EXHIBIT 10.2
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of December
31, 2001, is by and between Urecoats Industries Inc., a Delaware corporation,
with its principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, with
a residence at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "BUYER").
WHEREAS:
A. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "ACT");
B. The Company has authorized the following new series of its preferred
stock, $1.00 par value per share: the Series B convertible preferred stock (the
"SERIES B PREFERRED STOCK"), which shall be convertible into restricted shares
of the Company's Common Stock, $.01 par value per share (the "COMMON STOCK") (as
converted, the "CONVERSION SHARES"), at the conversion rate (set forth below) in
accordance with terms of the Company's Certificate of Designation in the form
attached hereto as EXHIBIT A (the "CERTIFICATE OF DESIGNATION"). The stated
value per share of Series B Preferred Stock shall be $5.00, which includes the
$1.00 par value per share. The Series B Preferred Stock and the Conversion
Shares are collectively referred to in this Agreement as the "SECURITIES";
C. The Buyer wishes to purchase and the Company desires to sell an
aggregate of 124,755 shares of Series B Preferred Stock for a total of $623,775,
upon the terms and conditions stated in this Agreement.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SERIES B PREFERRED STOCK.
a. PURCHASE OF SERIES B PREFERRED STOCK. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7(a)
below, the Company shall issue and sell to the Buyer and the Buyer shall
purchase from the Company, for an aggregate of $623,775 an aggregate of 124,755
shares of Series B Preferred Stock (the "CLOSING"). On the Closing Date,
subject to receipt of the agreed upon consideration, the Company shall cause to
be delivered to Buyer a stock certificate representing the number of shares of
Series B Preferred Stock that Buyer is then purchasing, duly executed on behalf
of the Company and registered in the name of the Buyer or his designee (the
"STOCK CERTIFICATE").
b. CLOSING DATE. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Eastern Daylight Time on December 31,2001,
subject to satisfaction (or waiver) of the conditions to the Closing set forth
in Sections 6 and 7(a) below (or such later date as is mutually agreed to by the
Company and the Buyer).
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c. FORM OF PAYMENT. On the Closing Date, Buyer shall cancel
indebtedness in the form of short-term loans bearing interest at 9% per annum
owed by Company to Buyer in payment of the applicable purchase price for the
Series B Preferred Stock to be issued and sold to Buyer at the Closing.
2. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants with respect to only himself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the
Series B Preferred Stock and (ii) upon conversion of the Series B Preferred
Stock, will acquire the Conversion Shares, then issuable for his own account for
investment only and not with a view towards, or for resale in connection with,
the unlawful public sale or distribution thereof, except pursuant to sales of
such shares which are the subject of an effective registration statement duly
filed under the Act or otherwise exempted under the Act and all applicable state
blue sky laws; provided, however, that by making the representations herein,
such Buyer does not agree to hold any Securities for any minimum period or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the Act and all applicable state blue sky laws.
b. ACCREDITED INVESTOR STATUS. Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D promulgated by
the United States Securities and Exchange Commission (the "SEC") under the Act
("REGULATION D").
c. RELIANCE ON EXEMPTIONS. Buyer understands that the
Series B Preferred Stock is being offered and sold to him in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility of
Buyer to acquire the Series B Preferred Stock.
d. INFORMATION. Buyer acknowledges that he is the Chairman
of the Board of Directors of the Company and as such has been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Series B Preferred Stock that
have been requested by Buyer. No independent due diligence investigations
conducted by Buyer shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties contained in Section 3 below.
e. NO GOVERNMENTAL REVIEW. Buyer 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 Series B
Preferred Stock or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Series B Preferred Stock.
f. TRANSFER OR RESALE. Buyer understands that the: (i)
Securities have not been and are not being registered under the Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) (i) they have been subsequently registered thereunder and (ii) they
are offered for sale, sold, assigned and transferred in compliance with the
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prospectus delivery requirements of the Act; or (B) Buyer shall have delivered
to the Company an opinion of counsel, in a generally acceptable form, to the
effect that such securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration.
g. LEGENDS.
i. Buyer understands that the certificates or other
instruments representing the Series B Preferred Stock and, until such time as
the sale of the Conversion Shares have been registered under the Act, the stock
certificates representing the Conversion Shares, except as set forth below,
shall bear a restrictive legend in substantially the following form (and a stop-
transfer order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
ii. Each certificate for Series B Preferred Stock
shall also bear the following legend:
ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE
COMPANY'S CERTIFICATE OF DESIGNATIONS RELATING TO THE SERIES B PREFERRED SHARES
REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 2(b)(iv) THEREOF. THE NUMBER
OF SERIES B PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN
THE NUMBER OF SUCH SHARES STATED ON THE FACE HEREOF.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Buyer as set forth in this Section 3.
a. ORGANIZATION AND QUALIFICATION. The Company and its
subsidiaries are duly organized and validly existing in good standing under the
laws of the jurisdiction in which they are organized, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified to
do business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any material adverse
effect on (i) the business, properties, operations, condition (financial or
otherwise), results of operations or objective prospects of the Company and its
subsidiaries taken as a whole, (ii) on the ability of the Company to perform its
obligations hereunder, under the Certificate of Designation or under the
agreements or instruments to be entered into or filed in connection herewith or
therewith, or (iii) the Securities.
b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement, to issue, sell and
perform its obligations with respect to the Series B Preferred Stock in
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accordance with the terms hereof, the Certificate of Designation and to issue
the Conversion Shares upon conversion of the Series B Preferred Stock in
accordance with the Certificate of Designation, (ii) the execution and delivery
of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including without limitation the issuance of
the Series B Preferred Stock and the issuance of the Conversion Shares issuable
upon conversion of the Series B Preferred Stock in accordance with the terms of
the Certificate of Designation, 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 shareholders, (iii) this Agreement and the
certificates for the Series B Preferred Stock have been duly executed and
delivered by the Company, (iv) this Agreement and the certificates for the
Series B Preferred Stock constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their 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, and (v) the Certificate of Designation will have been filed
with the Secretary of State of the State of Delaware within thirty (30) days
after the Closing date hereof and will be in full force and effect, enforceable
against the Company in accordance with its terms.
c. CAPITALIZATION. As of December 31, 2001, the authorized
capital stock of the Company consists of 142 million shares, of which 140
million are for Common Stock and 2 million for preferred stock. No shares of
Common Stock or preferred stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company. There are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by the issuance of any of the
Securities as described in this Agreement. The Company has furnished to the
Buyer true and correct copies of the Company's Restated Certificate Articles of
Incorporation, as amended, and as in effect on the date hereof (the "RESTATED
CERTIFICATE OF INCORPORATION"), and the Company's Bylaws, as in effect on the
date hereof (the "BYLAWS"), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the holders thereof in
respect thereto.
d. ISSUANCE OF SECURITIES. The Securities are duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, liens
and charges with respect to the issue thereof and (iii) entitled to the rights
and preferences set forth in the Certificate of Designation. As of the date
hereof, the Company does not have authorized nor has it reserved any Common
Stock, solely for the purpose of effecting the conversion of the Series B
Preferred Stock. The Company is obligated to take all steps necessary to enable
it to fulfill the conversion obligations hereunder prior to the expiration of
the Mandatory Conversion Date (as such is defined in the Certificate of
Designation) under the Certificate of Designation. Upon conversion in
accordance with the Certificate of Designation, the Conversion Shares will be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock.
e. NO CONFLICTS. Except as otherwise expressly stated
herein, the execution, delivery and performance of this Agreement, the
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performance by the Company of its obligations under the Certificate of
Designation and the consummation by the Company of the transactions contemplated
hereby and thereby will not (i) result in a violation of the Restated
Certificate of Incorporation, as amended, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or Bylaws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which
the Company or any of its subsidiaries 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 and the rules and regulations of the
principal market or exchange on which the Common Stock is traded or listed)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or affected. Neither
the Company nor its subsidiaries is in violation of any term of or in default
under its Restated Certificate of Incorporation, as amended, or Articles of
Incorporation, as amended, as applicable, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or Bylaws or their organizational charter or by-laws, respectively, or
any material contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order (collectively referred to as the "MATERIAL CONTRACTS")
or any statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its subsidiaries is not being
conducted, and shall not be conducted, in violation of any material law,
ordinance or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Act and applicable blue
sky 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 or
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by this Agreement or
perform its obligations under the Certificate of Designation in accordance with
the terms hereof or thereof.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 20,
1997, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
DOCUMENTS"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents.
As of their respective dates, the financial statements of the Company included
in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
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g. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF THE SERIES
B PREFERRED STOCK. Purchaser's status as Chairman of the Board of Directors and
holder of more than ten percent (10%) of the Company's outstanding shares, the
Company acknowledges and agrees that for purposes hereof, Buyer is acting in the
capacity of an arm's length purchaser with respect to this Agreement and the
Certificate of Designation and the transactions contemplated hereby and thereby.
The Company further acknowledges that for the purposes hereof, Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the Certificate of Designation and
the transactions contemplated hereby and thereby and any advice given by Buyer
or any of his representatives or agents in connection with this Agreement and
the Certificate of Designation and the transactions contemplated hereby and
thereby is merely incidental to Buyer's purchase of the Series B Preferred
Stock. The Company further represents to Buyer that the Company's decision to
enter into this Agreement has been based solely on the independent evaluation by
the Company and its representatives.
h. 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 Act) in connection with the offer or sale of any of the
Securities offered hereby.
i. 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 any of
the Securities under the Act or cause the offering of any of the Securities to
be integrated with prior offerings by the Company for purposes of the Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated, nor will the
Company or any of its Subsidiaries take any action or steps that would require
registration of the issuance by the Company of any of the Securities under the
Act or cause the offering of the Securities to be integrated with other
offerings.
j. INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service ▇▇▇▇ registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights (collectively "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct their respective businesses as now conducted and
as presently contemplated to be operated in the future except for Intellectual
Property Rights that, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect.
k. LEASES. Any real property and facilities held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases.
l. INSURANCE. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as is prudent and customary in the businesses in
which the Company and its subsidiaries are engaged. Neither the Company nor any
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such subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not individually or in the aggregate have a
Material Adverse Effect.
m. INTERNAL ACCOUNTING CONTROLS. The Company and each of
its subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
n. TAX STATUS. The Company and each of its subsidiaries
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 and each of its subsidiaries 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. 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. The
Company has not been notified that any of its tax returns is currently being
audited by any taxing authority.
o. DILUTIVE EFFECT. The Company understands and
acknowledges that its obligation to issue Conversion Shares upon conversion of
the Series B Preferred Stock in accordance with this Agreement and the
Certificate of Designation is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interest of other
stockholders of the Company.
p. ADJUSTMENTS. In the event the Company shall at any time
prior to the conversion of the Series B Preferred Stock: (i) declare to the
holders of its Common Shares a dividend payable in Common Shares, then the
holder hereof, upon the conversion of this Series B Preferred Stock after the
record date for the determination of holders of Common Shares entitled to
receive, in addition to the number of Common Shares into which this Series B
Preferred Stock is convertible, such additional Common Shares as such holder
would have received if he had theretofore converted and been the holder of
record of such number of Common Shares on such record date; or (ii) effect a
stock split or recapitalization of such character that the Common Shares shall
be changed into or become exchangeable for larger or smaller number of shares,
then upon the effective date thereof the number of Common Shares which the
holder hereof shall be entitled to acquire hereunder on conversion shall be
increased or decreased, as the case may be, in direct proportion to the increase
or decrease in the number of Common Shares by reason of such recapitalization
and the number of recapitalized Common Shares be proportionately increased upon
conversion and in the case of a decrease in the number of recapitalized Common
Shares be proportionately decreased upon conversion; or (iii) consolidate or
merge with or
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transfer all or substantially all of its assets as an entirety to any other
corporation, then the holder hereof upon the conversion of this Series B
Preferred Stock after the effective date of such consolidation or merger or
transfer shall be entitled to receive the number of shares or other securities
or property of the corporation resulting from such consolidation or merger or to
which such transfer was made which such holder would have received if he had
theretofore converted the Series B Preferred Stock and been the holder of record
of the Common Shares on the effective date of such consolidation or merger or
transfer.
4. COVENANTS AND AGREEMENTS.
a. 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 6 and 7 of this Agreement.
b. BLUE SKY. The Company shall take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption
for or to qualify the Securities for, or obtain exemption for the Securities
for, sale to Buyer pursuant to this Agreement under applicable securities or
"Blue Sky" laws of the State of New Jersey. The Company shall make all filings
and reports relating to the offer and sale of the Securities required under
applicable securities or "Blue Sky" laws of the State of New Jersey wherein the
Buyer resides.
c. FINANCIAL INFORMATION. The Company agrees to file all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act so
long as the Series B Preferred Stock shall be outstanding and unconverted. The
financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied, and will fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries and results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
d. NONRESERVATION OF SHARES. As of the date hereof, the
restated certificate of incorporation, as amended, of the Company does not have
authorized, nor has the Company reserved the requisite number of shares of
Common Stock, for the purpose of effecting the conversion of the Series B
Preferred Shares. The Company has covenanted to take all steps necessary to
enable the Company to fulfill the conversion obligations hereunder prior to
expiration of the Mandatory Conversion Date (as such is defined in the
Certificate of Designation). If, for reasons beyond its control, the Company
does not have the power and authority to issue Common Stock pursuant to a
Holder's Conversion Notice after 180 days from the Initial Issuance Date up to
and including the Mandatory Conversion Date, the Mandatory Conversion Date shall
be automatically extended for additional and successive one year periods until
such time that Common Stock becomes available for issuance. There shall be no
penalty for the Company's inability to convert at any time for failure to
fulfill any Holder's Conversion Notice.
e. FILING OF FORM 8-K. As soon as practicable after the
Closing Date, the Company will file a Form 8-K with the SEC with respect to the
issuance of the Securities at such Closing and the transactions contemplated by
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this Agreement. Such filing shall contain appropriate disclosure of the terms
and conditions of the issuance of the Securities and shall include as exhibits
forms of the Agreement and Certificate of Designation.
f. CORPORATE EXISTENCE. So long as any Buyer beneficially
owns any Securities pursuant to this Agreement, the Company shall maintain its
corporate existence in good standing under the laws of the jurisdiction in which
it is incorporated and shall not sell all or substantially all of the Company's
assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company's assets for cash, or, if for securities, where
the surviving or successor entity in such transaction either (i) redeems all of
the then outstanding Series B Preferred Stock in accordance with and subject to
the terms of the Certificate of Designation applicable to such transactions, or
(ii) assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith.
g. INSURANCE. The Company shall maintain liability,
casualty and other insurance (subject to customary deductions and retentions)
with responsible insurance companies against such risk of the types and in the
amounts customarily maintained by companies of comparable size to the Company.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation
of the Company hereunder to issue and sell the Series B Preferred Stock to Buyer
at the Closing is subject to the satisfaction 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. Buyer shall have executed this Agreement and delivered
the same to the Company.
b. Buyer shall have delivered to the Company the applicable
purchase price for the Series B Preferred Stock being purchased by Buyer at
Closing.
c. A Merger Transaction (as defined in the Certificate of
Designation) pursuant to which all of the outstanding Series B Preferred Stock
shall have been converted or redeemed shall not have been consummated.
d. The representations and warranties of Buyer shall be
true and correct in all material respects as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date), and Buyer 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 Buyer at or prior to
the Closing Date.
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. CLOSING DATE. The obligation of Buyer hereunder to
purchase the Series B Preferred Stock 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 Buyer's sole benefit and may
be waived by such Buyer at any time in his sole discretion:
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i. The Company shall have executed this Agreement
and delivered the same to such Buyer.
ii. The Certificate of Designation shall have been
executed by the Company and filed with the Secretary of the State of Delaware,
and a copy marked as filed shall have been delivered to such Buyer.
iii. 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
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. Buyer shall
have received a certificate, executed by the President of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as may
be reasonably requested by Buyer.
iv. Buyer shall have received the opinion of the
Company's counsel dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to Buyer and in substantially the form of EXHIBIT B
attached hereto.
v. The Company shall have executed and delivered to
Buyer the Stock Certificates (in such denominations as such Buyer shall request)
for the Series B Preferred Stock being purchased by Buyer being given at the
Closing.
vi. The Board of Directors of the Company shall have
adopted the resolutions in substantially the form of EXHIBIT C attached hereto
(the "RESOLUTIONS").
vii. The Company shall have delivered to Buyer a
secretary's certificate certifying as to (A) the Resolutions, (B) copies of its
Restated Certificate of Incorporation and (C) By-laws, each as in effect at the
Closing.
viii. The Company shall have delivered to Buyer such
other documents relating to the transactions contemplated by this Agreement as
Buyer may reasonably request.
ix. The transactions contemplated hereby shall not
violate any law, regulation or order then in effect and applicable to Buyer or
the Company.
7. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of this Agreement and acquiring the Securities hereunder and in
addition to all of the Company's other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless Buyer and each other
holder of Securities 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 Buyer is a party to
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the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "BUYER INDEMNIFIED
LIABILITIES"), incurred by Buyer (and shall advance the same) 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, the
Certificate of Designation 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, the Certificate of
Designation or any other certificate, instrument or document contemplated hereby
or thereby, or (c) any cause of action, suit or claim brought or made against
Buyer 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 the Buyer. Promptly after receipt by Buyer of
notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving the Buyer Indemnified Liabilities,
Buyer shall deliver to the Company a written notice of the commencement thereof,
and the Company shall have the right to participate in, and, to the extent it so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel selected by the Company and
reasonably satisfactory to Buyer; provided, however, that Buyer shall have the
right to retain its own counsel with the fees and expenses to be paid by the
Company, if, in the reasonable opinion of counsel retained by the Company, the
representation by such counsel of the Buyer and the Company would be
inappropriate due to actual differing interests between Buyer and any other
party represented by such counsel in such proceeding. The Buyer shall cooperate
fully with the Company in connection with any negotiation or defense of any such
action or claim by the Company and shall furnish to the Company all information
reasonably available to the Buyer which relates to such action or claim. The
Company shall keep the Buyer fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. The Company shall
not be liable for any settlement of any action, claim or proceeding effected
without its written consent, provided, however, that the Company shall not
unreasonably withhold, delay or condition its consent. The Company shall not,
without the consent of the Buyer, consent to entry of any judgment or enter into
any settlement or other compromise which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Buyer of a release
from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the Company shall be subrogated to
all rights of the Buyer with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the Company within a reasonable time of the
commencement of any such action shall not relieve it of any liability to the
Buyer, except to the extent that the Company is prejudiced in its ability to
defend such action. 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 Buyer Indemnified
Liabilities which is permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws.
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b. 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, PROVIDED THAT a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. 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.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
documents referred to herein, supersede all other prior or contemporaneous oral
or written agreements between or among the Buyer, the Company, their affiliates
and persons acting on their behalf with respect to the matters discussed herein,
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 Buyer 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 Company and the
holders of at least 2/3 of the then outstanding Series B Preferred Stock, but
any such waiver or amendment shall bind all Buyers and holders.
f. 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 (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) business days after being sent by U.S. certified mail, return
receipt requested, or (iv) one (1) business 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:
Urecoats Industries Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Corporate Secretary
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with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
if to the Buyer:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Securities. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of 2/3 of the Series B Preferred Stock then
outstanding. A Buyer may assign some or all of its rights hereunder without the
consent of the Company, PROVIDED, HOWEVER, that (i) any such assignment shall
not release such Buyer from its obligations hereunder unless such obligations
are assumed by such assignee and the Company has consented to such assignment
and assumption, which consent shall not be unreasonably withheld; (ii) Buyer may
not assign his purchase or other rights hereunder in a manner that would cause
the offering of Securities hereunder to be required to be registered under the
Act; (iii) Buyer may not assign his purchase or other rights with respect to the
Series B Preferred Stock; and (iv) Buyer may not assign his rights hereunder to
an entity that in the good faith judgment of the Board of Directors of the
Company is competitive with a core business of the Company.
h. 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.
i. SURVIVAL. The representations and warranties of the
Company and the Buyer contained in Sections 3 and 2, respectively, shall survive
the Closing until three years after the Closing Date, including, without
limitation, all financial statements thereto. The agreements and covenants set
forth in Sections 4, 5 and 9, and the indemnification provisions set forth in
Section 8, shall survive the Closing. Buyer shall be responsible only for his
own representations, warranties, agreements and covenants hereunder.
j. 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.
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k. 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.
l. GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(other than Section 5-1401 of the New York General Obligations Law and whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
state and federal courts sitting in The City of New York, borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
m. REMEDIES. Buyer and each holder of the Securities shall
have all rights and remedies set forth in this Agreement and the Certificate of
Designation and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
URECOATS INDUSTRIES INC. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------- --------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President Title: Investor
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