Exhibit 10.17
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of May 17, 2002
by and among CBCom, Inc., a Delaware corporation, with headquarters located at
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, (the "Company"),
and Ashland Partners, a California general partnership, located at 000 Xxxxx
Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, (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 Rule 506 of
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 Rule 4(2) thereof;
B. The Company owes Buyer, pursuant to a Secured Convertible Debenture,
$100,000 with interest at 6.67 percent per annum, all due and payable on June 6,
2002 (the "Debenture").
C. The Company has authorized the issuance of 5,000,000 shares of its
Common Stock (the "Shares") to be sold to Buyer.
D. The Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, an aggregate of up to 5,000,000 shares of Common Stock (the
"Shares").
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES.
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a. Sale of Shares. The Company hereby sells to the Buyer 5,000,000
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shares of the Company's Common Stock (the "Certificates") and agrees that within
five (5) days from the close of this Agreement, to have certificates for the
Shares issued in the name of Ashland Partners.
b. Purchase of Shares. The Buyer hereby purchases from the Company the
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Shares, and, in consideration therefore, shall pay to the Company the following:
(1) $150,000 in cash
(2) Cancellation of the Secured Convertible Debenture
10.17-1
2. LOCK-UP
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The Buyer agrees to hold the Shares for two years from the date hereof
and not sell, transfer, place in street-name, pledge or hypothecate during the
two- year period. At the end of the two-year period the Buyer may sell or
transfer the Shares pursuant to rule 144 of the Securities Act of 1933.
3. BUYER'S REPRESENTATIONS AND WARRANTIES.
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The Buyer represents and warrants that:
a. Investment Purpose. The Buyer (i) is acquiring the Shares and (ii)
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for its own account for investment 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 1933 Act; provided, however,
that by making the representations herein, the Buyer does not agree to hold any
of the Securities for any minimum 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 1933 Act.
b. Accredited Investor Status. The Buyer is an "accredited investor"
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as that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. The Buyer understands that the Shares are
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being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying in part 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 Shares.
d. Information. The Buyer has been furnished with all materials
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relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Shares which have been requested by the
Buyer. The Buyer has been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its advisors, if any, or its representatives shall
modify, amend or affect the Buyer's right to rely on the Company's
representations and warranties contained in Section 4 below. The Buyer
understands that its investment in the Shares involves a high degree of risk.
The Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Shares.
10.17-2
e. No Governmental Review. The Buyer understands that no United States
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federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Shares or the
fairness or suitability of the investment in the Shares nor have such
authorities passed upon or endorsed the merits of the offering of the Shares.
f. Transfer or Resale. The Buyer understands that (i) the Shares have
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not been and are not being registered under the 1933 Act or any state Shares
laws, and after the Lock-Up period may not be offered for sale, sold, assigned
or transferred unless (A) subsequently registered thereunder, (B) the Buyer
shall have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such Shares to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) the Buyer provides the Company with reasonable
assurance that such Shares can be sold, assigned or transferred pursuant to Rule
144 promulgated under the 1933 Act, as amended, (or a successor rule thereto)
("Rule 144"); (ii) any sale of the Shares made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of the 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;
and (iii) neither the Company nor any other person is under any obligation to
register the Shares under the 1933 Act or any state Shares laws or to comply
with the terms and conditions of any exemption thereunder.
g. Legends. The Buyer understands that the certificates or other
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instruments representing the Shares 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 MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS OR (B) AN OPINION OF COUNSEL, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Shares upon which it is
stamped, if, unless otherwise required by federal or state securities laws, that
(i) such Shares are registered for resale under the 1933 Act, (ii) in connection
10.17-3
with a sale transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public sale,
assignment or transfer of the Shares may be made without registration under the
1933 Act, or (iii) such holder provides the Company with reasonable assurances
that the Shares can be sold pursuant to Rule 144 without any restriction as to
the number of securities acquired as of a particular date that can then be
immediately sold.
h. Authorization; Enforcement; Validity. This Agreement has been duly
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and validly authorized, executed and delivered on behalf of the Buyer and is a
valid and binding agreement of the Buyer, enforceable against the Buyer in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to the Buyer that:
a. Organization and Qualification. The Company and its "Subsidiaries"
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(which, for purposes of this Agreement, means any entity in which the Company,
directly or indirectly, owns capital stock or holds an equity or similar
interest) are corporations duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate power and authorization to own their properties and to carry
on their business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership of property or 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.
b. Authorization; Enforcement; Validity. (i) The Company has the
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requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue the Shares in accordance with the
terms hereof and thereof, (ii) the execution and delivery of this Agreement and
the consummation by it of the transaction contemplated hereby and thereby,
including without limitation the issuance of the Shares have been duly
authorized and unanimously approved by the Company's Board of Directors and no
further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement has been duly executed and
delivered by the Company, (iv) this Agreement, upon execution and delivery
thereof, will constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies.
10.17-4
c. Issuance of Securities. The Shares are duly authorized and, upon
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issuance in accordance with the terms hereof, shall be (i) validly issued, fully
paid and non-assessable, and (ii) free from all taxes, liens and charges with
respect to the issue thereof. The issuance by the Company of the Shares is
exempt from registration under the 1933 Act, assuming that the representations
and warranties of the Buyer contained in Section 4 are true and correct as to
factual matters.
e. No General Solicitation. Neither the Company, nor any of its
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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 0000 Xxx) in connection with the offer or sale of the
Securities.
f. No Other Agreements. The Company has not, directly or indirectly,
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made any agreements with the Buyer relating to the terms or conditions of the
transactions contemplated by the Agreement except as set forth in the Agreement.
5. COVENANTS.
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a. Best Efforts. Each party shall use its best efforts to timely
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satisfy each of the conditions to be satisfied by it as provided in Sections 4
and 5 of this Agreement.
b. Form D and Blue Sky. The Company agrees to file a Form D with
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respect to the Shares as required under Regulation D and to provide a copy
thereof to the Buyer promptly after such filing. 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 Shares for sale to the Buyer pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of the
United States, and shall provide evidence of any such action so taken to the
Buyer. The Company shall make all filings and reports relating to the offer and
sale of the Shares required under applicable securities or "Blue Sky" laws of
the states of the United States following the date of the Agreement.
c. Use of Proceeds. The Company will use the proceeds from the sale of
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the Shares for working capital and for inventory.
6. GOVERNING LAW; MISCELLANEOUS.
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a. Governing Law; Jurisdiction; Jury Trial. The corporate laws of the
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State of Delaware shall govern all issues concerning the relative rights of the
Company and its stockholders. All other questions concerning the construction,
10.17-5
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of California, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
California or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of California. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of Los Angeles, County of Los Angeles, 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.
b. Counterparts. This Agreement may be executed in two or more
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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
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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
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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 supersedes all other
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prior oral or written agreements between 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 hereto with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Buyer, and no provision hereof may be waived other than by
10.17-6
an instrument in writing signed by the party against whom enforcement is sought.
No consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement, as the
case may be.
f. Notices. Any notices, consents, waivers or other communications
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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
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one 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:
CBCom, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, CFO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Law Offices of Xxxxxxx X. Xxxxxxx
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer:
Ashland Partners
000 Xxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx, General Partner
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Or at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party five days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
10.17-7
g. Successors and Assigns. This Agreement shall be binding upon and
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inure to the benefit of the parties and their respective successors and assigns.
The Buyer may assign some or all of its rights hereunder without the consent of
the Company, provided, however, that any such assignment shall not release the
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.
h. No Third Party Beneficiaries. This Agreement is intended for the
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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
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Buyer contained in Section 4 and 5, and the Agreement shall survive the closing.
j. Publicity. The Company and the Buyer shall have the right to
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approve before issuance of any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of any Buyer, to make
any press release or other public disclosure with respect to such transactions
as is required by applicable law, regulation, or rule of the NASD or Principal
Market (although the Buyer shall be consulted by the Company in connection with
any such press release or other public disclosure prior to its release and shall
be provided with a copy thereof).
k. Further Assurances. Each party shall do and perform, or cause to be
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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.
l. No Strict Construction. The language used in this Agreement will be
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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.
m. Remedies. The Buyer and each holder of the Shares shall have all
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rights and remedies set forth in this Agreement 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.
10.17-8
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.
COMPANY: BUYER:
CBCom, INC. ASHLAND PARTNERS
By: By:
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Chian Xx Xxx Xxxxx Xxxxxx
President General Partner
10.17-9
