), and issued to the warrant holders (the
"WARRANT HOLDERS" and, together with the Investors, the "Holders") warrants to
purchase up to 675,000 shares of the Common Stock (the "WARRANTS"). Pursuant to
the Purchase Agreement, the Company has also entered into a Registration Rights
Agreement with the Holders (the "REGISTRATION RIGHTS AGREEMENT") pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement) under the
Securities Act of 1933, as amended (the "1933 ACT"). In connection with the
Company's obligations under the Registration Rights Agreement, on ____________
___, 2001, the Company filed a Registration Statement on Form (File No.
333-_____________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[COMPANY'S COUNSEL]
A-1
EXHIBIT D
AGREEMENT
AGREEMENT dated as of June __, 2001 by and among JLM Industries,
Inc., a Delaware corporation (the "COMPANY"), Phoenix Enterprises LLC
("PHOENIX") and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), who together with Phoenix,
are collectively referred to as the "HOLDERS" and individually as a "HOLDER".
WHEREAS, the parties hereto desire to enter into this agreement (the
"AGREEMENT");
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
REPRESENTATIONS
Section 1.1 REPRESENTATIONS OF THE COMPANY. The Company hereby
represents to the Holders that (i) it has the full legal right, power and
authority to enter into and perform this Agreement, (ii) the execution and
delivery of this Agreement by the Company has been duly authorized by the
Company, and (iii) this Agreement constitutes the legal, 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, fraudulent transfer or
similar laws relating to, or affecting the enforcement of creditor's rights
generally and by general equitable principles (regardless of whether enforcement
is sought in equity or at law).
Section 1.2 REPRESENTATIONS OF THE HOLDERS. Each Holder hereby
represents to the Company that (i) such Holder has the full legal right, power
and authority to enter into and perform this Agreement, (ii) the execution and
delivery of this Agreement by Phoenix has been duly authorized by Phoenix, and
(iii) this Agreement constitutes, or shall constitute when executed and
delivered at or prior to Closing, a valid and binding obligation of the Holders
enforceable against the Holders in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws relating to, or
affecting the enforcement of creditor's rights generally and by general
equitable principles (regardless of whether enforcement is sought in equity or
at law).
ARTICLE II
STANDSTILL PROVISIONS
Section 2.1 STANDSTILL PROVISIONS. (a) During the Term (as defined
below), each Holder will not, and will cause each of its Affiliates (as defined
below) not to, either alone or as part of a "group" (as such term is used in
Section 13d-5 (as such rule is currently in effect) of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), directly or indirectly:
(i) make, or in any way participate, directly or
indirectly, in any "solicitation in opposition" (as such term is defined or used
in Regulation 14A under the Exchange Act);
(ii) initiate or propose any "shareholder proposals" for
submission to a vote of stockholders, whether by action at a stockholder meeting
or by written consent with respect to the Company, as such term is used in
Section 14(a) of the Exchange Act;
(iii) form, join or in any way participate in a group to
take any actions otherwise prohibited by the terms of this Agreement; or
(iv) enter into any arrangements or understandings with
any third party with respect to any of the foregoing.
(b) For purposes of this Agreement, the term "Affiliate" shall
have meaning given to such term under Rule 405 of the Securities Act of 1933, as
amended.
ARTICLE III
MISCELLANEOUS
Section 3.1 FEES AND EXPENSES. The Company shall pay the fees and
expenses of all attorneys, accountants and other advisors, if any, of the
parties hereto and all other expenses incurred by such party incident to the
negotiation, preparation, execution and delivery of this Agreement.
Section 3.2 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect.
Section 3.3 SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION. (a) The
parties acknowledge and agree that irreparable damage would occur in the event
that any provision of this Agreement was not preformed in accordance with its
specific terms or was otherwise breached, and further acknowledge and agree that
money damages are an inadequate remedy for the breach of this agreement because
of the difficulty of ascertaining the amount of damage that would be suffered in
the event of such breach. The parties accordingly agree that the other party
shall be entitled to obtain specific performance of any provision of this
Agreement and injunctive or other equitable relief to prevent or cure breaches
of any provision of this Agreement, this being in addition to any other remedy
to which they may be entitled by law or equity.
(b) Each of the parties hereto irrevocably and unconditionally
submits to the exclusive jurisdiction of (i) the state courts of the State of
New York located in New York City and (ii) the United States District Court for
the Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the parties hereto agrees to commence any action, suit or
-2-
proceeding relating hereto in the state courts of the State of New York located
in New York City, or if such suit, action or other proceeding may not be brought
in such court for jurisdictional reasons, in the United States District Court
for the Southern District of New York. Each party hereto further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party's respective address set forth below shall be effective service of
process for any action, suit or proceeding brought in any such court with
respect to any matters to which it has submitted to jurisdiction in this Section
3.3(b). Each party hereto irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in the state courts of the
State of New York located in New York City and the United States District Court
for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
Section 3.4 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the matters covered hereby
and this Agreement may be amended only by an agreement in writing executed by
the parties hereto.
Section 3.5 NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (i)
when personally delivered or delivered by telecopy on a business day during
normal business hours with confirmation postmarked the same day, at the address
or number designated below or (ii) on the business day following the date of
mailing by overnight courier, fully prepaid, addressed to such address. The
addresses for such communications shall be:
If to the Company:
JLM Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Holland & Knight LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-3-
If to any Holder to:
Phoenix Enterprises LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ Marks & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may from time to time change its address for notices under this
Section 3.5 by giving at least 10 days notice of such changed address to the
other parties hereto.
Section 3.6 WAIVERS. No waiver by either party of any breach of any
provision hereof shall be deemed to be a continuing waiver in the future thereof
or a waiver of any other provision hereof; nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 3.7 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 3.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
legal representatives. The parties shall not assign this Agreement or any rights
hereunder without the prior written consent of the other parties hereto.
Section 3.9 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflict of laws.
Section 3.10 TERMINATION. The term of this Agreement shall commence
on the date hereof and expire on June 28, 2003 (the "TERM"), whereupon this
Agreement, except for Article III hereof, shall terminate and have no further
force or effect.
-4-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
or have caused this Agreement to be duly executed by their respective authorized
officers as of the date hereof.
JLM INDUSTRIES, INC.
By:
-----------------------------------------
Name:
Title:
PHOENIX ENTERPRISES LLC
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-5-
EXHIBIT E
[OPINION OF HOLLAND & KNIGHT LLP]
June __, 2001
To the Investors listed on Schedule A attached hereto
c/o Phoenix Enterprises
LLC ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to JLM Industries, Inc., a Delaware
corporation (the "Company"), in connection with the Purchase Agreement (the
"Purchase Agreement") dated as of May __, 2001, by and among the Company and the
Investors. This opinion letter is being delivered to you pursuant to Section
4.3(f) of the Purchase Agreement. Capitalized terms not otherwise defined in
this opinion letter have the meaning given to them in the Purchase Agreement.
In connection with the opinions expressed herein, we have made such
examination of matters of law and fact as we have considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied upon the representations and warranties
contained in and made by the Company pursuant to the Purchase Agreement and upon
certificates and statements of government officials and officers of the Company.
We have also examined originals or copies of the Transaction Documents and such
other corporate documents or records of the Company as we have considered
appropriate for the opinions expressed herein. We have assumed for the purposes
of this letter the genuineness of all signatures other than those of the
officers of the Company, the legal capacity of natural persons, the authenticity
of the documents submitted to us as originals, the conformity to the original
documents of all documents submitted to us as certified, facsimile or
photostatic copies and the authenticity of the originals of such copies.
In rendering this opinion we have also assumed that the Transaction
Documents have been duly and validly executed and delivered by you, that you
have the power to enter into and perform all of your obligations thereunder, and
that the Transaction Documents constitute valid, legal, binding and enforceable
obligations upon you; and (B) that the representations and warranties made in
the Purchase Agreement by you are true and correct. We are members of the Bar of
the State of New York and we express no opinion as to the laws of any
jurisdiction other than the laws of the State of New York, the federal laws of
the United States of America and the Delaware General Corporation Law (the
"DGCL").
Based upon the foregoing and subject to the limitations, exceptions,
qualifications and assumptions expressly set forth herein, we are of the opinion
that:
June __, 2001
Page 2
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. The Company has the requisite
corporate power and corporate authority to own its properties and to conduct its
business as, to our knowledge, it is presently conducted. The Company is
qualified to do business in every jurisdiction in which the nature of the
business presently conducted, or property owned, by it makes such qualification
necessary except for jurisdictions in which the failure to be so qualified would
not have a Material Adverse Effect.
2. The Company has the requisite corporate power and authority to
execute, deliver and consummate the transactions contemplated by the Transaction
Documents. Each of the Transaction Documents has been duly and validly
authorized by the Company, duly executed and delivered by an authorized officer
of the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable by you against the Company in accordance with its terms.
3. The execution, delivery and performance of each of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated therein do not (i) violate any provision of the
Certificate of Incorporation or Bylaws of the Company, (ii) to our knowledge
after due inquiry, 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, acceleration or cancellation of, any material
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company is a party or by which
the Company or any of its assets are bound, (iii) to our knowledge after due
inquiry, create or impose a lien, charge or encumbrance on any property of the
Company under any agreement or any commitment to which the Company is a party or
by which the Company is bound or by which any of its respective properties or
assets are bound, or (iv) to our knowledge after due inquiry, result in a
violation of any Federal, state, local or foreign statute, 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 asset of the Company or any of its subsidiaries are bound or
affected. 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 the Transaction
Documents except as expressly set forth therein, or to issue and sell the Common
Stock to be purchased by the Investors hereunder, or the Warrants or the Warrant
Shares in accordance with the terms thereof.
4. To our knowledge after due inquiry, no shares of Common Stock are
entitled to preemptive rights, or except as provided on Schedule 2.1(c) to the
Purchase Agreement, registration rights, and except as provided on Schedule
2.1(c) to the Purchase Agreement, there are no outstanding options, warrants,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into any shares of capital
stock of the Company. To our knowledge after due inquiry, except as set forth on
Schedule 2.1(c) of the Purchase Agreement, there are no contracts, commitments,
June __, 2001
Page 3
understandings or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company. To our knowledge
after due inquiry, except as set forth on Schedule 2.1(c) to the Purchase
Agreement, the Company is not a party to any agreement granting registration or
anti-dilution rights to any person with respect to any of its equity or debt
securities.
5. The Common Stock and Warrants to be issued under this Agreement
have been duly authorized by all necessary corporate action and, when issued and
paid for in accordance with the terms hereof, the Common Stock and Warrants
shall be validly issued and outstanding, fully paid and nonassessable, free and
clear of all liens, encumbrances, and rights of first refusal of any kind, other
than resale restrictions imposed by Federal and state securities laws. The
Warrant Shares issuable in accordance with the terms of the Warrants have been
duly authorized by all necessary corporate action and when issued in accordance
with the terms of the Warrants, such shares will be validly issued and
outstanding, fully paid and nonassessable, and the Holders shall be entitled to
all rights accorded to a holder of Common Stock.
6. Assuming (i) the accuracy of the representations provided by the
Investors in the Purchase Agreement and (ii) that the Company has complied with
the requirements of Section 4(2) of the Securities Act (and the provisions of
Regulation D promulgated thereunder), the issuance and sale of the Common Stock
sold pursuant to the Purchase Agreement is exempt from registration under the
Securities Act by reason of Regulation D promulgated thereunder.
7. The Common Stock of the Company is registered pursuant to Section
12(g) of the Exchange Act, and, to our knowledge after due inquiry, the Company
has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a), 14 or 15(d) of the Exchange Act (all of the foregoing including filings
incorporated by reference therein being referred to herein as the "Commission
Documents").
8. The Company is eligible to file the Registration Statement (as
defined in the Registration Rights Agreement) on Form S-3 under the Securities
Act and rules promulgated thereunder, and Form S-3 is permitted to be used for
the transactions contemplated by the Registration Rights Agreement and thereby
under the Securities Act and rules promulgated thereunder.
We have not considered and have expressed no opinion with respect to
any of the following:
(i) the effect of bankruptcy, insolvency, moratorium or other
similar laws affecting the rights or remedies of creditors generally, and the
effect of general principles of equity, whether considered in a proceeding at
law or in equity, upon the enforceability of the Transaction Documents and the
availability of equitable relief; or
June __, 2001
Page 4
(ii) the enforceability of provisions contained in the Transaction
Documents requiring indemnification to the extent otherwise contrary to the
public policy of state or federal law.
Holland & Knight LLP
SCHEDULE A
EXHIBIT F
[RESOLUTIONS TO BE ADOPTED
BY THE BOARD OF DIRECTORS OF
JLM INDUSTRIES, INC.]
RESOLVED, that the form, terms and provisions of:
(a) the Purchase Agreement, substantially in the form presented to
the Board on the date hereof, by and among the Company and the
Investors (as defined therein) pursuant to which the Company
will issue and sell 2,173,913 shares (the "Shares") of the
Company's common stock (the "Common Stock") to the Investors,
and warrants to purchase 425,000 shares of Common Stock (the
"Purchase Agreement");
(b) the draft Registration Rights Agreement, substantially in the
form presented to the Board on the date hereof, by and among
the Company, the Investors and the Warrant Holders (as defined
therein) pursuant to which registration rights are granted to
the Investors and the Warrant Holders with respect to the
Registrable Securities (as defined therein) (the "Registration
Rights Agreement");
(c) the draft Warrant, substantially in the form presented to the
Board on the date hereof, by and among the Company and the
Warrant Holders pursuant to which Phoenix Enterprises LLC
("Phoenix") and/or its designees are entitled to subscribe for
and purchase warrants to purchase up to 425,000 shares of
Common Stock (the "Warrant"); and
(d) the draft escrow agreement, substantially in the form
presented to the Board on the date hereof, by and among the
Company, the Investors and the escrow agent named therein (the
"Escrow Agent") pursuant to which the Investors purchasing the
Common Stock pursuant to the Purchase Agreement shall deposit
funds with the Escrow Agent (the "Escrow Agreement," and
together with the Purchase Agreement, Registration Rights
Agreement and Warrant, collectively, the "Principal
Transaction Documents");
be, and the same hereby are, in all respects ratified, authorized and
approved, and that the Chief Executive Officer, President or Chief
Financial Officer of the Company be, and they hereby are, authorized, in
the name and on behalf of the Company, to execute and deliver the
Principal Transaction Documents, with such changes therein or additions
thereto as may be approved by the Chief Executive Officer, President or
Chief Financial Officer of the Company, such approval to be conclusively
evidenced by the execution thereof; and be it further
RESOLVED, that pursuant to the terms of the Principal Transaction
Documents the Company is hereby authorized to issue: (i) the Shares to the
investors listed in the Purchase Agreement (the "Investors") at a purchase
price of US$1.15 per share and that all of such Shares issued pursuant
thereto shall be validly issued, fully paid and nonassessable and (ii)
warrants to Phoenix and/or its designee to purchase 425,000 shares of
Common Stock at an exercise price of $1.15 per share (the "Warrants") and
the shares of Common Stock underlying such Warrants, when issued pursuant
thereto, shall be validly issued, fully paid and nonassessable; and be it
further
RESOLVED, that there be reserved for issuance at all times prior to
the expiration of the Warrants such number of shares of Common Stock equal
to or exceeding the maximum number of shares issuable upon the exercise of
the Warrants (including any adjustments to such number of shares issued
pursuant to the terms thereof); and be it further
RESOLVED, that the Chief Executive Officer, President and Chief
Financial Officer of the Company and any other appropriate executive
officer of the Company be, and each of them hereby is, authorized,
empowered and directed, from time to time, to take such additional action
and to execute, certify, deliver, file and record with the appropriate
judicial, public and governmental authorities or any other persons or
entities, such additional agreements, documents and instruments
(including, without limitation, any amendment or extension of any of the
Principal Transaction Documents and any waiver or consent in connection
with any of the Principal Transaction Documents) as may be necessary or
appropriate to implement the provisions of the foregoing resolutions and
the Principal Transaction Documents and to consummate the transactions
contemplated thereby, the execution, certification, delivery, filing and
recording of such agreements, documents and instruments and the taking of
such action to be the conclusive evidence of the authority therefore; and
be it further
RESOLVED, that the Chief Executive Officer, President and Chief
Financial Officer, and any other appropriate executive officer of the
Company be, and each of them hereby is, authorized and directed to prepare
a Registration Statement on Form S-3 or other permissible form (the
"Registration Statement"), pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), and the applicable rules and regulations
of the Securities and Exchange Commission (the "SEC") promulgated
thereunder, with respect to the registration and sale to the Registrable
Securities; and be it further
RESOLVED, that the Chief Executive Officer, President and Chief
Financial Officer, and any other appropriate executive officer of the
Company be, and each of them hereby is, authorized to take any and all
further action necessary or appropriate in connection with the
Registration Statement, including the execution and filing of the
Registration Statement with the SEC and Nasdaq and all pre-effective and
post-effective amendments, and all exhibits, documents and
2
instruments related thereto, as such officer shall deem necessary or
appropriate in order for the Registration Statement to be declared
effective by the SEC under the Securities Act and remain effective
thereafter; and be it further
RESOLVED, that ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ be, and each of them
hereby is, authorized to act as true and lawful attorneys-in-fact for each
of the members of the Board for the purpose of executing any and all
amendments to the Registration Statement, as more fully described in the
power of attorney section of the Registration Statement; and be it further
RESOLVED, that any appropriate executive officer of the Company be,
and each of them hereby is, in the name and on behalf of the Company,
authorized to file such applications, registrations or qualifications for
the issuance, offer and sale of the Registrable Securities in compliance
with the U.S. "blue sky" or similar state securities laws and regulations
in such jurisdictions as may be necessary in connection with the
Registration Statement and that the Board does hereby adopt, confirm and
approve in their entirety all resolutions required by each of such state
"blue sky" or similar state securities regulatory authority in connection
with the qualification or registration of such shares in all jurisdictions
in which they are to be so offered and sold; and be it further
RESOLVED, that any appropriate executive officer be, and each of
them hereby is, authorized to incur and bear, on behalf of and for the
account of the Company, all such fees, costs, expenses and disbursements
as may be necessary or appropriate to implement the foregoing resolutions,
including without limitation, the preparation, printing and filing of the
Registration Statement and all pre- and post-effective amendments and
supplements thereto; the inclusion for quotation of the Shares through
Nasdaq; and the qualification or registration of such shares under the
"blue sky" and similar securities laws of various jurisdictions; and be it
further
RESOLVED, that the form, terms and provisions of the retainer letter
dated March 27, 2001, between the Company and Phoenix Enterprises LLC (the
"Retainer Letter") be, and the same hereby is, ratified and approved in
all respects, and that all actions taken by the Chief Executive Officer,
President or Chief Financial Officer or any other appropriate executive
officer of the Company in order to implement the provisions of such
Retainer Letter are hereby ratified in all respects and any such further
actions to be taken by the Chief Executive Officer, President or Chief
Financial Officer or any other appropriate executive officer to implement
the provisions of such Retainer Letter are in all respects authorized and
approved; and be it further
RESOLVED, that the issuance of warrants to purchase up to 250,000
shares of Common Stock, at an exercise price of $1.43 per share, to
Phoenix and its designees pursuant to the Retainer Letter is hereby
ratified in all respects and that all of such warrants and the shares of
Common Stock underlying such
3
warrants issued pursuant thereto shall be deemed validly issued, fully
paid and nonassessable; and be it further
RESOLVED, that any appropriate executive officer of the Company be,
and each of them hereby is authorized, empowered and directed, in the name
and on behalf of the Company, to take such action and to make, execute,
deliver and file or cause to be filed, such agreements, documents,
payments, applications, instruments, and certificates, and to take such
other and further actions, in the name and on behalf of the Company, as
they, or any of them, may deem to be proper, necessary, desirable or
appropriate to effectuate the purpose and intent of the foregoing
resolutions, the authority for the taking of such action and the making,
execution, delivery or filing of such agreements, documents, payments,
applications, instruments or certificates to be conclusively evidenced
thereby.
4
