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EXHIBIT 10.14
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, (the, "Agreement") dated as of the
date of acceptance set forth below, is entered into by and between INFORMATION
ARCHITECTS CORP., F/K/A ALYDAAR SOFTWARE CORP., a North Carolina corporation,
with headquarters located at 0000 Xxxxxx Xxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
(the "Company"), and each entity named on a signature page hereto and permitted
assigns (each, a "Buyer") (each agreement with a Buyer being deemed a separate
and independent agreement between the Company and such Buyer, except that each
Buyer acknowledges and consents to the rights granted to each other Buyer under
such agreement and the Transaction Agreements (as defined below).
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, 6% Convertible Debentures of the Company (the
"Convertible Debentures"), which will be convertible into shares of Common
Stock, $.001 par value per share, of the Company (the "Common Stock"), upon the
terms and subject to the conditions of such Convertible Debentures, together
with the Warrants (as defined below) exercisable for the purchase of shares of
Common Stock, and subject to acceptance of this Agreement by the Company;
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. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) The undersigned hereby agrees to purchase from the Company
Convertible Debentures in the principal amount set forth on the signature page
of this Agreement (the "Debentures") having the terms and conditions and being
in the form attached hereto as ANNEX I(a). The aggregate Debentures purchased
by all Buyers shall be $5,000,000.
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(ii) Subject to the terms and conditions of this Agreement and
the other Transaction Agreements, the Buyer will purchase the Debentures on the
Closing Date (as defined below).
(iii) The purchase price to be paid by the Purchaser shall be
equal to the face amount of the Debentures, as the case may be, being purchased
on the Closing Date (as defined below) and shall be payable in United States
Dollars.
b. Certain Definitions. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:
(i) "Debentures" means all or any portion of the Debentures.
(ii) "Securities" means the Debentures, the Warrants and the
Common Stock issuable upon conversion of the Debentures or the exercise of the
Warrants.
(iii) "Purchase Price" means the purchase price for the
Debentures.
(iv) "Closing Date" means the date of the closing of the
purchase and sale of the Debentures, as provided herein.
(v) "Buyer's Allocable Share" means the fraction of which the
numerator is the Purchase Price of the Buyer's Debentures and the denominator
is the aggregate Purchase Price of the Debentures of all Buyers.
(vi) "Effective Date" means the effective date of the
Registration Statement covering the Registrable Securities (as those terms are
defined in the Registration Rights Agreement defined below) for the Debentures
and Warrants issued on the Closing Date.
(vii) "Market Price of the Common Stock" means (x) the average
closing bid price of the Common Stock for the five (5) trading days ending on
the trading day immediately before the relevant date indicated in the relevant
provision hereof (unless a different relevant period is specified in the
relevant provision), as reported by Bloomberg, LP or, if not so reported, as
reported on the over-the-counter market or (y) if the Common Stock is listed on
a stock exchange, the average closing price of the Common Stock on such
exchange for the five (5) trading days ending on the trading day immediately
before the relevant date indicated in the relevant provision hereof (unless a
different relevant period is specified in the relevant provision), as reported
in The Wall Street Journal.
(viii) "Converted Shares" means the shares of Common Stock
issuable upon conversion of the Debentures.
(ix) "Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
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(x) "Shares" means the shares of Common Stock representing any
or all of the Converted Shares and the Warrant Shares.
(xi) "Certificates" means the relevant Debentures and the
relevant Warrants, each duly executed on behalf of the Company and issued in
the name of the Buyer.
(xii) "Person" means any living person or any entity, such as,
but not necessarily limited to, a corporation, partnership or trust.
(xiii) "Affiliate" means, with respect to a specific Person
referred to in the relevant provision, another Person who or which controls or
is controlled by or is under common control with such specified Person.
c. Form of Payment; Delivery of Certificates.
(i) The Buyer shall pay the Purchase Price for the relevant
Debentures by delivering immediately available good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in the Joint Escrow
Instructions attached hereto as Annex II (the "Joint Escrow Instructions") on
the date prior to the relevant Closing Date.
(ii) No later than the relevant Closing Date, but in any
event promptly following payment by the Buyer to the Escrow Agent of the
relevant Purchase Price, the Company shall deliver the relevant Certificates to
the Escrow Agent.
(iii) By signing this Agreement, each of the Buyer and the
Company, subject to acceptance by the Escrow Agent, agrees to all of the terms
and conditions of, and becomes a party to, the Joint Escrow Instructions, all
of the provisions of which are incorporated herein by this reference as if set
forth in full.
d. Method of Payment. Payment into escrow of the Purchase
Price shall be made by wire transfer of funds to:
Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 000000000
For credit to the account of Xxxxxxx & Xxxxxx, Esqs.
Account No.: [To be provided by Xxxxxxx & Prager]
Re: Information Architects Corp.
Not later than 5:00 p.m., New York time, on the date which is two (2) New York
Stock Exchange trading days after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Buyer by
facsimile, the Buyer shall deposit with the Escrow Agent the Purchase Price for
the Debentures in currently available funds. Time is of the essence with
respect to such payment, and failure by the Buyer to make such payment, shall
allow the Company to cancel this Agreement.
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e. Escrow Property. The Purchase Price and the Certificates
delivered to the Escrow Agent as contemplated by Sections 1(c) and (d) hereof
are referred to as the "Escrow Property."
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
a. Without limiting Buyer's right to sell the Common Stock
pursuant to the Registration Statement, the Buyer is purchasing the Debentures
and the Warrants and will be acquiring the Shares for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof.
b. The Buyer is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3), (ii) experienced in making investments of the kind
described in this Agreement and the related documents, (iii) able, by reason of
the business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its
investment in the Securities.
c. All subsequent offers and sales of the Debentures and the
Shares by the Buyer shall be made pursuant to registration of the Shares under
the 1933 Act or pursuant to an exemption from registration.
d. The Buyer understands that the Debentures are being offered
and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Debentures.
e. The Buyer and its advisors, if any, have 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 Debentures and the
offer of the Shares which have been requested by the Buyer, including Annex V
hereto. The Buyer and its advisors, if any, have been afforded the opportunity
to ask questions of the Company and have received complete and satisfactory
answers to any such inquiries. Without limiting the generality of the
foregoing, the Buyer has also had the opportunity to obtain and to review the
Company's (1) Annual Report on Form 10-K for the fiscal year ended December 31,
1998, (2) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1998, (3) Forms 8-K, dated March 12, 1999 and April 8, 1999, and (4) Form
10-12G/A dated July 1, 1999 (the "Company's SEC Documents").
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f. The Buyer understands that its investment in the Securities
involves a high degree of risk.
g. The 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 Securities.
h. The Buyer is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. This Agreement
and the Transaction Agreements have been duly and validly authorized, executed
and delivered on behalf of the Buyer and create a valid and binding agreement
of the Buyer enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and
warrants to the Buyer that, except as provided in Annex V hereto:
a. Concerning the Debentures and the Shares. There are no
preemptive rights of any stockholder of the Company, as such, to acquire the
Debentures, the Warrants or the Shares.
b. Reporting Company Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. The Company is duly qualified
as a foreign corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property owned by it
makes such qualification necessary, other than those jurisdictions in which the
failure to so qualify would not have a material adverse effect on the business,
operations or condition (financial or otherwise) or results of operation of the
Company and its subsidiaries taken as a whole (a "Material Adverse Effect").
The Company has registered its Common Stock pursuant to Section 12 of the 1934
Act, and the Common Stock is listed and traded on The NASDAQ/National Market
System. The Company has received no notice, either oral or written, with
respect to the continued eligibility of the Common Stock for such listing, and
the Company has maintained all requirements for the continuation of such
listing.
c. Authorized Shares. The authorized capital stock of the
Company consists of (i)50,000,000 shares of Common Stock, $.001 par value per
share, of which approximately 19,393,809 shares had been issued as of July 21,
1999 and (ii) 1,000,000 shares of Preferred Stock $.001 par value, of which -0-
shares are outstanding. All issued and outstanding shares of Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable.
The Company has sufficient authorized and unissued shares of Common Stock as
may be necessary to effect the issuance of the Shares. The Shares have been
duly authorized and, when issued upon conversion of, or as interest on, the
Debentures or upon exercise of the Warrants, each in accordance with its
respective terms, will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability by
reason of being such holder.
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d. Securities Purchase Agreement; Registration Rights
Agreement. This Agreement and the Registration Rights Agreement, the form of
which is attached hereto as Annex IV (the "Registration Rights Agreement"), and
the transactions contemplated thereby, have been duly and validly authorized by
the Company, this Agreement has been duly executed and delivered by the Company
and this Agreement is, and the Debentures, the Warrants and the Registration
Rights Agreement, when executed and delivered by the Company, will be, valid
and binding agreements of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
e. Non-Contravention. The execution and delivery of this
Agreement and the Registration Rights Agreement by the Company, the issuance of
the Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Registration Rights Agreement, and the
Debentures do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under (i)
the articles of incorporation or by-laws of the Company, each as currently in
effect, (ii) any indenture, mortgage, deed of trust, or other material
agreement or instrument to which the Company is a party or by which it or any
of its properties or assets are bound, including any listing agreement for the
Common Stock, except as herein set forth, (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or
order of any court, United States federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Company or any of its properties or assets, or (iv) the Company's listing
agreement for its Common Stock, except such conflict, breach or default which
would not have a Material Adverse Effect.
f. Approvals. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the stockholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the
Buyer as contemplated by this Agreement, except such authorizations, approvals
and consents that have been obtained.
g. SEC Filings. None of the Company's SEC Documents contained,
at the time they were filed, any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements made therein in light of the circumstances under which they were
made, not misleading. The Company has since March 1, 1998 timely filed all
requisite forms, reports and exhibits thereto with the SEC.
h. Absence of Certain Changes. Since December 31, 1998, there
has been no material adverse change and no material adverse development in the
business, properties, operations, condition (financial or otherwise), or
results of operations of the Company, except as disclosed in the Company's SEC
Documents. Since December 31, 1998, except as provided in the Company's SEC
Documents, the Company has not (i) incurred or become subject to any material
liabilities (absolute or contingent) except liabilities incurred in the
ordinary course of business consistent with past practices; (ii) discharged or
satisfied any material lien or encumbrance or paid any material obligation or
liability (absolute or contingent), other than current liabilities paid in the
ordinary course of business consistent with past practices; (iii)
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declared or made any payment or distribution of cash or other property to
stockholders with respect to its capital stock, or purchased or redeemed, or
made any agreements to purchase or redeem, any shares of its capital stock;
(iv) sold, assigned or transferred any other tangible assets, or canceled any
debts or claims, except in the ordinary course of business consistent with past
practices; (v) suffered any substantial losses or waived any rights of material
value, whether or not in the ordinary course of business, or suffered the loss
of any material amount of existing business; (vi) made any changes in employee
compensation, except in the ordinary course of business consistent with past
practices; or (vii) experienced any material problems with labor or management
in connection with the terms and conditions of their employment.
i. Full Disclosure. There is no fact known to the Company
(other than general economic conditions known to the public generally or as
disclosed in the Company's SEC Documents) that has not been disclosed in
writing to the Buyer that (i) would reasonably be expected to have a Material
Adverse Effect, (ii) would reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations pursuant to this
Agreement or any of the agreements contemplated hereby (collectively, including
this Agreement, the "Transaction Agreements"), or (iii) would reasonably be
expected to materially and adversely affect the value of the rights granted to
the Buyer in the Transaction Agreements.
j. Absence of Litigation. Except as set forth in the Company's
SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of
the Company, threatened against or affecting the Company, wherein an
unfavorable decision, ruling or finding would have a Material Adverse Effect or
which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, any of
the Transaction Agreements.
k. Absence of Events of Default. Except as set forth in
Section 3(e) hereof, no Event of Default (or its equivalent term), as defined
in the respective agreement to which the Company is a party, and no event
which, with the giving of notice or the passage of time or both, would become
an Event of Default (or its equivalent term) (as so defined in such agreement),
has occurred and is continuing, which would have a Material Adverse Effect.
l. Prior Issues. During the twelve (12) months preceding the
date hereof, the Company has not issued any convertible securities or any
shares of the Common Stock or Preferred Stock.
m. No Undisclosed Liabilities or Events. The Company has no
liabilities or obligations other than those disclosed in the Company's SEC
Documents or those incurred in the ordinary course of the Company's business
since December 31, 1998, and which individually or in the aggregate, do not or
would not have a Material Adverse Effect. No event or circumstances has
occurred or exists with respect to the Company or its properties, business,
condition (financial or otherwise), or results of operations, which, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed. There are no proposals currently under consideration or
currently anticipated to be under consideration by the Board of Directors or
the executive officers of the Company which proposal would (x) change the
certificate of incorporation or other charter document or by-laws of the
Company, each as currently in effect,
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with or without shareholder approval, which change would reduce or otherwise
adversely affect the rights and powers of the shareholders of the Common Stock
or (y) materially or substantially change the business, assets or capital of
the Company, including its interests in subsidiaries.
n. No Default. The Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any material indenture, mortgage, deed of trust or other
material instrument or agreement to which it is a party or by which it or its
property is bound.
o. No Integrated Offering. Neither the Company nor any of its
affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time since March 1, 1998, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under Rule
506 of Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.
p. Dilution. The number of Shares issuable upon conversion of
the Debentures and the exercise of the Warrants may increase substantially in
certain circumstances, including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines prior to
the conversion of the Debentures. The Company's executive officers and
directors have studied and fully understand the nature of the Securities being
sold hereby and recognize that they have a potential dilutive effect. The board
of directors of the Company has concluded, in its good faith business judgment,
that such issuance is in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue the Shares upon
conversion of the Debentures and upon exercise of the Warrants is binding upon
the Company and enforceable regardless of the dilution such issuance may have
on the ownership interests of other shareholders of the Company.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1) the
Debentures have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement, the
Shares have not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities 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 used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; (3) the Buyer may not sell or transfer the Debentures unless the
amount sold or transferred exceeds 20% of the Debentures; and (4) neither the
Company nor any other person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act
or to comply with the terms and conditions of any exemption thereunder.
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b. Restrictive Legend. The Buyer acknowledges and agrees that
the Debentures and the Warrants, and, until such time as the Common Stock has
been registered under the 1933 Act as contemplated by the Registration Rights
Agreement and sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Securities shall
bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of any such Securities):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF
COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED.
c. Registration Rights Agreement. The parties hereto agree to
enter into the Registration Rights Agreement on or before the Closing Date.
d. Filings. The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Securities to the Buyer
required under any United States laws and regulations applicable to the
Company, or by any domestic securities exchange or trading market, and to
provide a copy thereof to the Buyer promptly after such filing.
e. Reporting Status. So long as the Buyer beneficially owns
any of the Securities, the Company shall file all reports required to be filed
with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
permit such termination. Except as otherwise set forth in this Agreement and
the Transaction Agreements, the Company will take all reasonable action under
its control to obtain and to continue the listing and trading of its Common
Stock (including, without limitation, all Registrable Securities) on The
NASDAQ/National Market System and will comply in all material respects with the
Company's reporting, filing and other obligations under the by-laws or rules of
the National Association of Securities Dealers, Inc. ("NASD") or The
NASDAQ/National Market System.
f. Use of Proceeds. The Company will use the proceeds from the
sale of the Debentures (excluding amounts paid by the Company for legal fees,
finder's fees and escrow fees in connection with the sale of the Debentures)
for internal working capital purposes, and, unless specifically consented to in
advance in each instance by the Buyer, the Company shall not, (i) directly or
indirectly, use such proceeds for any loan to or investment in any other
corporation, partnership enterprise or other person except such loans to or
investments in Data Systems Network Corporation, not to exceed $250,000, as may
be required to consummate the Company's proposed acquisition thereof (ii)or for
the repayment of any outstanding loan by the Company to any other party.
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g. Certain Agreements. (i) The Company covenants and agrees
that it will not, without the prior written consent of the Buyer, enter into
any subsequent or further offer or sale of Common Stock or securities
convertible into Common Stock (collectively, "New Common Stock") with any third
party pursuant to a transaction which in any manner permits the sale of the New
Common Stock on any date which is earlier than ninety (90) days from the last
day of the calendar month in which the Effective Date occurs. The limitations
described in this section shall not apply to (w) any underwritten offering of
securities made pursuant to a written underwriting agreement with a nationally-
or regionally-recognized investment bank, (x) any issuance of securities or
assumption of debt made in connection with a merger, acquisition of or purchase
of the assets of another entity where the purpose of such issuance is not to
raise equity capital, or (y) any issuance of warrants made to a bank or other
commercial lending institution in connection with a loan made to the Company by
such bank or institution, or (z) any issuance of securities or stock when the
price of the Company's common stock is trading above ten dollars ($10) per
share, provided that the number of shares of Common Stock into which such
warrants are exercisable shall not exceed, individually or in the aggregate, 5%
of the number of shares of Common Stock issued and outstanding as of the date
of such issuance.
(ii) By the Closing Date, the Company shall obtain the agreement
(each, a "Principal's Agreement") of each of its Principals (as defined below)
that, without the prior written consent of the Buyer in each instance, such
Principal will not sell or otherwise transfer or offer to sell or otherwise
transfer, except for (a) sales or transfers made pursuant to a pledge or margin
account agreement or (b) sales or transfers made at a sales price in excess of
ten dollars ($10) per share, any shares of Common Stock directly or indirectly
held by such Principal prior to ninety (90) days after the Effective Date. Each
such Principal's Agreement shall (w) specify that it is entered into as an
inducement to the Buyer's execution, delivery and performance of this
Agreement, (x) name the Buyer as a third party beneficiary thereof, (y)
acknowledge that the Company's transfer agent will be provided with
instructions that transfers by a Principal require the consent of the Company
and the Buyer, and (z) contemplate that, in addition to any other damages or
remedies that may be appropriate, the Principal's Agreement shall be
enforceable by injunction sought by the Company and the Buyer or any one or
more of them. A "Corporate Principal" is a person who meets any one or more of
the following criteria: (A) a person who is the Chief Executive Officer of the
Company (the a "Company Principal") and who, directly or indirectly, holds any
shares of Common Stock of the Company; (B) a spouse of the Company Principal (a
"Principal's Spouse") who, directly or indirectly, holds any shares of Common
Stock of the Company, (C) a parent, sibling or child of a Company Principal who
resides in the household of a Company Principal or of a Principal's Spouse
(each, a "Principal's Relative") and who, directly or indirectly, holds any
shares of Common Stock, (D) any other person or entity, including, without
limitation, for profit or non-profit corporations, partnerships and trusts,
whose voting rights regarding Common Stock of the Company is subject to the
direction, control or other influence of any Company Principal, Principal's
Spouse, or Principal's Relative.
(iii) In the event the Company breaches the provisions of this
Section 4(g), the Conversion Rate (as defined in the Debentures) shall be
amended to be equal to (x) 90% of (y) the amount determined in accordance with
the provisions of the Debenture without regard to this provision, and the
Purchaser may require the Company to immediately redeem all outstanding
Debentures in accordance Section 15 of the Debenture.
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h. Available Shares. The Company shall have at all times
authorized and reserved for issuance, free from preemptive rights, shares of
Common Stock sufficient to yield two hundred percent (200%) of the number of
shares of Common Stock issuable (i) at conversion as may be required to satisfy
the conversion rights of the Buyer pursuant to the terms and conditions of the
Debentures which have been issued and not yet converted and (ii) upon exercise
as may be required to satisfy the exercise rights of the Buyer pursuant to the
terms and conditions of the Warrants which have been issued and not yet
exercised.
i. Warrants. The Company agrees to issue to the Buyer on
Closing Date transferable, divisible warrants with cashless exercise rights
(the "Warrants") for the purchase of Two Hundred Eighty-Seven Thousand Eight
Hundred Forty-Three (287,843) shares of Common Stock. The Warrants shall bear
an exercise price equal to one hundred twenty percent (125%) of the Market
Price of the Common Stock on the relevant Closing Date. The Warrants will
expire on the last day of the month in which the fifth anniversary of the
Closing Date occurs. The Warrants shall be in the form annexed hereto as Annex
VI, together with registration rights as provided in the Registration Rights
Agreement and piggy-back registration after the expiration of the effectiveness
of the Registration Statement contemplated by the Registration Rights
Agreement.
j. Limitation on Issuance of Shares. If the Common Stock is
then listed for trading on the NASDAQ or the Nasdaq SmallCap Market and the
Company has not obtained the Shareholder Approval (as defined below), then the
Company may not issue in excess of 3,878,000 shares of Common Stock upon
conversions of the Debentures or exercise of the Warrants, which number of
shares of Common Stock shall be subject to adjustment pursuant to Section 6.2
of the Warrant (such number of shares, the "Issuable Maximum"). The Issuable
Maximum equals 19.999% of the number of shares of Common Stock outstanding
immediately prior to the closing of transactions set forth in the Purchase
Agreement. If on any Conversion Date (A) the shares of Common Stock are listed
for trading on the NASDAQ or the Nasdaq SmallCap Market, (B) the Conversion
Price (as defined herein) then in effect is such that the aggregate number of
shares of Common Stock that would then be issuable upon conversion in full of
all then outstanding Debentures, together with any shares of Common Stock
previously issued upon conversion of the Debentures, would exceed the Issuable
Maximum, and (C) the Company shall not have previously obtained the vote of
shareholders (the "Shareholder Approval"), if any, as may be required by the
applicable rules and regulations of the Nasdaq Stock Market (or any successor
entity) applicable to approve the issuance of shares of Common Stock in excess
of the Issuable Maximum pursuant to the terms hereof, then the Company shall
issue to the Holder requesting a conversion, a number of shares of Common Stock
equal to the Issuable Maximum and, with respect to the remainder of the
aggregate previous amount of Debentures then held by such Holder for which a
conversion in accordance with the Conversion Price would result in an issuance
of shares of Common Stock in excess of the issuable Maximum (the "Excess Stated
Value"), the Company shall use its best efforts to obtain the Shareholder
Approval applicable to such issuance as soon as possible, but in any event not
later than the 75th day after such request (such 75th day, the "Target Date"),
provided, that in the event the Company does not obtain the Shareholder
Approval on or prior to the Target Date, then, as soon as possible
12
after the Target Date but, in any event no later than ten (10) days following
the Target Date (such 10th day following the Target Date, the "OTC Date"), the
Company shall (i) initiate all steps necessary pursuant to the applicable rules
and regulations of the Nasdaq Stock Market (or any successor entity) in order
to delist the Common Stock from trading on the NASDAQ or the Nasdaq SmallCap
Market, as the case may be, and (ii) quote the Common Stock on the OTC Bulletin
Board (the obligations indicate in (i)-(ii), are collectively referred to as
the "OTC Obligations"). Within three (3) days of the Common Stock being quoted
on the OTC Bulletin Board, the Company shall issue shares of Common Stock to
the converting Holder in an amount equal to the Excess Stated Value divided by
the Conversion Price on (x) the Target Date or (y) the date of delivery of the
shares of Common Stock being acquired upon the conversion of the Excess Stated
Value by the Company, whichever is lower. It is understood that in connection
with the issuance of the shares of Common Stock being acquired upon the
conversion of the Excess Stated Value, the Holder shall be entitled to the
rights and benefits conferred to it pursuant to the Registration Rights
Agreement. Xx. Xxxxxx, the Holder of approximately 35% of the outstanding
Common Stock shall simultaneous with closing, deliver a Irrevocable Proxy with
respect to matters requiring Shareholder Approval.
k. Right of First Refusal. (i) Except as set forth below, the
Company covenants and agrees that if during the period from the date hereof
through and including the date which is seven (7) months after the Effective
Date of the Registration Statement, the Company offers to enter into any
transaction (a "New Transaction") for the sale of New Common Stock, the Company
shall notify the Buyer in writing of all of the terms of such offer (a "New
Transaction Offer"). Except as set forth below, the Buyer shall have the right
(the "Right of First Refusal"), exercisable by written notice given to the
Company by the close of business on the fifth (5th) business day after the
Buyer's receipt of the New Transaction Offer (the "Right of First Refusal
Expiration Date"), to enter into the New Transaction Offer on the terms so
specified. The limitations described in this section shall not apply to (x) any
underwritten offering of securities made pursuant to a written underwriting
agreement with a nationally- or regionally-recognized investment bank, (y) any
issuance of securities or assumption of debt made in connection with a merger,
acquisition of or purchase of the assets of another entity where the purpose of
such issuance is not to raise equity capital or (z) any issuance of warrants
made to a bank or other commercial lending institution in connection with a
loan made to the Company by such bank or institution, provided that the number
of shares of Common Stock into which such warrants are exercisable shall not
exceed, individually or in the aggregate, 5% of the number of shares of Common
Stock issued and outstanding as of the date of such issuance.
(ii) If the Buyer does not exercise the Right of First Refusal,
the Company may consummate the New Transaction with any other party (the "New
Investor") on the terms specified in the New Transaction Offer within thirty
(30) days of the Right of First Refusal Expiration Date.
(iii) If the terms of the New Transaction to be consummated with
such other party differ from the terms specified in the New Transaction Offer
so that the terms are materially more beneficial to the New Investor, the
Company shall give the Buyer a New Transaction Offer relating to the terms of
the New Transaction, as so changed, and the Buyer's Right of First
13
Refusal and the preceding terms of this paragraph (k) shall apply with respect
to such changed terms.
(iv) If there is more than one Buyer signatory to this
Agreement, the preceding provisions of this paragraph (k) shall apply pro rata
among them (based on their relative Buyer's Allocable Shares), except that, to
the extent any such Buyer does not exercise its Right of First Refusal in full
(a "Declining Buyer"), the remaining Buyer or Buyers who or which have
exercised their own Right of First Refusal, shall (pro rata among them based on
their relative Buyer's Allocable Shares, if more than one) exercise such
Declining Buyer's unexercised Right of Refusal. Nothing in this paragraph (k)
shall be deemed to permit a transaction not otherwise permitted by subparagraph
(g)(i), as modified by the provisions of subparagraph (g)(ii).
(v) In the event the New Transaction is consummated with other
third party on terms providing for (x) either a sale price equal to or computed
based on, or a determination of a conversion price based on, a lower percentage
of the then current market price (howsoever defined or computed) than provided
in the Debentures for determining the Conversion Rate or a lower Base Price
(howsoever defined or computed) and/or (y) the issuance of warrants at an
exercise price lower than that provided in the Warrants, the terms of any
unissued or unconverted Debentures or any unissued or unexercised Warrants
shall be modified to reduce the relevant Conversion Rate, Base Price or Warrant
exercise price to be equal to that provided in the New Transaction as so
consumated.
(vi) The restrictions contained in this Section 4(k) shall
terminate once the Buyer has converted at least ninety percent (90%) of the
original principal amount of the Debentures and sold at least 90% of the shares
issued on such conversion.
l. Reimbursement. If (i) any Buyer, other than by reason of
its gross negligence, willful misconduct or breach of law, becomes involved in
any capacity in any action, proceeding or investigation brought by any
stockholder of the Company, in connection with or as a result of the
consummation of the transactions contemplated by the Transaction Agreements, or
if such Buyer is impleaded in any such action, proceeding or investigation by
any Person, or (ii) any Buyer, other than by reason of its gross negligence,
willful misconduct or breach of law, becomes involved in any capacity in any
action, proceeding or investigation brought by the SEC against or involving the
Company or in connection with or as a result of the consummation of the
transactions contemplated by the Transaction Agreements, or if such Buyer is
impleaded in any such action, proceeding or investigation by any Person, then
in any such case, the Company will reimburse such Buyer for its reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, as such expenses are incurred.
The reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliates of the Buyers who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Buyers and any such Affiliate, and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives
of the Company, the Buyers and any such Affiliate and any such Person. Except
as otherwise set forth in the Transaction
14
Agreements, the Company also agrees that neither any Buyer nor any such
Affiliate, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any person asserting claims on behalf of
or in right of the Company in connection with or as a result of the
consummation of the Transaction Agreements except to the extent that any
losses, claims, damages, liabilities or expenses incurred by the Company result
from the gross negligence or willful misconduct of such Buyer or from a breach
of the representations, covenants and conditions contained herein or from a
breach of law.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of the
Purchase Price for the Debentures in accordance with Section 1(c) hereof, the
Company will irrevocably instruct its transfer agent to issue Common Stock from
time to time upon conversion of the Debentures in such amounts as specified
from time to time by the Company to the transfer agent, bearing the restrictive
legend specified in Section 4(b) of this Agreement prior to registration of the
Shares under the 1933 Act, registered in the name of the Buyer or its permitted
assigns and in such denominations to be specified by the Buyer in connection
with each conversion of the Debentures. The Company warrants that if the Buyer
is not in breach of the representations and warranties contained in this
Agreement, no instruction other than such instructions referred to in this
Section 5 and stop transfer instructions to give effect to Section 4(a) hereof
prior to registration and sale of the Shares under the 1933 Act will be given
by the Company to the transfer agent and that the Shares shall otherwise be
freely transferable on the books and records of the Company as and to the
extent provided in this Agreement, the Registration Rights Agreement, and
applicable law. Nothing in this Section shall affect in any way the Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of the Securities. If the Buyer provides the Company with an opinion of
counsel reasonably satisfactory to the Company that registration of a resale by
the Buyer of any of the Securities in accordance with clause (1)(B) of Section
4(a) of this Agreement is not required under the 1933 Act, the Company shall
(except as provided in clause (2) of Section 4(a) of this Agreement) permit the
transfer of the Securities and, in the case of the Converted Shares or the
Warrant Shares, as the case may be, promptly instruct the Company's transfer
agent to issue one or more certificates for Common Stock without legend in such
name and in such denominations as specified by the Buyer.
b. (i) The Company will permit the Buyer to exercise its
right to convert the Debentures by telecopying or delivering an executed and
completed Notice of Conversion to the Company and delivering, within five (5)
business days thereafter, the original Debentures being converted to the
Company by express courier, with a copy to the transfer agent.
(ii) The term "Conversion Date" means, with respect to
any conversion elected by the holder of the Debentures, the date specified in
the Notice of Conversion, provided the copy of the Notice of Conversion is
telecopied to or otherwise delivered to the Company in accordance with the
provisions hereof so that it is received by the Company on or before such
specified date.
15
(iii) The Company will transmit the certificates
representing the Converted Shares issuable upon conversion of any Debentures
(together, unless otherwise instructed by the Buyer, with Debentures not being
so converted) to the Buyer at the address specified in the Notice of Conversion
(which may be the Buyer's address for notices as contemplated by Section 11
hereof or a different address) via express courier, by electronic transfer or
otherwise, within five (5) business days if the address for delivery is in the
United States and within seven (7) business days if the address for delivery is
outside the United States (such fifth business day or seventh business day, as
the case may be, the "Delivery Date") after (A) the business day on which the
Company has received both of the Notice of Conversion (by facsimile or other
delivery) and the original Debentures being converted (and if the same are not
delivered to the Company on the same date, the date of delivery of the second
of such items) or (B) the date an interest payment on the Debenture, which the
Company has elected to pay by the issuance of Common Stock, as contemplated by
the Debentures, was due.
c. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date could result in economic loss
to the Buyer. As compensation to the Buyer for such loss, the Company agrees to
pay late payments to the Buyer for late issuance of Shares upon Conversion in
accordance with the following schedule (where "No. Business Days Late" is
defined as the number of business days beyond two (2) business days from the
Delivery Date):
Late Payment For Each $10,000
of Debenture Principal or Interest
No. Business Days Late Amount Being Converted
---------------------- ----------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each Business
Day Late beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Buyer's right to
pursue actual damages for the Company's failure to issue and deliver the Common
Stock to the Buyer. Furthermore, in addition to any other remedies which may be
available to the Buyer, in the event that the Company fails for any reason to
effect delivery of such shares of Common Stock within two (2)
16
business days after the Delivery Date, the Buyer will be entitled to revoke the
relevant Notice of Conversion by delivering a notice to such effect to the
Company whereupon the Company and the Buyer shall each be restored to their
respective positions immediately prior to delivery of such Notice of
Conversion.
d. If, by the relevant Delivery Date, the Company fails for
any reason to deliver the Shares to be issued upon conversion of a Debenture
and after such Delivery Date, the holder of the Debentures being converted (a
"Converting Holder") purchases, in an open market transaction or otherwise,
shares of Common Stock (the "Covering Shares") in order to make delivery in
satisfaction of a sale of Common Stock by the Converting Holder (the "Sold
Shares"), which delivery such Converting Holder anticipated to make using the
Shares to be issued upon such conversion (a "Buy-In"), the Company shall pay to
the Converting Holder, in addition to all other amounts contemplated in other
provisions of the Transaction Agreements, and not in lieu thereof, the Buy-In
Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the
amount equal to the excess, if any, of (x) the Converting Holder's total
purchase price (including brokerage commissions, if any) for the Covering
Shares over (y) the net proceeds (after brokerage commissions, if any) received
by the Converting Holder from the sale of the Sold Shares. The Company shall
pay the Buy-In Adjustment Amount to the Company in immediately available funds
immediately upon demand by the Converting Holder. By way of illustration and
not in limitation of the foregoing, if the Converting Holder purchases shares
of Common Stock having a total purchase price (including brokerage commissions)
of $11,000 to cover a Buy-In with respect to shares of Common Stock it sold for
net proceeds of $10,000, the Buy-In Adjustment Amount which Company will be
required to pay to the Converting Holder will be $1,000.
e. In lieu of delivering physical certificates representing
the Common Stock issuable upon conversion, provided the Company's transfer
agent is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, upon request of the Buyer and its compliance with
the provisions contained in this paragraph, so long as the certificates
therefor do not bear a legend and the Buyer thereof is not obligated to return
such certificate for the placement of a legend thereon, the Company shall use
its best efforts to cause its transfer agent to electronically transmit the
Common Stock issuable upon conversion to the Buyer by crediting the account of
Buyer's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system.
f. The Company will authorize its transfer agent to give
information to the Buyer or the Buyer's representative relating to the transfer
of the Company's shares of Common Stock to the Buyer, upon the request of the
Buyer or any such representative. The Company will provide the Buyer with a
copy of the authorization so given to the transfer agent.
g. If, at any time the Company challenges, disputes or denies
the right of a Buyer to effect a conversion of the Debentures into Common Stock
or otherwise dishonors or rejects any Conversion Notice delivered in accordance
with the terms of this Agreement or the Certificate of Designations or any
exercise of any Warrant in accordance with its terms ("Warrant Exercise"), then
such Buyer shall have the right, by written notice to the Company, to
17
require the Company to promptly redeem the Debentures for cash at a redemption
price (the "Mandatory Purchase Amount") equal to (x) one hundred twenty-two
percent (122%) of the liquidation preference of the unconverted Debentures held
by such Buyer plus (y) all accrued but unpaid dividends on the Debentures
through the date of payment of the Mandatory Purchase Amount. Under any of the
circumstances set forth above, the Company shall be responsible for the payment
of all costs and expenses of such Buyer, including, but not necessarily limited
to, reasonable legal fees and expenses, as and when incurred in connection with
such Buyer's disputing any such action or pursuing such Buyer's rights
hereunder (in addition to any other rights such Buyer may have hereunder or
otherwise). The Mandatory Purchase Amount will be payable to such Buyer in cash
within five (5) business days from the date such Buyer gives the Company
written notice that it is exercising its rights under this paragraph. In
addition, the Company will not solicit any third party to commence any lawsuit
or proceeding or otherwise assert any claim before any court or public or
governmental authority, which lawsuit, proceeding or claim would seek to
challenge, deny, enjoin, limit, modify, delay or dispute the right of such
holder to effect the conversion of the Debentures into Common Stock.
h. The Buyer shall be entitled to exercise its conversion
privilege with respect to the Debentures notwithstanding the commencement of any
case under 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"). In the event
the Company is a debtor under the Bankruptcy Code, the Company hereby waives, to
the fullest extent permitted, any rights to relief it may have under 11 U.S.C.
Section 362 in respect of such Buyer's conversion privilege. The Company hereby
waives, to the fullest extent permitted, any rights to relief it may have under
11 U.S.C. Section 362 in respect of the conversion of the Debentures. The
Company agrees, without cost or expense to such Buyer, to take or to consent to
any and all action necessary to effectuate relief under 11 U.S.C. Section 362.
6. CLOSING DATE.
a. The Closing Date shall occur on the date which is the first
NYSE trading day after each of the conditions contemplated by Sections 7 and 8
hereof shall have either been satisfied or been waived by the party in whose
favor such conditions run.
b. The closing of the purchase and issuance of Debentures
shall occur on the Closing Date at the offices of the Escrow Agent and shall
take place no later than 3:00 P.M., New York time, on such day or such other
time as is mutually agreed upon by the Company and the Buyer.
c. Notwithstanding anything to the contrary contained herein,
the Escrow Agent will be authorized to release the Escrow Funds to the Company
and to others and to release the other Escrow Property on the Closing Date upon
satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.
18
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the
Debentures to the Buyer pursuant to this Agreement on the Closing Date is
conditioned upon:
a. The execution and delivery of this Agreement by the Buyer;
b. Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for the Debentures in
accordance with this Agreement;
c. The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement, each as if made on such
date, and the performance by the Buyer on or before such date of all covenants
and agreements of the Buyer required to be performed on or before such date;
and
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Debentures on the Closing Date is conditioned upon:
a. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company;
b. Delivery by the Company to the Escrow Agent of the
Certificates in accordance with this Agreement;
c. The accuracy in all material respects on the Closing Date
of the representations and warranties of the Company contained in this
Agreement, each as if made on such date, and the performance by the Company on
or before such date of all covenants and agreements of the Company required to
be performed on or before such date;
d. On the Closing Date, the Registration Rights Agreement
shall be in full force and effect and the Company shall not be in default
thereunder;
e. On the Closing Date, the Buyer shall have received an
opinion of counsel for the Company, dated as of the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer, substantially to the
effect set forth in Annex III attached hereto;
f. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained;
19
g. From and after the date hereof to and including the
Closing Date, the trading of the Common Stock shall not have been suspended by
the SEC or the NASD and trading in securities generally on the New York Stock
Exchange or The NASDAQ/National Market System shall not have been suspended or
limited, nor shall minimum prices been established for securities traded on The
NASDAQ/National Market System, nor shall there be any outbreak or escalation of
hostilities involving the United States or any material adverse change in any
financial market that in either case in the reasonable judgment of the Buyer
makes it impracticable or inadvisable to purchase the Debentures; and
9. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions. To the extent determined by such court,
the Company shall reimburse the Buyer for any reasonable legal fees and
disbursements incurred by the Buyer in enforcement of or protection of any of
its rights under any of the Transaction Agreements.
b. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original.
g. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
h. 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 or
the validity or enforceability of this Agreement in any other jurisdiction.
20
i. This Agreement may be amended only by the written consent
of a majority in interest of the holders of the Debentures and an instrument in
writing signed by the Company.
j. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
10. NOTICES. Any notice required or permitted hereunder shall
be given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of
(a) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(b) the seventh business day after deposit, postage prepaid, in the
United States Postal Service by registered or certified mail, or
(c) the third business day after mailing by next-day express courier,
with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
COMPANY: INFORMATION ARCHITECTS CORP.
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
ATTN: Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopier No.: (704) -
with a copy to:
Xxxxxxx X. Xxx, Esq.
McGuire, Woods, Battle & Xxxxxx LLP
Bank of America Corporate Center
000 Xxxxx Xxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
21
BUYER: At the address set forth on the signature page of this
Agreement.
with a copy to:
Xxxxxxx & Prager, Esqs.
000 Xxxxx Xxxxxx
Attn: Xxxxxx Xxxxxxx, Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
ESCROW AGENT: Xxxxxxx & Prager, Esqs.
000 Xxxxx Xxxxxx
Attn: Xxxxxx Xxxxxxx, Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
and the Buyer's representations and warranties herein shall survive for a
period of twelve (12) months after the execution and delivery of this Agreement
and shall inure to the benefit of the Buyer and the Company and their
respective successors and assigns.
12. EXPENSES. The Company and the Purchaser each shall pay all
costs and expenses that it incurs in connection with the negotiation,
execution, delivery and performance of this Agreement, except as otherwise set
forth in this Agreement and the Transaction Agreements.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
22
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Buyer by one of its officers thereunto duly authorized as of the date set
forth below.
AMOUNT AND PURCHASE PRICE OF DEBENTURES: $_________________________
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this _____ day of __________, 1999.
------------------------------------ --------------------------------------
Address Printed Name of Subscriber
------------------------------------
By:
-----------------------------------
Telecopier No. (Signature of Authorized Person)
----------------------
--------------------------------------
Printed Name and Title
------------------------------------
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its
behalf.
INFORMATION ARCHITECTS CORP.
By:
-------------------------------
Title:
-------------------------------
Date: ,1999
-------------------------------
23
ANNEX I(a) FORM OF INITIAL DEBENTURE
ANNEX I(b) FORM OF ADDITIONAL DEBENTURE
ANNEX II JOINT ESCROW INSTRUCTIONS
ANNEX III OPINION OF COUNSEL
ANNEX IV REGISTRATION RIGHTS AGREEMENT
ANNEX V COMPANY DISCLOSURE MATERIALS
ANNEX VI FORM OF WARRANT
