Exhibit 10(ej)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of May 11, 2004,
by and between NCT GROUP, INC., a Delaware corporation, with principal executive
offices located at 00 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("NCT"), and
XXXXXXX ROAD LLC, a Cayman Islands Limited Liability Company, with offices at
Harbour House, Waterfront Drive, Road Town, Tortola, British Virgin Islands
(hereinafter "Purchaser").
WHEREAS, NCT and Purchaser 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 "1933 Act");
WHEREAS, Purchaser desires to purchase and NCT desires to sell, upon the
terms and conditions set forth in this Agreement, twenty seven (27) shares of
Series H Preferred Stock, $10,000 stated value per share (the "Preferred
Stock"), of NCT in consideration for the payment by Purchaser to NCT of Two
Hundred, Thirty Thousand Dollars ($230,000.00); and
NOW THEREFORE, 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 parties agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK.
a. Purchase of Preferred Stock of NCT. On the Closing Date (as defined
below), NCT shall sell and deliver to Purchaser, and Purchaser agrees to
purchase from NCT, an aggregate amount of twenty seven (27) shares of the
Preferred Stock (the "Shares") in consideration for $230,000.00 (the
"Purchase Price").
b. Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 5 and Section 6 below, the date and
time of the sale of the Shares pursuant to this Agreement (the "Closing
Date") shall be 12:00 noon Eastern Standard Time on or about May 11, 2004
or such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the "Closing") shall occur on the Closing
Date at the offices of Xxxxxxx & Xxxxxx, 00 Xxxxxxxx, Xxxxx 0000, Xxx Xxxx,
Xxx Xxxx or at such other location as may be agreed to by the parties.
c. Form of Payment. On the Closing Date, (i) Purchaser shall pay the
balance due of Purchase Price in United States dollars, less commission and
applicable legal fees, by wire transfer of immediately available funds to
an account designated in writing by NCT for such purpose, against delivery
of the Shares, and (ii) NCT shall deliver to Purchaser stock certificates
representing the Shares, which Purchaser is then purchasing, duly executed
on behalf of NCT, against delivery of the Purchase Price.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents and
warrants to NCT that:
a. Investment Purpose. Purchaser is purchasing the Shares for its own
account for investment purposes only and not with a view towards, or for
resale in connection with the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1993 Act and applicable
state securities laws; provided, however, that by making the
representations herein, Purchaser does not agree to hold any of the Shares
for any minimum or other specific term and reserves the right to dispose of
the Shares at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act and applicable state
securities laws.
b. Reliance on Exemptions. Purchaser understands that the Shares are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities
laws and that Purchaser is relying upon the truth and accuracy of, and
Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Shares.
c. Information. Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of NCT, and materials relating to the offer and sale of the
Shares which have been requested by Purchaser or its advisors. Purchaser
and its advisors, if any, have been afforded the opportunity to ask
questions of NCT. Neither such inquiries nor any other due diligence
investigation conducted by Purchaser or any of its advisors or
representatives shall modify, amend or affect Purchaser's right to rely on
NCT's representations and warranties contained in Section 3 below.
Purchaser understands that its investment in the Shares involves a
significant degree of risk.
d. Governmental Review. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Shares.
e. Transfer or Resale. Purchaser understands that (i) the sale or
resale of the Shares has not been and is not being registered under the
1933 Act or any applicable state securities laws, and the Shares may not be
transferred unless (a) the Shares are sold pursuant to an effective
registration statement under the 1933 Act, (b) the Shares are sold or
transferred pursuant to an exemption from such registration, (c) the Shares
are sold or transferred to an "affiliate" (as defined in Rule 144
promulgated under the 1933 Act (or a successor rule) ("Rule 144")) of
Purchaser who agrees to sell or otherwise transfer the Shares only in
accordance with this Section 2(f) and who is an Accredited Purchaser, or
(d) the Shares are sold pursuant to Rule 144, if such Rule is available;
(ii) any sale of such Shares made in reliance on Rule 144 may be made only
in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Shares under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder.
f. Legends. Purchaser understands that the Shares shall bear a
restrictive legend in the following form (and a stop-transfer order may be
placed against transfer of the certificates for such Shares):
"[FOR SHARES] NEITHER THESE SECURITIES NOR THE SECURITIES
INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
[ONLY FOR UNDERLYING SHARES TO THE EXTENT THE RESALE THEREOF
IS NOT COVERED BY AN EFFECTIVE REGISTRATION STATEMENT AT THE
TIME OF CONVERSION, ISSUANCE OR EXERCISE] THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS."
g. Authorization; Enforcement. This Agreement has been duly and
validly authorized by Purchaser. This Agreement has been duly executed and
delivered on behalf of Purchaser, and this Agreement constitutes a valid
and binding agreement of Purchaser enforceable in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies or by other equitable principles of general
application.
3. REPRESENTATIONS AND WARRANTIES OF NCT. NCT represents and
warrants to NCT that:
a. Authorization; Enforcement. (i) NCT has all requisite corporate
power and authority to enter into and perform this Agreement and to
consummate the transactions contemplated hereby and to sell the Shares, in
accordance with the terms hereof, (ii) the execution and delivery of this
Agreement by NCT and the consummation by it of the transactions
contemplated hereby (including without limitation, the sale of the Shares
to Purchaser) have been duly authorized by NCT and no further consent or
authorization of NCT or its directors is required, (iii) this Agreement has
been duly executed and delivered by NCT, and (iv) this Agreement
constitutes a legal, valid and binding obligation of NCT enforceable
against NCT in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies or by other
equitable principles of general application
b. [INTENTIONALLY OMITTED]
c. No Conflicts. The execution, delivery and performance of this
Agreement by NCT and the consummation by NCT of the transactions
contemplated hereby (including, without limitation, the sale of the Shares
to Purchaser) will not (i) conflict with or result in a violation of any
provision of its certificate of incorporation, bylaws or other
organizational documents, or (ii) violate or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, any agreement, note, bond, indenture or other instrument to which NCT
is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which
NCT is subject) applicable to NCT or by which any property of NCT or the
Shares are bound or affected. Except as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable federal and
state securities laws, NCT is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement in accordance with the
terms hereof. Except for filings that may be required under applicable
federal and state securities laws in connection with the issuance and sale
of the Shares, all consents, authorizations, orders, filings and
registrations which NCT is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof.
d. No Brokers. NCT has taken no action which would give rise to any
claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated
hereby, except for dealings with Greenfield Capital Partners, LLC, whose
commissions and fees in the amount of Eleven Thousand, Five Hundred Dollars
($11,500.00) will be paid for by NCT.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts to satisfy
timely each of the
conditions described in Section 5 and Section 6 of this Agreement.
b. Registration Rights. The Company acknowledges that the Purchaser
shall be entitled to all the rights granted under that certain Registration
Rights Agreement (the "Registration Rights Agreement") dated June 21, 2002
between the Company and Purchaser as if fully set forth herein and made a
part hereof.
5. CONDITIONS TO NCT'S OBLIGATION TO SELL. The obligation of NCT hereunder
to sell and deliver the certificate(s) representing the Shares to Purchaser at
the Closing is subject to the satisfaction, at or before the Closing Date of
each of the following conditions thereto, provided that these conditions are for
NCT's sole benefit and may be waived by NCT at any time in its sole discretion:
a. NCT shall have executed this Agreement and delivered the same to
Purchaser.
b. Purchaser shall have delivered the Purchase Price in accordance
with Section 1(c) above.
c. The representations and warranties of NCT 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 speak as of a specific date), and NCT 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 NCT at or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
6. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE. The obligation of
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 Purchaser's sole benefit and may be
waived by Purchaser at any time in its sole discretion.
a. Purchaser shall have executed this Agreement, and delivered the
same to NCT.
b. NCT shall have delivered to Purchaser duly executed certificate(s)
representing the Shares (in such denominations as Purchaser shall
reasonably request) in accordance with Section 1(c) above and an opinion of
Counsel in the form annexed hereto.
c. The representations and warranties of 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 such time
(except for representations and warranties that speak as of a specific
date) and 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 Purchaser at
or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
7. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE ENFORCED,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITH SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES
HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK, NEW YORK WITH RESPECT TO
ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN
CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT
SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH
SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT ANY PARTY'S RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE PARTIES AGREE THAT A
FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH
JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTIES HEREBY WAIVE A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT.
b. Counterparts; Signatures by Facsimile. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may
be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
c. Headings. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of,
this Agreement.
d. Severability. In the event that any provision of this Agreement is
invalid or enforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
e. Entire Agreement; Amendments. 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, NCT makes no 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.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including
a recognized overnight delivery service) or by facsimile and shall be
effective five days after being placed in the mail, if mailed by regular
United States mail, or upon receipt, if delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile, in
each case addressed to a party. The addresses for such communications shall
be:
If to NCT:
NCT Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
Telephone No.: (000) 000-0000, ext. 3572
Telecopier No.: (000) 000-0000
With a copy to:
If to Purchaser, to:
Xxxxxxx Road LLC
Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxxx Xxxxx
PO Box 972
Road Town
Tortola, British Virgin Islands
With a copy to:
Xxxxxxx & Xxxxxx LLP
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Each party shall provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns.
Neither NCT nor Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(e), Purchaser may
assign its rights hereunder to any person that purchases Shares in a
private transaction from Purchaser or to any of its "affiliates," as that
term is defined under the 1934 Act, without the consent of NCT.
h. 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 NCT and the
agreements and covenants set forth in Sections 4 and 7 shall survive the
closing hereunder notwithstanding any due diligence investigation conducted
by or on behalf of Purchaser. Purchaser agrees to indemnify and hold
harmless NCT and all their officers, directors, employees and agents for
loss or damage arising as a result of or related to any breach or alleged
breach by NCT of any of its representations, warranties and covenants set
forth in Sections 2 and 3 hereof or any of its covenants and obligations
under this Agreement, including advancement of expenses as they are
incurred (except in the case of gross negligence or willful misconduct by
NCT).
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.
k. Fees and Expenses. The Company shall pay $13,000 of the fees and
expenses of the Investor's counsel, incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The
Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Shares pursuant hereto. The Investor shall be
responsible for its own tax liability that may arise as a result of the
investment hereunder or the transactions contemplated by this Agreement.
l. 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.
IN WITNESS WHEREOF, NCT and Purchaser have caused this Securities
Purchase Agreement to be duly executed as of the date first above written.
NCT GROUP, INC. XXXXXXX ROAD LLC
By: /s/ Xx X. Xxxxxxx By: /s/ Xxxxxx XxXxxxxx & Xxxxx Xxxxxx
-------------------------------- ----------------------------------
Name: Xx Xxxxxxx Name:
Title: Senior Vice President, Title: Navigator Management Ltd.
Chief Financial Officer Director
and Director
