EXHIBIT 4.2
COMMON STOCK PURCHASE AGREEMENT
BETWEEN
DIVERSIFIED PRODUCT INSPECTIONS, INC.
(THE COMPANY)
AND
THOMSON KERNAGHAN & CO. LIMITED, AS AGENT
(THE PURCHASER)
DATED AS OF JULY 13, 2000
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COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is made and entered
into as of July 13, 2000 (the "Effective Date"), between Diversified Product
Inspections, Inc. (the "Company"), a Florida corporation, and Thomson Kernaghan
& Co. Limited, as Agent (the "Purchaser").
Background
The Company has authorized the issuance, sale, and delivery of 25,000
shares (the "Shares") of the Company's Common Stock, par value $0.0001 ("Common
Stock") at a price per Share of $2.00, in currency of the United States of
America, for a total purchase price of $50,000. The Purchaser wishes to purchase
the Shares upon the terms and conditions stated in this Agreement. The Purchaser
is purchasing the Shares in reliance upon the exemption from the registration
requirements of Section 5 of the U.S. Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the safe harbor afforded by Rule 903
promulgated by the U.S. Securities and Exchange Commission (the "SEC").
In connection with the issuance and sale of the Shares to the Purchaser,
the Company has authorized the issuance and delivery of (i) a warrant in the
form of Exhibit C attached to this Agreement (the "Purchaser's Warrant") to the
Purchaser to purchase 7,500 shares of Common Stock at $0.01 per share, and (ii)
a warrant in the form of Exhibit D attached to this Agreement (the "Agent's
Warrant") to Thomson Kernaghan & Co. Limited, to purchase 5,000 shares of Common
Stock at $0.01 per share.
Agreement
For and in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Purchaser hereby agree as
follows:
Section 1. Class A Preferred.
Section 1.1. Issuance and Sale of Class A Preferred and Warrants
The Company agrees (i) to issue and sell the Shares to the Purchaser and
the Purchaser agrees to purchase the Shares from the Company, at the Closing,
for the Purchase Price of US$50,000; (ii) to issue and deliver the Purchaser's
Warrant to the Purchaser, and (iii) to issue and deliver the Agent's Warrant to
the Agent.
Section 1.2. Closing.
The closing of the purchase and sale of the Shares (the "Closing") shall
take place at the offices of Thomson Kernaghan & Co. Limited, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, at 3:00 p.m., Toronto time, on
Wednesday, July 13, 2000 (the "Closing Date"), or on such other date or such
other time or place as the parties may agree.
Section 1.3 Deliveries at Closing
At the Closing the Company shall deliver to Purchaser:
(a) this Agreement, executed by the Company;
(b) a certificate for the Shares, registered in the Purchaser's name, free
and clear of any claims, and containing a legend complying with the requirements
of SEC Rule 903(b)(3)(iii)(B)(3);
(c) the Purchaser's Warrant;
(c) the Registration Rights Agreement (defined in Section 4.9 below),
executed by the Company, in substantially the form of Exhibit B hereto;
(d) the opinion of Mintmire & Associates, legal counsel to the Company, in
substantially the form of Exhibit A hereto; and
At the Closing, the Company shall also deliver the Agent's Warrant to the
Agent.
Section 2. Purchaser's Representations and Warranties
The Purchaser represents and warrants with respect to only itself that:
Section 2.1. Investment Purpose
The Purchaser is acquiring the Shares, for the account for of certain
"accredited investors under Ontario law who are not "U.S. person" as defined by
SEC Rule 902(k), and who are acquiring the Shares investment and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, in the United States, on to or for the account of a U.S. person;
provided however, that by making the representations herein, the Purchaser does
not agree to hold any Shares for any minimum or other specific term. The
Purchaser acknowledges that the Shares may not be resold in the United States,
or to or for the account of a U.S. person as defined by SEC Rule 902(k), except
pursuant to an effective registration statement under the Securities Act or
after the expiration of the one-year distribution compliance period provided in
SEC Rule 903(b)(3)(iii)(A).
Section 2.2. Accredited Purchaser Status
The Purchaser is an "accredited investor" as that term is defined in Rule
501(a)(3) of Regulation D of the SEC.
Section 2.3. Reliance on Regulation S Exemption
The Purchaser understands that the Shares are being offered and sold to it
in reliance on the exemption from the registration requirements of Section 5 of
the Securities Act for offshore transactions as defined in SEC Rule 902(h), and
that the Company is relying in part upon the truth and accuracy of, and the
Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments, and understandings of the Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Purchaser to acquire such Shares. With respect to that exemption, the Purchaser
further represents and warrants to the Company that:
(a) The Purchaser is not a U.S. Person as defined in SEC Rule 902(k).
(b) The offer to sell the Shares to the Purchaser was not made in the
United States, and was made in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
(c) The Purchaser's buy order for the Shares was made outside the United
States, and was made in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
(d) The Purchaser has complied with all of the conditions required of it by
SEC Rule 903(b)(3).
Section 2.4. Information
The Purchaser and its advisors, if any, have been furnished with all
materials relating to the proposed business, financial condition, and operations
of the Company and materials relating to the offer and sale of the Shares, which
have been requested by the Purchaser. The Purchaser and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by the Purchaser
or its advisors, if any, or its representatives shall modify, amend, or affect
the Purchaser's right to rely on the Company's representations and warranties
contained in Section 3 below. The Purchaser understands that its investment in
the Shares involves a high degree of risk. The Purchaser has sought such
accounting, legal, and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Shares.
Section 2.5. No Governmental Review
The Purchaser understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares, or the fairness or suitability of
the investment in the Shares, nor have such authorities passed upon or endorsed
the merits of the offering of the Shares.
Section 2.6. Authorization Enforcement
This Agreement has been duly and validly authorized, executed, and
delivered on behalf of the Purchaser and is a valid and binding agreement of the
Purchaser enforceable in accordance with its terms, subject as to enforceability
to general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
Section 2.7. Organization
The Purchaser is a limited partnership organized under the laws of Bermuda.
Section 2.8. No Scheme to Evade Registration.
Purchaser represents and warrants to the Company that the acquisition of
the Shares is not a transaction (or any element of a series of transactions)
that is part of a plan or scheme by the Purchaser to evade the registration
provisions of the Securities Act.
Section 3. Representations And Warranties Of The Company
The Company represents and warrants to the Purchaser that:
Section 3.1. Organization and Qualification
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida, and has the requisite corporate
power to own its properties and to carry on its business as now being conducted.
The Company is not qualified as a foreign corporation to do business in any
other jurisdiction. The Company has no subsidiaries.
Section 3.2. Authorization, Enforcement, Compliance with Other Instruments.
(a) The Company has the requisite corporate power and authority to enter
into and perform this Agreement and to issue the Shares;
(b) the execution and delivery of this Agreement by the Company, and the
consummation by it of the transactions contemplated hereby, including without
limitation the issuance of the Shares, have been duly authorized by the
Company's Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders;
(c) this Agreement has been duly executed and delivered by the Company and
the persons signing on behalf of the Company have full power and authority to do
so; and
(d) this Agreement constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation, or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies.
Section 3.3. Capitalization
Immediately prior to Closing, the authorized capital stock of the Company
consisted of 50,000,000 shares of Common Stock, of which 11,116,900 shares are
issued and outstanding and 10,000,000 shares of Preferred Stock, none of which
is outstanding. No shares of the Company's capital stock are subject to
preemptive rights or any other similar rights.
Section 3.4. Issuance of Shares
The Shares are duly authorized and, upon issuance in accordance with the
terms hereof, shall be validly issued, fully paid, and nonassessable, are free
from all taxes, liens, and charges with respect to the issue thereof and are
entitled to the rights and preferences set forth in the Shares. The Shares are
"restricted securities" as defined by SEC rules, and may be transferred,
assigned or resold by the Purchaser only in accordance with the Securities Act
and the SEC rules promulgated thereunder.
Section 3.5. No Conflicts
The execution, delivery, and performance of this Agreement and the
Acquisition Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby and thereby, will not (a) result in a violation
of the Certificate of Incorporation, any Certificate of Designation applicable
to any Preferred Stock of the Company, or the Bylaws of the Company or (b)
conflict with, constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration, or cancellation of, any agreement,
indenture, or instrument to which the Company is a party, or result in a
violation of any law, rule, regulation, order, judgment, or decree (including
federal and state securities laws and regulations) applicable to the Company or
by which any property or asset of the Company is bound or affected. The Company
is not in violation of any term of, or in default under, its Certificate of
Incorporation or Bylaws, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree, or order or any statute,
rule, or regulation applicable to the Company. The business of the Company is
not being conducted and shall not be conducted in violation of any law,
ordinance, or regulation of any governmental entity. Except as specifically
contemplated by this Agreement, the Acquisition Agreement and as required under
the Securities Act and any applicable state securities laws, the Company is not
required 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, and perform any of its obligations under or contemplated by
this Agreement and the Acquisition Agreement in accordance with the terms hereof
or thereof. All consents, authorizations, orders, filings, and registrations
which the Company is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the date hereof. The Company is unaware
of any facts or circumstances which might give rise to any of the foregoing.
Section 3.6. Financial Statements
The Company's unaudited balance sheet at March 31, 2000, and the related
statement of profit and loss for the three (3) month period then ended, were
prepared in accordance with generally accepted accounting principles, are true,
correct and complete in all material respects, and fairly present the Company's
financial position at that date and the results of its operations for the three
(3) month period then ended. The Company has not engaged in any transaction,
maintained any bank account, or used any of the funds of the Company that are
not reflected in the normally maintained books and records of the Company. No
other information provided by or on behalf of the Company to the Purchaser which
is not included in the Financial Statements, including, without limitation,
information referred to in Section 2.4 of this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made, not misleading.
Section 3.7. Absence of Certain Changes
Since March 31, 2000, the date of the Company's opening balance sheet,
there has been no material adverse change and no material adverse development in
the business, properties, operations, financial condition, results of
operations, or prospects of the Company. The Company has not taken any steps,
and does not currently expect to take any steps, to seek protection pursuant to
any bankruptcy law nor does the Company have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings.
Section 3.8. Absence of Litigation
There is no action, suit, proceeding, inquiry, or investigation before or
by any court, public board, government agency, self-regulatory organization, or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company or the Common Stock, in which an unfavorable decision,
ruling or finding would (a) have a material adverse effect on the transactions
contemplated hereby, (b) adversely affect the validity or enforceability of, or
the authority or ability of the Company to perform its obligations under this
Agreement, or any of the other documents contemplated herein, or (c) have a
material adverse effect on the business, operations, properties, financial
condition, or results of operation of the Company.
Section 3.9. Purchase of Shares
The Company acknowledges and agrees that the Purchaser is acting solely in
the capacity of an arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement or the Acquisition
Agreement, or the transactions contemplated herein or therein. The Company
further represents to the Purchaser that the Company's decision to enter into
this Agreement has been based solely on the independent evaluation by the
Company and its representatives.
Section 3.10. No Undisclosed Events, Liabilities, Developments, or
Circumstances
No event, liability, development, or circumstance has occurred or exists,
or is contemplated to occur, with respect to the Company or its businesses,
properties, prospects, operations, or financial condition, which could be
material but which has not been publicly announced or disclosed in writing to
the Purchaser.
Section 3.11. No General Solicitation
Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Shares.
Section 3.12. No Integrated Offering
Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of the Shares under the Securities Act or cause this
offering of the Shares to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable stockholder approval
provisions.
Section 3.13. Internal Accounting Controls
The Company maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (a) transactions are executed in accordance
with management's general or specific authorizations, (b) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (c) access to assets is permitted only in accordance with
management's general
or specific authorization, and (d) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
Section 3.14. No Materially Adverse Contracts, Etc.
The Company is not subject to any charter, corporate, or other legal
restriction, or any judgment, decree, order, rule, or regulation which in the
judgment of the Company's officers has, or is expected in the future to have, a
material adverse effect on the business, properties, operations, financial
condition, results of operations, or prospects of the Company. The Company is
not a party to any contract or agreement which in the judgment of the Company's
officers has, or is expected to have, a material adverse effect on the business,
properties, operations, financial condition, results of operations, or prospects
of the Company.
Section 3.15. Tax Status
The Company has made or filed all federal and state income and all other
tax returns, reports, and declarations required by any jurisdiction to which it
is subject (unless and only to the extent that the Company has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes), and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports, and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports,
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
Section 3.16. Certain Transactions
Except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties, none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers, and directors),
including any contract, agreement, or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director, or such employee or, to the knowledge of the Company, any corporation,
partnership, trust, or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee, or
partner.
Section 3.17. Fees and Rights of First Refusal
The Company is not obligated to offer the securities offered hereunder on a
right of first refusal basis or otherwise to any third parties including, but
not limited to, current or former shareholders of the Company, underwriters,
brokers, agents, or other third parties. The Company is not obligated to pay any
commission or fee in connection with the issuance and sale of the Shares for
which the Purchaser is or may become liable.
Section 3.18. Regulation S Exemption
The Company understands that the Purchaser is purchasing the Shares in
reliance on the exemption from the registration requirements of Section 5 of the
Securities Act for offshore transactions as defined in SEC Rule 902(h), and that
the Purchaser is relying in part upon the truth and accuracy of, and the
Company's compliance with, the representations, warranties, agreements,
acknowledgments, and understandings of the Company set forth herein in order to
determine the availability of such exemptions and the eligibility of the Company
to issue and sell the Shares to the Purchaser without having complied with those
registration requirements. With respect to that exemption, the Company further
represents and warrants to the Purchaser that:
(a) The Company has not offered any of the Shares to a U.S. Person (as
defined in SEC Rule 902(k)) or to a person in the United States.
(b) The offer and sale of the Shares to the Purchaser is being made in an
offshore transaction as defined in SEC Rule 902(h).
(c) The Company has not engaged in any directed selling efforts, as defined
in SEC Rule 902(c), with respect to the Shares.
(d) The Company has complied with all of the conditions required of it
under SEC Regulation S.
Section 4. Covenants
Section 4.1. Best Efforts
Each party shall use its best efforts timely to satisfy each of the
conditions to be satisfied by it as provided in Sections 5 and 6 of this
Agreement.
Section 4.2. Compliance with Regulation S
Each party shall comply with all of the terms of SEC Rule 903(b)(3)
required of it with respect to the Shares.
Section 4.3. Reporting Status
The Company is a "reporting company" under the Securities and Exchange Act
of 1934, as amended (the "Exchange Act"), as defined by the rules and
regulations of the SEC and the NASD, and shall timely file all reports and other
information required by it to be filed with the SEC under the Exchange Act in
order to remain a reporting company, for so long as the Purchaser is the holder
or beneficial owner of any Common Stock.
Section 4.4. Use of Proceeds
The Company will use the proceeds from the sale of the Shares for general
working capital purposes.
Section 4.5 Listings
The Company shall secure and maintain the listing of its Common Stock
(including the Shares), on the OTC Bulletin Board as soon as is practicable, and
upon the NASDAQ Small Cap Market as soon thereafter as it is eligible therefor.
The Company shall promptly provide to the Purchaser copies of any notices it
receives regarding the eligibility of the Common Stock for trading in the
over-the-counter market.
Section 4.6. Expenses
The Company shall pay the Purchaser's expenses, including reasonable
attorney's fees, incurred in connection with this Agreement.
Section 4.7. Corporate Existence
So long as the Purchaser is the holder of 1% or more of the outstanding
Common Stock, the Company shall not directly or indirectly consummate any
merger, reorganization, restructuring, consolidation, sale of all or
substantially all of the Company's assets, or any similar transaction or related
transactions (each such transaction, a "Sale of the Company") except if the
surviving or successor entity in such transaction is a publicly traded
corporation whose Common Stock is listed for trading on the New York Stock
Exchange, Inc., the American Stock Exchange, or the NASDAQ National Market.
Section 4.8. Transactions With Affiliates
So long as the Purchaser is the holder of 1% or more of the outstanding
Common Stock, the Company shall not, and shall cause each of its subsidiaries
not to, enter into, amend, modify, or supplement, or permit any subsidiary to
enter into, amend, modify, or supplement any agreement, transaction, commitment,
or arrangement with any of its or any subsidiary's officers, directors, persons
who were officers or directors at any time during the previous two years,
stockholders who beneficially own 5% or more of any class of the Company's
capital stock, or affiliates, or with any individual related by blood, marriage,
or adoption to any such individual or with any entity in which any such entity
or individual owns a 5% or more beneficial interest (each, a "Related Party"),
except for (i) transactions contemplated by the Acquisition Agreement, (ii)
customary employment arrangements and benefit programs on reasonable terms,
(iii) any agreement, transaction, commitment, or arrangement on an arms-length
basis on terms no less favorable than terms which would have been obtainable
from a person other than such Related Party, (vi) any agreement, transaction,
commitment, or arrangement which is approved by a majority of the disinterested
directors of the Company, for purposes hereof, any director who is also an
officer of the Company or any subsidiary of the Company shall not be
disinterested director with respect to any such agreement, transaction,
commitment, or arrangement. "Affiliate" for purposes hereof means, with respect
to any person or entity, another person or entity that, directly or indirectly,
(1) has a 5% or more equity interest in that person or entity, (2) has 5% or
more common ownership with that person or entity, (3) controls that person or
entity, or (4) share common control with that person or entity. "Control" or
"controls" for purposes hereof means that a person or entity has the power,
direct or indirect, to conduct or govern the policies of another person or
entity.
Section 4.9. Registration Rights
As soon as is practicable after the date of this Agreement, the Company
shall file a registration statement (the "Registration Statement") with the SEC
to register the resale of the Shares, and the issuance and resale of the Common
Stock underlying the Purchaser's Warrant and the Agent's Warrant and shall use
its best efforts to cause the Registration Statement to become effective, all as
provided in the Registration Rights Agreement (the "Registration Rights
Agreement") attached as Exhibit B to this Agreement.
Section 5. Conditions To The Company's Obligation To Sell
The obligation of the Company hereunder to issue and sell the Shares to The
Purchaser at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
(a) The Purchaser shall have executed this Agreement and delivered the same
to the Company.
(b) The Purchaser shall have delivered the Purchase Price for the Shares to
the Company.
(c) The representations and warranties of the Purchaser shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time, and the Purchaser shall have performed,
satisfied, and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied, or
complied with by the Purchaser at or prior to the Closing Date.
Section 6. Conditions To The Purchaser's Obligation To Purchase
The obligation of The Purchaser hereunder to purchase the Shares at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the
Purchaser's sole benefit and may be waived by the Purchaser at any time in its
sole discretion:
(a) The Company shall have executed this Agreement.
(b) The Company shall have executed the Registration Rights Agreement.
(c) The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied, and complied in all material respects with the covenants,
agreements, and conditions required by this Agreement to be performed,
satisfied, or complied with by the Company at or prior to the Closing Date.
(d) The Purchaser shall have received the opinion of the Company's counsel
dated as of the Closing Date, in form, scope, and substance reasonably
satisfactory to the Purchaser and in substantially the form of Exhibit A
attached hereto.
Section 7. Indemnification
In consideration of the Purchaser's execution and delivery of this
Agreement and acquiring the Shares hereunder and in addition to all of the
Company's other obligations under this Agreement, the Company shall defend,
protect, indemnify, and hold harmless the Purchaser, and all of its officers,
directors, employees, and agents (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities, and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement of the
Acquisition Agreement, or any other certificate, instrument, or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement, or
obligation of the Company contained in this Agreement, or (c) any cause of
action, suit, or claim brought or made against such Indemnitee and arising out
of or resulting from the execution, delivery, performance, or enforcement of
this Agreement, or any other instrument, document, or agreement executed
pursuant hereto by any of the Indemnities, any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Shares, or the status of the Purchaser or holder of the Shares,
as a stockholder in the Company. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
Section 8. General Provisions
Section 8.1. Governing Law
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Florida; provided, however, (i) that if any provision of
this Agreement is unenforceable under the laws of the State of Florida, but is
enforceable under the laws of the Province of Ontario, Canada, then such
provision shall be governed by and interpreted in accordance with the laws of
the Province of Ontario; and (ii) that the exemption from the registration
requirements of the Securities Act for the sale shall be governed by SEC Rule
903. The parties agree that the courts of the Province of Ontario, Canada, shall
have exclusive jurisdiction and venue for the adjudication of any civil action
between them arising out of relating to this Agreement, and hereby irrevocably
consent to such jurisdiction and venue.
Section 8.2. Counterparts
This Agreement may be executed in two or more identical counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause four (4)
additional original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery hereof.
Section 8.3. Headings
The headings of this Agreement are for convenience of reference and shall
not form part of, or affect the interpretation of, this Agreement.
Section 8.4. Severability
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
Section 8.5. Entire Agreement, Amendments
This Agreement supersedes all other prior oral or written agreements
between the Purchaser, the Company, their affiliates and persons acting on their
behalf with respect to the issuance and sale of the Shares, and this Agreement
and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Purchaser
makes any representation, warranty, covenant, or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended other than
by an instrument in writing signed by the party to be charged with enforcement.
Section 8.6. Notices
Any notices, consents, waivers, or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered (a) upon receipt, when delivered
personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed
by U.S. certified mail, return receipt requested, (c) three (3) days after being
sent by certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
if to the Company: with a copy (which shall not constitute notice) to:
Diversified Product Inspections, Inc. Mintmire & Associates
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇ ▇▇▇▇, President Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Purchaser: with a copy (which shall not constitute notice) to:
Thomson Kernaghan & Co. Limited ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at Law
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each party shall provide five (5) day's prior written notice to the other party
of any change in address or facsimile number.
Section 8.7. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Purchaser. The Purchaser may assign its rights hereunder
without the consent of the Company, provided however, that any such assignment
shall not release the Purchaser from its obligations hereunder unless such
obligations are assumed by such assignee and the Company has consented to such
assignment and assumption.
Section 8.8. No Third Party Beneficiaries
This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.
Section 8.9. Survival
Unless this Agreement is terminated under Section 8.12, the representations
and warranties of the Company and the Purchaser contained in Sections 2 and 3,
the agreements and covenants set forth in Sections 4 and 5, and the
indemnification provisions set forth in Section 7, shall survive the Closing.
The Purchaser shall be responsible only for its own representations, warranties,
agreements, and covenants hereunder.
Section 8.10. Publicity
The Company and the Purchaser shall have the right to approve, before
issuance, any press releases or any other public statements with respect to the
transactions contemplated hereby; provided however, that the Company shall be
entitled, without the prior approval of the Purchaser, to make any press release
or other public disclosure with respect to such transactions as is required by
applicable law and regulations (although the Purchaser shall be consulted by the
Company in connection with any such press release or other public disclosure
prior to its release and shall be provided with a copy thereof).
Section 8.11. Further Assurances
Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments, and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
Section 8.12. Termination
In the event that the Closing shall not have occurred with respect to the
Purchaser on or before five (5) business days from the date hereof due to the
Company's or Purchaser's failure to satisfy the conditions set forth in Sections
5 and 6 above (and the non-breaching party's failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided however, that
if this Agreement is terminated pursuant to this Section 8.12, the Company shall
remain obligated to reimburse the Purchaser for the expenses described in
Section 4.6 above.
Section 8.13. No Strict Construction
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
Section 8.14. Currency
All dollar amounts expressed in this Agreement are currency of the United
States of America.
Section 8.15. Agent's Fee
On the Closing Date, the Company shall pay the Agent a fee of $5,000., and
hereby authorizes the Agent to withhold that amount, together with the fees and
expenses of its legal counsel from the Purchase Price. IN WITNESS WHEREOF, the
Company and the Purchaser have caused this Common Stock Purchase Agreement to be
duly executed as of the date first written above.
DIVERSIFIED PRODUCT INSPECTIONS, INC. THOMSON KERNAGHAN & CO. LIMITED, AS
AGENT
By /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇ By /s/ M ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇ ▇▇▇▇, President Name ▇. ▇▇▇▇▇▇▇▇
Title as agent
