Exhibit 10.35
SECURITIES PURCHASE AGREEMENT
by and among
SOUTHHAMPTON ENTERPRISES CORP.
SOUTHHAMPTON ENTERPRISES, INC.
THE ANTIGUA GROUP, INC.
and
THE CRUTTENDEN XXXX BRIDGE FUND, LLC
Dated as of May 7, 1997
Senior Subordinated Secured Note
Warrants to Purchase Common Stock
CRUTTENDEN XXXX, INC.
Placement Agent
1. ISSUANCE OF SECURITIES. ........................................... 1
1.1 Authorization ..................................................... 1
1.2 Purchase and Sale of Securities; the Closing ...................... 2
1.3 Representations of the Purchaser .................................. 2
2. REPRESENTATIONS OF ANTIGUA ........................................ 3
2.1 Organization and Authority ........................................ 3
2.2 Financial and Other Information ................................... 3
2.3 Capital Stock; Subsidiaries ....................................... 4
2.4 Litigation, etc ................................................... 4
2.5 Application of Proceeds ........................................... 4
2.6 Outstanding Indebtedness .......................................... 4
2.7 Title to Collateral; Leases ....................................... 5
2.8 Taxes ............................................................. 5
2.9 Compliance with Other Instruments ................................. 5
2.10 Governmental Authorizations, etc .................................. 5
2.11 Licenses, Permits, etc ............................................ 6
2.12 Compliance with ERISA ............................................. 6
2.13 Margin Regulations ................................................ 6
2.14 Investment Company Act ............................................ 6
2.15 Compliance with Law ............................................... 6
2.16 Environmental ..................................................... 6
2.17 Maintenance of Insurance .......................................... 6
2.18 Proprietary Information ........................................... 7
2.19 Security Interest; Priority and Intercreditor Agreement ........... 7
2.20 Related-Party Transactions ........................................ 7
2.21 Manufacturing and Marketing Rights ................................ 7
2.22 Stock Purchase Agreement .......................................... 7
2.23 Disclosure ........................................................ 8
3. REPRESENTATIONS OF SOUTHHAMPTON ................................... 8
3.1 Organization and Authority ........................................ 8
3.2 Financial and Other Information ................................... 8
3.3 Capital Stock; Subsidiaries ....................................... 9
3.4 Litigation, etc ................................................... 10
3.5 Application of Proceeds ........................................... 10
3.6 Outstanding Indebtedness .......................................... 10
3.7 Title to Collateral; Leases ....................................... 10
3.8 Taxes ............................................................. 10
3.9 Compliance with Other Instruments ................................. 11
3.10 Governmental Authorizations, etc .................................. 11
3.11 Licenses, Permits, etc ............................................ 11
3.12 Compliance with ERISA ............................................. 11
3.13 Margin Regulations ................................................ 11
3.14 Investment Company Act ............................................ 11
3.15 Compliance with Law ............................................... 12
3.16 Environmental ..................................................... 12
3.17 Maintenance of Insurance .......................................... 12
3.18 Proprietary Information ........................................... 12
3.19 Security Interest; Priority and Intercreditor Agreement ........... 12
3.20 Related-Party Transactions ........................................ 12
3.21 Manufacturing and Marketing Rights ................................ 13
3.22 Stock Purchase Agreement .......................................... 13
3.23 Disclosure ........................................................ 13
3.24 Commission Filings ................................................ 13
4. REPRESENTATIONS OF SEI ............................................ 14
4.1 Organization and Authority ........................................ 14
4.2 Financial and Other Information ................................... 14
4.3 Capital Stock; Subsidiaries ....................................... 15
4.4 Litigation, etc ................................................... 15
4.5 Application of Proceeds ........................................... 15
4.6 Outstanding Indebtedness .......................................... 15
4.7 Title to Collateral; Leases ....................................... 16
4.8 Taxes ............................................................. 16
4.9 Compliance with Other Instruments ................................. 16
4.10 Governmental Authorizations, etc .................................. 16
4.11 Licenses, Permits, etc ............................................ 16
4.12 Compliance with ERISA ............................................. 17
4.13 Margin Regulations ................................................ 17
4.14 Investment Company Act ............................................ 17
4.15 Compliance with Law ............................................... 17
4.16 Environmental ..................................................... 17
4.17 Maintenance of Insurance .......................................... 17
4.18 Proprietary Information ........................................... 17
4.19 Security Interest; Priority and Intercreditor Agreement ........... 18
4.20 Related-Party Transactions ........................................ 18
4.21 Manufacturing and Marketing Rights ................................ 18
4.22 Stock Purchase Agreement .......................................... 18
4.23 Disclosure ........................................................ 18
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER .............. 19
5.1 Securities and Security Documents ................................. 19
5.2 Proceedings Satisfactory .......................................... 19
5.3 Other Securities and Related Transactions; Intercreditor
Agreement ......................................................... 19
5.4 Security Agreements ............................................... 19
5.5 Stock Purchase Agreement; Capital Investment ...................... 19
5.6 Representations True, etc.; Compliance Certificate ................ 19
5.7 Opinion of Counsel ................................................ 20
5.8 Approval of VSE ................................................... 20
5.9 Commitment for Public Offering .................................... 20
6. PREPAYMENT AND SUBORDINATION OF THE NOTE .......................... 20
6.1 Prepayment ........................................................ 20
6.2 Subordination ..................................................... 20
7. FINANCIAL INFORMATION; COMPLIANCE CERTIFICATES;
MAINTENANCE OF RECORDS ............................................ 21
8. INSPECTION ........................................................ 21
8.1 Inspection ........................................................ 21
9. COVENANTS ......................................................... 22
9.1 Payment of Note ................................................... 22
9.2 Guaranty of Payment ............................................... 22
9.3 Limitations on Distributions and Investments ...................... 22
9.4 Limitation on Indebtedness ........................................ 22
9.5 Limitations on Liens .............................................. 23
9.6 Observance of Statutes, Regulations and Orders .................... 23
9.7 Corporate Existence ............................................... 23
9.8 Taxes ............................................................. 23
9.9 Limitations on Transactions with Affiliates ....................... 23
9.10 Investment Company Act ............................................ 23
9.11 Maintenance of Properties ......................................... 23
9.12 Books and Records ................................................. 24
9.13 Maintenance of Insurance .......................................... 24
9.14 Accounting Changes ................................................ 25
9.15 Merger, Consolidation or Sale ..................................... 25
9.16 Change of Control ................................................. 25
9.17 Compliance with ERISA ............................................. 26
9.18 Employee Stock Option Plans ....................................... 26
9.19 Sale of Assets .................................................... 26
9.20 Restriction on Creation and Ownership of Subsidiaries;
Restriction on Transfer of Subsidiary Interest .................... 26
9.21 Disclosure of Environmental Claims ................................ 26
9.22 Consolidated Capital Expenditures ................................. 26
9.23 Restricted Payments ............................................... 26
9.24 Preservation of Collateral ........................................ 27
9.25 Board Seat ........................................................ 27
9.26 Issuance of Additional Shares ..................................... 27
10. DEFINITIONS ....................................................... 27
10.1 Definitions ....................................................... 27
10.2 Accounting Terms .................................................. 28
11. EVENTS OF DEFAULT; REMEDIES ....................................... 28
11.1 Events of Default Defined; Acceleration of Maturity ............... 28
11.2 Suits for Enforcement ............................................. 30
11.3 Remedies Cumulative; Remedies Not Waived .......................... 30
11.4 Security Documents ................................................ 31
12. REGISTRATION, TRANSFER AND EXCHANGE OF NOTE; LOST, ETC., NOTES .... 31
13. AMENDMENT AND WAIVER .............................................. 31
13.1 Amendment and Waiver .............................................. 31
13.2 Effect of Amendment or Waiver ..................................... 31
14. TAXES ............................................................. 31
15. MISCELLANEOUS ..................................................... 32
15.1 Fees and Expenses ................................................. 32
15.2 Reliance on and Survival of Representations ....................... 32
15.3 Successors and Assigns ............................................ 32
15.4 Indemnification ................................................... 32
15.5 Notices ........................................................... 33
15.6 Counterparts ...................................................... 34
15.7 Governing Law ..................................................... 34
15.8 Arbitration ....................................................... 34
15.9 Waiver of Jury Trial .............................................. 34
15.10 Attorneys' Fees ................................................... 35
15.11 No Commissions .................................................... 35
15.12 Invalidity ........................................................ 35
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement") is entered into as
of May 7, 1997 by and among Southhampton Enterprises Corp., a British Columbia,
Canada corporation ("Southhampton"), Southhampton Enterprises, Inc., a Texas
corporation ("SEI"), The Antigua Group, Inc., a Nevada corporation ("Antigua"),
and The Cruttenden Xxxx Bridge Fund, LLC, a California limited liability company
("Purchaser"). Southhampton and Antigua are hereinafter sometimes collectively
referred to as the "Issuers". Southhampton, SEI and Antigua are hereinafter
sometimes collectively referred to as the "Loan Parties." In consideration of
the mutual promises, representations, warranties, covenants and conditions set
forth below, the parties agree as follows:
1. ISSUANCE OF SECURITIES.
1.1 Authorization. Antigua has duly authorized the issue of Antigua's
Senior Subordinated Secured Note (the "Note") in the aggregate principal amount
of $1,020,000, such Note to be in the form of Exhibit A, and Southhampton has
duly authorized the issue of (i) a warrant (the "Warrant") in the form of
Exhibit B to purchase an aggregate of 10% of that number of shares of
Southhampton's Common Stock, no par value ("Southhampton Common Stock"), which
will be outstanding immediately following consummation of the transactions
contemplated by the Other Securities Documents (as defined below), on a
fully-diluted basis, at an exercise price as provided in the Warrant, subject to
adjustments set forth therein, and (ii) the Southhampton Common Stock issuable
upon exercise of the Warrant. The Note shall mature, bear interest, be payable
and otherwise be substantially in the manner provided herein and in Exhibit A.
SEI and Southhampton shall each execute and deliver to Purchaser a guaranty
agreement in substantially the form of Exhibit C pursuant to which Southhampton
and SEI shall directly, primarily, absolutely and unconditionally guarantee the
payment of the Note. Antigua shall execute and deliver to Purchaser a Security
Agreement in substantially the form of Exhibit D, and Southhampton and SEI shall
each execute and deliver to Purchaser a Security and Pledge Agreement in
substantially the form of Exhibit E and Exhibit F, respectively, evidencing
Purchaser's security interest in substantially all of the assets of Antigua,
Southhampton and SEI ("Collateral"), including a security interest in all of the
rights of SEI under the Stock Purchase Agreement dated May 7, 1997 (the "Stock
Purchase Agreement"), pursuant to which SEI agreed to acquire all of the issued
and outstanding stock of Antigua, together with UCC-1 Financing Statements
evidencing the security interest in the Collateral (collectively the "Security
Documents"). The Note and
Warrant, and the certificates and other instruments from time to time evidencing
the Note and the Warrant, are herein sometimes collectively called the
"Securities."
In addition to the Note and Warrant which are being purchased by
Purchaser pursuant to this Agreement, the Issuers and SEI have collectively
authorized several other transactions and issuances of other securities
(hereinafter, the "Other Securities"), relating to capital investments to be
made to SEI and Antigua in connection with the Stock Purchase Agreement. The
documents and agreements constituting the Other Securities are herein sometimes
collectively the "Other Securities Documents".
1.2 Purchase and Sale of Securities; the Closing. Antigua shall sell to
Purchaser and, subject to the terms and conditions hereof, Purchaser shall
purchase from Antigua, the Note at a price equal to 100% of the principal amount
thereof, which shall be issued together with the Warrant, at an aggregate
combined purchase price equal to $1,020,000, less amounts withheld in accordance
with Section 15.1.
The closing (the "Closing") of such purchase of the Securities and the
closing of the purchase of the Other Securities shall take place concurrently at
such other time as the parties hereto and thereto may mutually agree; provided,
however, that if the Closing Date shall not have occurred within ten (10)
Business Days after the date hereof, Purchaser's obligation to purchase and pay
for the Note and Warrant, and the Issuers' respective obligations to sell the
Note and Warrant hereunder, shall be terminated and Purchaser and the Issuers
shall have no liability or further obligations hereunder.
On the Closing Date, the Issuers will deliver to Purchaser at the
offices of Stradling, Yocca, Xxxxxxx & Xxxxx in Newport Beach, California, the
Note and Warrant, in the name of Purchaser or its nominee, duly executed and
dated the Closing Date, against Purchaser's delivery to Antigua of immediately
available funds in the amount of the purchase price.
1.3 Representations of the Purchaser. Purchaser hereby represents and
warrants to the Issuers that:
(a) The Purchaser is acquiring the Securities for its own
account, not as a nominee or agent, for the purpose of investment, and not with
a view to or for sale in connection with any distribution thereof in violation
of the Securities Act of 1933 (the "Securities Act").
(b) The Purchaser has no present intention of selling,
granting any participation in or otherwise distributing the Securities and
Purchaser does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant a participation to such person or to any
third person, with respect to any of the Securities.
(c) Purchaser understands that the Securities at the time of
issuance will not be registered under the Securities Act on the ground that the
sale provided for in this Agreement and the issuance of securities hereunder is
exempt from registration under the Securities Act and that the Issuers' reliance
on such exemption is predicated in part on Purchaser's representations set forth
herein.
(d) Purchaser represents that Purchaser is experienced in
evaluating and investing in companies in the development stage, Purchaser is
able to fend for itself, Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of Purchaser's investment in the Securities, and Purchaser has the ability
to bear the economic risks of such investment.
(e) Purchaser understands that the Securities may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Securities or an available exemption from
registration under the Securities Act, the Securities may need to be held
indefinitely.
(f) Purchaser is a commercial finance lender duly licensed as
such pursuant to Sections 22000 et seq. of the California Financial Code.
(g) The Purchaser is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission, as presently in effect.
2. REPRESENTATIONS OF ANTIGUA.
Antigua represents and warrants to Purchaser as of the date hereof and
as of the Closing Date that:
2.1 Organization and Authority. Antigua is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada, and has all requisite power and authority to own or hold under lease the
property it purports to own or hold under lease and to transact the business it
transacts and proposes to transact. Antigua has all requisite corporate power
and authority to execute and deliver this Agreement, the Securities and the
Security Documents and any other documents or agreements contemplated hereby and
thereby, including the Other Securities and the Other Security Documents, to
which Antigua is a party, to perform the obligations hereunder and thereunder
and to consummate the transactions contemplated hereunder and thereunder.
Antigua is duly qualified as a foreign corporation and is in good standing in
each jurisdiction in which the character of the properties owned or held under
lease by it or the nature of the business transacted by it requires such
qualification except in such jurisdictions, if any, in which the failure to be
so qualified
or in good standing will not have a material adverse effect upon Antigua.
The execution, delivery and performance of this Agreement, the
Securities and the Security Documents, the Other Securities and the Other
Security Documents and any other documents or agreements to which Antigua is a
party contemplated hereby and thereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized and approved by the
Board of Directors of Antigua. Each of this Agreement, the Securities and the
Security Documents, the Other Securities and the Other Security Documents and
any other document or agreement to which Antigua is a party contemplated hereby
or thereby has been (or on the Closing Date will have been) duly authorized,
executed and delivered by, and each is (or, when duly executed and delivered on
the Closing Date, will be) the valid and binding obligation of, Antigua,
enforceable in accordance with its terms, except as may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws or by
legal or equitable principles relating to or limiting creditors' rights
generally.
2.2 Financial and Other Information. Antigua has delivered to Purchaser
copies of Antigua's balance sheets and related statements of operation,
stockholders, equity and cash flows (including in each case the related
schedules and notes) for the period ended December 31, 1996, (collectively, the
"Antigua Financial Statements") attached hereto as Exhibit G.
The Antigua Financial Statements fairly present the consolidated
financial position of Antigua as of the respective dates of such balance sheet
and the consolidated results of Antigua's operations for the period or periods
covered by such statements of operations, consolidated stockholders' equity and
cash flows, and have been prepared in accordance with the books and records of
Antigua. Except as disclosed on Schedule 2.2, there are no material differences
between the consolidated results of operations and consolidated financial
position of Antigua as reflected in the Antigua Financial Statements and what
the consolidated results of operations and consolidated financial position of
Antigua would be were such Antigua Financial Statements prepared in accordance
with generally accepted accounting principles.
Since December 31, 1996, there have been no changes in the assets,
liabilities, contingent or otherwise, or financial position of Antigua from that
set forth in such balance sheet as of such date, other than changes in the
ordinary course of business which have not, either individually or in the
aggregate, been materially adverse to Antigua.
As of their respective dates, none of the Antigua Financial Statements,
this Agreement or any other document, certificate or written statement furnished
to Purchaser by or on behalf of Antigua in connection with the transactions
contemplated hereby contain any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements not misleading in light of the circumstances
under which they were made.
2.3 Capital Stock; Subsidiaries. The authorized capital stock of
Antigua consists of 5,000,000 shares of Common Stock, $.0005 par value (the
"Antigua Common Stock"). On the Closing Date, 2,074,600 shares of Antigua Common
Stock, all of which will be directly and beneficially owned by SEI will be
validly issued and outstanding and fully paid and nonassessable; and no shares
of Antigua Common Stock will be outstanding or authorized for issuance pursuant
to the exercise of stock options or warrants or otherwise.
Antigua (i) does not own, beneficially or of record, any shares or
capital stock of, or hold any other equity interest in, any Person, (ii) is not
committed to purchase or acquire any such interest, and (iii) is not a
participant in any joint venture, partnership or similar arrangement.
Antigua does not have outstanding: (i) any capital stock or other
securities convertible into or exchangeable for any of its capital stock or any
rights to subscribe for or to purchase, or any options for the purchase of, or
any agreements (contingent or otherwise) providing for the issuance of, or any
calls, commitments or claims of any character relating to, any of its capital
stock or any securities convertible into or exchangeable for any of its capital
stock; or (ii) any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its capital stock or obligation evidencing
the rights of the holders thereof to purchase any of its capital stock. There is
not in effect on the date of this Agreement any agreement by Antigua pursuant to
which any holders of securities of Antigua have a right to cause Antigua to
register such securities under the Securities Act.
2.4 Litigation, etc. Except as set forth on Schedule 2.4, there is no
action, suit, proceeding or investigation pending or, to the knowledge of
Antigua, currently threatened against Antigua which challenges the validity of
this Agreement or the right of Antigua to enter into it, or to consummate the
transactions contemplated hereby, or which might result, either individually or
in the aggregate, in any material adverse changes in the assets, condition,
affairs or prospects of Antigua, financially or otherwise, or any change in the
current equity ownership of Antigua.
2.5 Application of Proceeds. Antigua, SEI and Southhampton will apply
the net proceeds of the sale of the Securities (after the payment of fees and
expenses associated with the transaction) to fund a portion of the purchase
price payable under the Stock Purchase Agreement.
2.6 Outstanding Indebtedness. Schedule 2.6A sets forth a correct and
complete list of all indebtedness of Antigua outstanding or existing on the date
hereof and to be existing or
outstanding on the Closing Date (the "Antigua Indebtedness") other than the
Antigua Indebtedness created under or evidenced by the Note, this Agreement and
the Security Documents, but including the indebtedness of Antigua under the
Other Securities Documents, if any. With respect to each item of Antigua
Indebtedness listed in Schedule 2.6A, Antigua has made available to Purchaser a
true and complete copy of each instrument or agreement evidencing such Antigua
Indebtedness or pursuant to which such Indebtedness was issued or secured
(including each amendment, consent, waiver or similar instrument in respect
thereof), as the same is in effect on the date hereof. Except as disclosed on
Schedule 2.6B, Antigua is not in monetary or other material default in the
performance or observance of any of the terms, covenants or conditions contained
in any instrument or agreement evidencing the Antigua Indebtedness listed in
Schedule 2.6A or pursuant to which such Antigua Indebtedness was issued or
secured and has not requested any waiver in respect of any default and no event
has occurred and is continuing which, with notice or the lapse of time or both,
would constitute such a default.
2.7 Title to Collateral; Leases. Except as reflected in Schedule 2.7A
and the Antigua Financial Statements (defined in Section 2.2), and except (i)
for liens for current taxes not yet delinquent, (ii) for liens imposed by law
and incurred in the ordinary course of business for obligations not past due to
carriers, warehousemen, laborers, materialmen and the like, and (iii) for liens
in respect of pledges or deposits under workers' compensation laws or similar
legislation (collectively, "Permitted Liens"), Antigua has good and marketable
title to the Collateral and to all of its other property and assets, free and
clear of all mortgages, liens, claims, and encumbrances. Antigua enjoys full and
undisturbed possession under all leases necessary in any material respect for
the operation of its business, which leases are listed on Schedule 2.7B (the
"Leases"). None of the Leases contains any unusual or burdensome provisions
that, individually or in the aggregate, are likely to materially impair the
operation of the business of Antigua. The Leases are valid and subsisting and
are in full force and effect. Antigua has delivered to Purchaser a true and
complete copy of each of the Leases.
2.8 Taxes. Except as disclosed on Schedule 2.8, Antigua has filed all
tax returns which are required to have been filed by Antigua in any jurisdiction
and have paid all taxes shown to be due and payable on such returns and other
taxes and assessments payable by Antigua to the extent the same have become due
and payable. Antigua knows of no proposed material tax assessment against
Antigua and in the opinion of Antigua, all tax liabilities are adequately
provided for on the books of Antigua.
2.9 Compliance with Other Instruments. The consummation of the
transactions contemplated by this Agreement and the execution, delivery and
performance of the terms and provisions of this Agreement, the Securities and
the Security Documents, the Other Securities and the Other Securities Documents,
the Stock Purchase
Agreement, the Intercreditor Agreement executed concurrently herewith by and
among LaSalle Business Credit, Inc., Xxxxxx X. Xxxxxx (as agent for the Antigua
shareholders), Imperial Bank Arizona, Antigua and Purchaser (the "Intercreditor
Agreement") or any other document or agreement contemplated hereby or thereby
will not contravene, result in any breach of, constitute a default or require a
consent under, or result in the creation of any lien (other than as contemplated
in the Security Documents or the Other Securities Documents) in respect of any
property of Antigua under, any material indenture, mortgage, deed of trust, bank
loan or credit agreement, corporate charter, by-laws or other agreement or
instrument to which Antigua is a party or by which Antigua or any of its
properties may be bound or affected.
2.10 Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any governmental
body is required for the validity of the execution and delivery, or for the
performance by Antigua, of this Agreement, the Securities and the Security
Documents, the Other Securities and the Other Securities Documents, the Stock
Purchase Agreement, the Intercreditor Agreement or any other document or
agreement or instrument contemplated hereby or thereby other than the (i) filing
and recording of certain of the Security Documents and Other Securities
Documents, (ii) forms required to be filed by the Securities and Exchange
Commission pursuant to Regulation D, (iii) forms required by Section 25102(f) of
the California Corporations Code or (iv) other "Blue Sky" filings.
2.11 Licenses, Permits, etc. Antigua possesses all licenses, permits,
franchises, authorizations, and similar authority required to conduct its
business substantially as now conducted and as currently proposed to be
conducted, without known conflict with the rights of others, and Antigua
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as presently planned to be conducted.
2.12 Compliance with ERISA. Except as disclosed on Schedule 2.12A, all
employee benefit plans maintained or contributed to by Antigua, or under which
Antigua has any obligation or liability, are in substantial compliance with
respect to both their terms and operation with the Internal Revenue Code of
1954, as amended, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any and all other applicable laws. Except as disclosed in
Schedule 2.12B, Antigua does not have any pension, retirement or similar plans
or obligations, whether of a legally binding nature or in the nature of an
informal understanding.
2.13 Margin Regulations. No part of the proceeds from the sale of the
Securities or the Other Securities hereunder or thereunder will be used,
directly or indirectly, for the purpose of buying or carrying any "margin stock"
within the meaning of Regulation G of the Board of Governors of the Federal
Reserve System (12 CFR 207), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve
Antigua in a violation of Regulation X of said Board (12 CFR 224) or to involve
any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).
The assets of Antigua do not include any margin stock, and Antigua does not have
any present intention of acquiring any margin stock.
2.14 Investment Company Act. Antigua is not an investment company or a
person directly or indirectly controlled by or acting on behalf of an investment
company within the meaning of the Investment Company Act of 1940, as amended.
2.15 Compliance with Law. To the best of its knowledge, Antigua has
been, and on the Closing Date will continue to be, in compliance with all
applicable laws (including duties imposed by common law), rules, regulations,
orders, ordinances, judgments and decrees of all governmental authorities
(federal, state, local and foreign) and all requirements imposed under building,
zoning, occupational safety and health, pension, environmental control, toxic
waste, fair employment, equal opportunity or similar laws, rules, regulations
and ordinances.
2.16 Environmental. To the best knowledge of Antigua, Antigua has
obtained all licenses and permits which are required under applicable
environmental laws in connection with all real estate owned or leased by them
and the conduct of their respective business and operations. Each of such
licenses and permits is in full force and effect and Antigua is in compliance in
all material respects with the terms and conditions of all such licenses and
permits and with any applicable environmental law.
2.17 Maintenance of Insurance. Antigua maintains policies of insurance
issued by responsible and reputable insurance companies or associations in such
amounts and to cover such risks as are usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which Antigua operates.
2.18 Proprietary Information. To the best of its knowledge, Antigua
owns or possesses sufficient legal rights to all trade or service marks,
copyrights, patents, processes, operation manuals, techniques, trade secrets and
similar proprietary property and rights necessary for its business as now
conducted and as proposed to be conducted, without any known conflict or
infringement of the rights of others. To the extent applicable, set forth on
Schedule 2.18A are the permits, licenses and registrations to use the foregoing
proprietary information. Except as set forth on Schedule 2.18B, Antigua has not
received any communications alleging that it has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, or other proprietary rights of any other person or entity
nor does Antigua have reason to believe that it has violated or, by conducting
its business as proposed, would violate any of the patents, trademarks, service
marks, trade names, or other proprietary rights of any other person or entity.
2.19 Security Interest; Priority and Intercreditor Agreement. Upon the
due filing or recording in all places necessary to perfect and maintain the
liens purported to be created by the Security Documents and the Other Securities
Documents, the liens of the Security Documents and Other Securities Documents
shall constitute fully perfected security interests in all right, title and
interest of Antigua in and to the property described therein, in the order of
priority set forth in the Intercreditor Agreement, prior to all other consensual
security interests against such property or interests therein other than
Permitted Liens.
2.20 Related-Party Transactions. Except as set forth on Schedule 2.20,
no employee, officer, stockholder or director of Antigua or member of his or her
immediate family is indebted to Antigua, nor is Antigua indebted (or committed
to make loans or extend or guarantee credit) to any of them, other than (i) for
payment of salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of Antigua, and (iii) for other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of Antigua). To the best knowledge of Antigua, none of such persons
has any direct or indirect ownership interest in any firm or corporation with
which Antigua is affiliated or with which Antigua has a business relationship,
or any firm or corporation that competes with Antigua, except that employees,
stockholders, officers, or directors of Antigua and members of their immediate
families may own stock in publicly traded companies that may compete with
Antigua. To the best knowledge of Antigua, no officer, director, or stockholder
or any member of their immediate families is, directly or indirectly, interested
in any material contract with Antigua (other than as set forth on Schedule
2.20).
2.21 Manufacturing and Marketing Rights. Set forth on Schedule 2.21
attached hereto is a list of the material license agreements to which Antigua is
a party. As used herein, "material license agreement" shall mean one or more
license agreements which individually or in the aggregate generate five percent
(5%) or more of the revenues of Antigua.
2.22 Stock Purchase Agreement. Antigua has executed a form of the Stock
Purchase Agreement and delivered it to each other party thereto, and the Stock
Purchase Agreement constitutes the valid and binding obligations of Antigua,
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the rights of creditors generally.
2.23 Disclosure. Neither this Agreement nor any Schedule hereto nor any
certificate or other document referenced herein or therein and furnished to the
Purchaser by Antigua contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
therein or herein, in light of the circumstances under which they were made,
not misleading. There is no material fact known to Antigua, or to the reasonable
belief of Antigua, relating to the business, properties, affairs, operations,
condition (financial or otherwise) or prospects of Antigua that materially
adversely affects the same or materially adversely affects the ability of
Antigua to perform its obligations under this Agreement, the Securities, the
Security Agreement or any other document or agreement contemplated hereby or
thereby that has not been disclosed to the Purchaser by Antigua. No claim made
by the Purchaser that is based on an alleged breach of the representation and
warranty contained in the preceding sentence shall result in liability of
Antigua to the Purchaser if Antigua proves that the Purchaser had actual
knowledge of the same material fact prior to the Closing under this Agreement,
the burden of proof of such knowledge being on Antigua.
3. REPRESENTATIONS OF SOUTHHAMPTON.
Southhampton represents and warrants to Purchaser as of the date hereof
and as of the Closing Date that:
3.1 Organization and Authority. Southhampton is a corporation duly
organized, validly existing and in good standing under the laws of the province
of British Columbia, Canada and has all requisite power and authority to own or
hold under lease the property it purports to own or hold under lease and to
transact the business it transacts and proposes to transact. Southhampton has
all requisite corporate power and authority to execute and deliver this
Agreement, the Securities and the Security Documents and any other documents or
agreements contemplated hereby and thereby, including the Other Securities and
the Other Security Documents, to which Southhampton is a party, to perform the
obligations hereunder and thereunder and to consummate the transactions
contemplated hereunder and thereunder. Southhampton is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the properties owned or held under lease by it or the nature of the
business transacted by it requires such qualification except in such
jurisdictions, if any, in which the failure to be so qualified or in good
standing will not have a material adverse effect upon Southhampton.
The execution, delivery and performance of this Agreement, the
Securities and the Security Documents, the Other Securities and the Other
Security Documents and any other documents or agreements to which Southhampton
is a party contemplated hereby and thereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by the Board of Directors of Southhampton. Each of this Agreement, the
Securities and the Security Documents, the Other Securities and the Other
Security Documents and any other document or agreement to which the Southhampton
is a party contemplated hereby or thereby has been (or on the Closing Date will
have been) duly authorized, executed and delivered by, and each is (or, when
duly executed and delivered on the Closing Date, will be) the valid and binding
obligation of, Southhampton, enforceable in accordance with its terms, except as
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws or by legal or equitable principles relating to or
limiting creditors' rights generally.
3.2 Financial and Other Information. Southhampton delivered to
Purchaser copies of the Southhampton's balance sheets and related statements of
operations, stockholders, equity and cash flows (including in each case the
related schedules and notes) for the period ended December 31, 1996
(collectively, the "Southhampton Financial Statements") attached hereto as
Exhibit H.
The Southhampton Financial Statements fairly present the consolidated
financial position of Southhampton as of the respective dates of such balance
sheet and the consolidated results of Southhampton's operations for the period
or periods covered by such statements of operations, consolidated stockholders'
equity and cash flows, and have been prepared in accordance with the books and
records of Southhampton. Except as disclosed on Schedule 3.2, there are no
material differences between the consolidated results of operations and
consolidated financial position of Southhampton as reflected in the Southhampton
Financial Statements and what the consolidated results of operations and
consolidated financial position of Southhampton would be were such Southhampton
Financial Statements prepared in accordance with generally accepted accounting
principles.
Since December 31, 1996, there have been no changes in the assets,
liabilities, contingent or otherwise, or financial position of Southhampton from
that set forth in such balance sheet as of such date, other than changes in the
ordinary course of business which have not, either individually or in the
aggregate, been materially adverse to Southhampton and SEI, taken as a whole.
As of their respective dates, none of the Southhampton Financial
Statements, this Agreement or any other document, certificate or written
statement furnished to Purchaser by or on behalf of Southhampton in connection
with the transactions contemplated hereby contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements not misleading in light of the circumstances under which they were
made.
3.3 Capital Stock; Subsidiaries. The authorized capital stock of
Southhampton consists of 100,000,000 shares of Southhampton Common Stock, no par
value (the "Southhampton Common Stock"), and 30,000,000 shares of Preferred
Stock, no par value (the "Southhampton Preferred Stock"). On the date hereof and
on the Closing Date, only __________ shares of Southhampton Common Stock, and
5,250,000 shares of Southhampton Preferred Stock will be issued and outstanding
on a fully-diluted basis, all of which shares have been duly and validly issued
and are fully paid and nonassessable; and, except for the Warrant and except as
set forth on Schedule 3.3A hereto, no shares of Southhampton Common Stock are
or will be authorized for issuance pursuant to the exercise of the stock options
and warrants or otherwise.
Except for all of the issued or outstanding shares of SEI Common Stock
(as defined in Section 4.3 below) and as otherwise set forth on Schedule 3.3B,
Southhampton (i) does not own, beneficially or of record, any shares or capital
stock of, or hold any other equity interest in, any Person, (ii) is not
committed to purchase or acquire any such interest, or (iii) is not a
participant in any joint venture, partnership or similar arrangement.
Except as otherwise set forth on Schedule 3.3A, Southhampton does not
have outstanding: (i) any capital stock or other securities convertible into or
exchangeable for any of its capital stock or any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreements (contingent or
otherwise) providing for the issuance of, or any calls, commitments or claims of
any character relating to, any of its capital stock or any securities
convertible into or exchangeable for any of its capital stock; or (ii) any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its capital stock or obligation evidencing the rights of the
holders thereof to purchase any of its capital stock. Except as set forth in
Schedule 3.3C, there is not in effect on the date of this Agreement any
agreement by Southhampton pursuant to which any holders of securities of
Southhampton have a right to cause Southhampton to register such securities
under the Securities Act.
3.4 Litigation, etc. Except as set forth on Schedule 3.4, there is no
action, suit, proceeding or investigation pending or, to the knowledge of
Southhampton, currently threatened against Southhampton which challenges the
validity of this Agreement or the right of Southhampton to enter into it, or to
consummate the transactions contemplated hereby, or which might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of Southhampton, financially or otherwise, or
any change in the current equity ownership of Southhampton.
3.5 Application of Proceeds. Southhampton, SEI and Antigua will apply
the net proceeds of the sale of the Securities (after the payment of fees and
expenses associated with the transaction) to fund a portion of the purchase
price payable under the Stock Purchase Agreement.
3.6 Outstanding Indebtedness. Schedule 3.6A sets forth a correct and
complete list of all indebtedness of Southhampton outstanding or existing on the
date hereof and to be existing or outstanding on the Closing Date (the
"Southhampton Indebtedness") other than Southhampton Indebtedness created under
or evidenced by this Agreement and the Security Documents, but including the
indebtedness of Southhampton under the Other Securities Documents, if any. With
respect to each item of Southhampton Indebtedness listed in Schedule 3.6A,
Southhampton has made available to
Purchaser a true and complete copy of each instrument or agreement evidencing
such Southhampton Indebtedness or pursuant to which such Southhampton
Indebtedness was issued or secured (including each amendment, consent, waiver or
similar instrument in respect thereof), as the same is in effect on the date
hereof. Except as disclosed on Schedule 3.6B, Southhampton is not in monetary or
other material default in the performance or observance of any of the terms,
covenants or conditions contained in any instrument or agreement evidencing
Southhampton Indebtedness listed in Schedule 3.6A or pursuant to which such
Southhampton Indebtedness was issued or secured and has not requested any waiver
in respect of any default and no event has occurred and is continuing which,
with notice or the lapse of time or both, would constitute such a default.
3.7 Title to Collateral; Leases. Except (i) as reflected in Schedule
3.7A, (ii) as reflected in the Southhampton Financial Statements (defined in
Section 2.2), and (iii) for Permitted Liens, Southhampton has good and
marketable title to the Collateral and to all of its other property and assets,
free and clear of all mortgages, liens, claims, and encumbrances. Southhampton
enjoys full and undisturbed possession under all leases necessary in any
material respect for the operation of its business, which leases are listed on
Schedule 3.7B (the "Leases"). None of the Leases contains any unusual or
burdensome provisions that, individually or in the aggregate, are likely to
materially impair the operation of the business of Southhampton. The Leases are
valid and subsisting and are in full force and effect. Southhampton has
delivered to Purchaser a true and complete copy of each of the Leases.
3.8 Taxes. Except as disclosed on Schedule 3.8, Southhampton has filed
all tax returns which are required to have been filed by Southhampton in any
jurisdiction and has paid all taxes shown to be due and payable on such returns
and other taxes and assessments payable by Southhampton to the extent the same
have become due and payable. Southhampton knows of no proposed material tax
assessment against Southhampton and in the opinion of Southhampton all tax
liabilities are adequately provided for on the books of Southhampton.
3.9 Compliance with Other Instruments. The consummation of the
transactions contemplated by this Agreement and the execution, delivery and
performance of the terms and provisions of this Agreement, the Securities and
the Security Documents, the Other Securities and the Other Securities Documents,
the Stock Purchase Agreement, the Intercreditor Agreement or any other document
or agreement contemplated hereby or thereby will not contravene, result in any
material breach of, constitute a material default or require a consent under, or
result in the creation of any material lien (other than as contemplated in the
Security Documents or the Other Securities Documents) in respect of any property
of Southhampton under, any material indenture, mortgage, deed of trust, bank
loan or credit agreement, corporate charter, by-laws or other agreement or
instrument to which Southhampton is a party or
by which Southhampton or any of its properties may be bound or affected.
3.10 Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any governmental
body is required for the validity of the execution and delivery, or for the
performance by Southhampton, of this Agreement, the Securities and the Security
Documents, the Other Securities and the Other Securities Documents, the Stock
Purchase Agreement, or any other document or agreement or instrument
contemplated hereby or thereby other than the (i) filing and recording of
certain of the Security Documents and Other Securities Documents, (ii) forms
required to be filed by the Securities and Exchange Commission pursuant to
Regulation D, (iii) forms required by Section 25102(f) of the California
Corporations Code, (iv) other "Blue Sky" filings or (v) forms required to be
filed with, or approvals to be received from, the Vancouver Stock Exchange
("VSE").
3.11 Licenses, Permits, etc. Southhampton possesses all licenses,
permits, franchises, authorizations, and similar authority required to conduct
its business substantially as now conducted and as currently proposed to be
conducted, without known conflict with the rights of others, and each believes
it can obtain, without undue burden or expense, any similar authority for the
conduct of its business as presently planned to be conducted.
3.12 Compliance with ERISA. Except as disclosed on Schedule 3.12A, all
employee benefit plans maintained or contributed to by Southhampton, or under
which Southhampton has any obligation or liability, are in substantial
compliance with respect to both their terms and operation with the Internal
Revenue Code of 1954, as amended, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and any and all other applicable laws. Except as
disclosed in Schedule 3.12B, Southhampton does not have any pension, retirement
or similar plans or obligations, whether of a legally binding nature or in the
nature of an informal understanding.
3.13 Margin Regulations. No part of the proceeds from the sale of the
Securities or the Other Securities hereunder or thereunder will be used,
directly or indirectly, for the purpose of buying or carrying any "margin stock"
within the meaning of Regulation G of the Board of Governors of the Federal
Reserve System (12 CFR 207), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve Southhampton in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). The assets of
Southhampton do not include any margin stock, and Southhampton does not have any
present intention of acquiring any margin stock.
3.14 Investment Company Act. Southhampton is not an investment company
or a person directly or indirectly controlled by
or acting on behalf of an investment company within the meaning of the
Investment Company Act of 1940, as amended.
3.15 Compliance with Law. Except as set forth on Schedule 3.15, to the
best of its knowledge, Southhampton has been, and on the Closing Date will
continue to be, in compliance with all applicable laws (including duties imposed
by common law), rules, regulations, orders, ordinances, judgments and decrees of
all governmental authorities (federal, state, local and foreign) and all
requirements imposed under building, zoning, occupational safety and health,
pension, environmental control, toxic waste, fair employment, equal opportunity
or similar laws, rules, regulations and ordinances.
3.16 Environmental. To the best knowledge of Southhampton, Southhampton
has obtained all licenses and permits which are required under applicable
environmental laws in connection with all real estate owned or leased by them
and the conduct of their respective business and operations. Each of such
licenses and permits is in full force and effect and Southhampton is in
compliance in all material respects with the terms and conditions of all such
licenses and permits and with any applicable environmental law.
3.17 Maintenance of Insurance. Southhampton maintains policies of
insurance issued by responsible and reputable insurance companies or
associations in such amounts and to cover such risks as are usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which Southhampton operates.
3.18 Proprietary Information. To the best of its knowledge,
Southhampton owns or possesses sufficient legal rights to all trade or service
marks, copyrights, patents, processes, operation manuals, techniques, trade
secrets and similar proprietary property and rights necessary for its business
as now conducted and as proposed to be conducted, without any known conflict or
infringement of the rights of others. To the extent applicable, set forth on
Schedule 3.18A are the permits, licenses and registrations to use the foregoing
proprietary information. Except as set forth on Schedule 3.18B, Southhampton has
not received any communications alleging that it has violated or, by conducting
its business as proposed, would violate any of the patents, trademarks, service
marks, trade names, or other proprietary rights of any other person or entity
nor does Southhampton have reason to believe that it has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, or other proprietary rights of any other
person or entity.
3.19 Security Interest; Priority and Intercreditor Agreement. Upon the
due filing or recording in all places necessary to perfect and maintain the
liens purported to be created by the Security Documents and the Other Securities
Documents, the liens of the Security Documents and Other Securities Documents
shall constitute
fully perfected security interests in all right, title and interest of
Southhampton in and to the property described therein, in the order of priority
set forth in the Intercreditor Agreement, prior to all other consensual security
interests against such property or interests therein other than Permitted Liens.
3.20 Related-Party Transactions. Except as set forth on Schedule 3.20,
no employee, officer, stockholder or director of Southhampton or member of his
or her immediate family is indebted to Southhampton, nor is Southhampton
indebted (or committed to make loans or extend or guarantee credit) to any of
them, other than (i) for payment of salary for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of Southhampton, and
(iii) for other standard employee benefits made generally available to all
employees (including stock option agreements outstanding under any stock option
plan approved by the Board of Directors of Southhampton). To the best knowledge
of Southhampton, none of such persons has any direct or indirect ownership
interest in any firm or corporation with which Southhampton is affiliated or
with which Southhampton has a business relationship, or any firm or corporation
that competes with Southhampton, except that employees, stockholders, officers,
or directors of Southhampton and members of their immediate families may own
stock in publicly traded companies that may compete with Southhampton. To the
best knowledge of Southhampton, no officer, director, or stockholder or any
member of their immediate families is, directly or indirectly, interested in any
material contract with Southhampton (other than as set forth on Schedule 3.20).
3.21 Manufacturing and Marketing Rights. Set forth in Schedule 3.21
attached hereto is a list of the material license agreements to which
Southhampton is a party. As used herein, "material license agreement" shall mean
one or more license agreements which individually or in the aggregate generate
five percent (5%) or more of the revenues of Southhampton.
3.22 Stock Purchase Agreement. Southhampton has executed a form of the
Stock Purchase Agreement and delivered it to each other party thereto, and the
Stock Purchase Agreement constitutes the valid and binding obligations of
Southhampton, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights of creditors
generally.
3.23 Disclosure. Neither this Agreement nor any Schedule hereto nor any
certificate or other document referenced herein or therein and furnished to the
Purchaser by Southhampton contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained therein or herein, in light of the circumstances under which they were
made, not misleading. There is no material fact known to Southhampton, or to the
reasonable belief of Southhampton, relating to the business, properties,
affairs, operations, condition (financial or
otherwise) or prospects of Southhampton that materially adversely affects the
same or materially adversely affects the ability of Southhampton to perform its
obligations under this Agreement, the Securities, the Security Agreement or any
other document or agreement contemplated hereby or thereby that has not been
disclosed to the Purchaser by Southhampton. No claim made by the Purchaser that
is based on an alleged breach of the representation and warranty contained in
the preceding sentence shall result in liability of Southhampton to the
Purchaser if Southhampton proves that the Purchaser had actual knowledge of the
same material fact prior to the Closing under this Agreement, the burden of
proof of such knowledge being on Southhampton.
3.24 Commission Filings. Southhampton has previously delivered to
Purchaser copies of all reports filed by Southhampton with the VSE since January
1, 1994, which constitute all reports required to be filed by Southhampton with
the VSE since such date. Southhampton has not received any written request from
the VSE to modify or supplement any such report. As of their respective dates,
the documents and reports referred to above did not contain any untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Southhampton
included in such documents and reports were prepared in accordance with Canadian
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present in all material respects according to Canadian generally accepted
accounting principles the financial position of Southhampton as of the date
thereof and results of its operations and its cash flows for the periods then
ended, in the case of the unaudited interim financial statements subject to
normal year-end audit adjustments and the absence of complete footnote
disclosures.
4. REPRESENTATIONS OF SEI.
SEI represents and warrants to Purchaser as of the date hereof and as
of the Closing Date that:
4.1 Organization and Authority. SEI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
has all requisite power and authority to own or hold under lease the property it
purports to own or hold under lease and to transact the business it transacts
and proposes to transact. SEI has all requisite corporate power and authority to
execute and deliver this Agreement, the Securities and the Security Documents
and any other documents or agreements contemplated hereby and thereby, including
the Other Securities and the Other Security Documents, to which SEI is a party,
to perform the obligations hereunder and thereunder and to consummate the
transactions contemplated hereunder and thereunder. SEI is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the properties owned or held under lease by
it or the nature of the business transacted by it requires such qualification
except in such jurisdictions, if any, in which the failure to be so qualified or
in good standing will not have a material adverse effect upon SEI.
The execution, delivery and performance of this Agreement, the
Securities and the Security Documents, the Other Securities and the Other
Security Documents and any other documents or agreements to which SEI is a party
contemplated hereby and thereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized and approved by the
Board of Directors of SEI. Each of this Agreement, the Securities and the
Security Documents, the Other Securities and the Other Security Documents and
any other document or agreement to which the SEI is a party contemplated hereby
or thereby has been (or on the Closing Date will have been) duly authorized,
executed and delivered by, and each is (or, when duly executed and delivered on
the Closing Date, will be) the valid and binding obligation of, SEI, enforceable
in accordance with its terms, except as may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws or by legal or
equitable principles relating to or limiting creditors' rights generally.
4.2 Financial and Other Information. SEI has delivered to Purchaser
copies of the SEI's balance sheets and related statements of operation,
stockholders, equity and cash flows (including in each case the related
schedules and notes) for the period ended December 31, 1996 (collectively, the
"SEI Financial Statements") attached hereto as Exhibit I.
The SEI Financial Statements fairly present the consolidated financial
position of SEI as of the respective dates of such balance sheet and the
consolidated results of the SEI's operations for the period or periods covered
by such statements of operations, consolidated stockholders' equity and cash
flows, and have been prepared in accordance with the books and records of SEI.
Except as disclosed on Schedule 4.2, there are no material differences between
the consolidated results of operations and consolidated financial position of
SEI as reflected in the SEI Financial Statements and what the consolidated
results of operations and consolidated financial position of SEI would be were
such SEI Financial Statements prepared in accordance with generally accepted
accounting principles.
Since December 31, 1996, there have been no changes in the assets,
liabilities, contingent or otherwise, or financial position of SEI from that set
forth in such balance sheet as of such date, other than changes in the ordinary
course of business which have not, either individually or in the aggregate, been
materially adverse to SEI.
As of their respective dates, none of the SEI Financial Statements,
this Agreement or any other document, certificate or written statement furnished
to Purchaser by or on behalf of SEI in
connection with the transactions contemplated hereby contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements not misleading in light of the circumstances under which
they were made.
4.3 Capital Stock; Subsidiaries. The authorized capital stock of SEI
consists of 10,000 shares of SEI Common Stock, no par value (the "SEI Common
Stock"). On the date hereof and on the Closing Date, 1,000 shares of SEI Common
Stock, all of which will be directly and beneficially owned by Southhampton,
will be issued and outstanding on a fully-diluted basis, all of which shares
have been duly and validly issued and are fully paid and nonassessable; and no
shares of SEI Common Stock are or will be authorized for issuance pursuant to
the exercise of the stock options and warrants or otherwise.
Except for all of the issued or outstanding shares of Antigua Common
Stock and as otherwise set forth on Schedule 4.3, SEI (i) does not own,
beneficially or of record, any shares or capital stock of, or hold any other
equity interest in, any Person, (ii) is not committed to purchase or acquire any
such interest, or (iii) is not a participant in any joint venture, partnership
or similar arrangement.
SEI does not have outstanding: (i) any capital stock or other
securities convertible into or exchangeable for any of its capital stock or any
rights to subscribe for or to purchase, or any options for the purchase of, or
any agreements (contingent or otherwise) providing for the issuance of, or any
calls, commitments or claims of any character relating to, any of its capital
stock or any securities convertible into or exchangeable for any of its capital
stock; or (ii) any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its capital stock or obligation evidencing
the rights of the holders thereof to purchase any of its capital stock. There is
not in effect on the date of this Agreement any agreement by SEI pursuant to
which any holders of securities of SEI have a right to cause SEI to register
such securities under the Securities Act.
4.4 Litigation, etc. Except as set forth on Schedule 4.4, there is no
action, suit, proceeding or investigation pending or, to the knowledge of SEI,
currently threatened against SEI which challenges the validity of this Agreement
or the right of SEI to enter into it, or to consummate the transactions
contemplated hereby, or which might result, either individually or in the
aggregate, in any material adverse changes in the assets, condition, affairs or
prospects of Southhampton, financially or otherwise, or any change in the
current equity ownership of SEI.
4.5 Application of Proceeds. SEI, Southhampton and Antigua will apply
the net proceeds of the sale of the Securities (after the payment of fees and
expenses associated with the transaction) to fund a portion of the purchase
price payable under the Stock Purchase Agreement.
4.6 Outstanding Indebtedness. Schedule 4.6A sets forth a correct and
complete list of all indebtedness of SEI outstanding or existing on the date
hereof and to be existing or outstanding on the Closing Date (the "SEI
Indebtedness") other than Southhampton Indebtedness created under or evidenced
by this Agreement and the Security Documents, but including the indebtedness of
SEI under the Other Securities Documents, if any. With respect to each item of
Southhampton Indebtedness listed in Schedule 4.6A, SEI has made available to
Purchaser a true and complete copy of each instrument or agreement evidencing
such SEI Indebtedness or pursuant to which such SEI Indebtedness was issued or
secured (including each amendment, consent, waiver or similar instrument in
respect thereof), as the same is in effect on the date hereof. Except as
disclosed on Schedule 4.6B, SEI is not in monetary or other material default in
the performance or observance of any of the terms, covenants or conditions
contained in any instrument or agreement evidencing SEI Indebtedness listed in
Schedule 4.6A or pursuant to which such SEI Indebtedness was issued or secured
and has not requested any waiver in respect of any default and no event has
occurred and is continuing which, with notice or the lapse of time or both,
would constitute such a default.
4.7 Title to Collateral; Leases. Except (i) as reflected in Schedule
4.7A, (ii) as reflected in the SEI Financial Statements (defined in Section
2.2), and (iii) for Permitted Liens, SEI has good and marketable title to the
Collateral and to all of its other property and assets, free and clear of all
mortgages, liens, claims, and encumbrances. SEI enjoys full and undisturbed
possession under all leases necessary in any material respect for the operation
of its business, which leases are listed on Schedule 4.7B (the "Leases"). None
of the Leases contains any unusual or burdensome provisions that, individually
or in the aggregate, are likely to materially impair the operation of the
business of SEI. The Leases are valid and subsisting and are in full force and
effect. SEI has delivered to Purchaser a true and complete copy of each of the
Leases.
4.8 Taxes. Except as disclosed on Schedule 4.8, SEI has filed all tax
returns which are required to have been filed by SEI in any jurisdiction and
have paid all taxes shown to be due and payable on such returns and other taxes
and assessments payable by SEI to the extent the same have become due and
payable. SEI knows of no proposed material tax assessment against SEI and in the
opinion of SEI all tax liabilities are adequately provided for on the books of
SEI.
4.9 Compliance with Other Instruments. The consummation of the
transactions contemplated by this Agreement and the execution, delivery and
performance of the terms and provisions of this Agreement, the Securities and
the Security Documents, the Other Securities and the Other Securities Documents,
the Stock Purchase Agreement, the Intercreditor Agreement or any other document
or agreement contemplated hereby or thereby will not contravene,
result in any breach of, constitute a default or require a consent under, or
result in the creation of any lien (other than as contemplated in the Security
Documents or the Other Securities Documents) in respect of any property of SEI
under, any material indenture, mortgage, deed of trust, bank loan or credit
agreement, corporate charter, by-laws or other agreement or instrument to which
SEI is a party or by which SEI or any of its properties may be bound or
affected.
4.10 Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any governmental
body is required for the validity of the execution and delivery, or for the
performance by SEI, of this Agreement, the Securities and the Security
Documents, the Other Securities and the Other Securities Documents, the Stock
Purchase Agreement, or any other document or agreement or instrument
contemplated hereby or thereby other than the (i) filing and recording of
certain of the Security Documents and Other Securities Documents, (ii) forms
required to be filed by the Securities and Exchange Commission pursuant to
Regulation D, (iii) forms required by Section 25102(f) of the California
Corporations Code, or (iv) other "Blue Sky" filings.
4.11 Licenses, Permits, etc. SEI possesses all licenses, permits,
franchises, authorizations, and similar authority required to conduct its
business substantially as now conducted and as currently proposed to be
conducted, without known conflict with the rights of others, and each believes
it can obtain, without undue burden or expense, any similar authority for the
conduct of its business as presently planned to be conducted.
4.12 Compliance with ERISA. Except as disclosed on Schedule 4.12A, all
employee benefit plans maintained or contributed to by SEI, or under which SEI
has any obligation or liability, are in substantial compliance with respect to
both their terms and operation with the Internal Revenue Code of 1954, as
amended, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any and all other applicable laws. Except as disclosed in
Schedule 4.12B, SEI does not have any pension, retirement or similar plans or
obligations, whether of a legally binding nature or in the nature of an informal
understanding.
4.13 Margin Regulations. No part of the proceeds from the sale of the
Securities or the Other Securities hereunder or thereunder will be used,
directly or indirectly, for the purpose of buying or carrying any "margin stock"
within the meaning of Regulation G of the Board of Governors of the Federal
Reserve System (12 CFR 207), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve SEI in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). The assets of SEI do not
include any margin stock, and SEI does not have any present intention of
acquiring any margin stock.
4.14 Investment Company Act. SEI is not an investment company or a
person directly or indirectly controlled by or acting on behalf of an investment
company within the meaning of the Investment Company Act of 1940, as amended.
4.15 Compliance with Law. Except as set forth on Schedule 4.15, to the
best of its knowledge, SEI has been, and on the Closing Date will continue to
be, in compliance with all applicable laws (including duties imposed by common
law), rules, regulations, orders, ordinances, judgments and decrees of all
governmental authorities (federal, state, local and foreign) and all
requirements imposed under building, zoning, occupational safety and health,
pension, environmental control, toxic waste, fair employment, equal opportunity
or similar laws, rules, regulations and ordinances.
4.16 Environmental. To the best knowledge of SEI, SEI has obtained all
licenses and permits which are required under applicable environmental laws in
connection with all real estate owned or leased by them and the conduct of their
respective business and operations. Each of such licenses and permits is in full
force and effect and SEI is in compliance in all material respects with the
terms and conditions of all such licenses and permits and with any applicable
environmental law.
4.17 Maintenance of Insurance. SEI maintains policies of insurance
issued by responsible and reputable insurance companies or associations in such
amounts and to cover such risks as are usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which SEI operates.
4.18 Proprietary Information. To the best of its knowledge, SEI owns or
possesses sufficient legal rights to all trade or service marks, copyrights,
patents, processes, operation manuals, techniques, trade secrets and similar
proprietary property and rights necessary for its business as now conducted and
as proposed to be conducted, without any known conflict or infringement of the
rights of others. To the extent applicable, set forth on Schedule 4.18A are the
permits, licenses and registrations to use the foregoing proprietary
information. Except as set forth on Schedule 4.18B, SEI has not received any
communications alleging that it has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks, service marks, trade
names, or other proprietary rights of any other person or entity nor does SEI
have reason to believe that it has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks, service marks, trade
names, or other proprietary rights of any other person or entity.
4.19 Security Interest; Priority and Intercreditor Agreement. Upon the
due filing or recording in all places necessary to perfect and maintain the
liens purported to be created by the Security Documents and the Other Securities
Documents, the liens of the
Security Documents and Other Securities Documents shall constitute fully
perfected security interests in all right, title and interest of SEI in and to
the property described therein, in the order of priority set forth in the
Intercreditor Agreement, prior to all other consensual security interests
against such property or interests therein other than Permitted Liens.
4.20 Related-Party Transactions. Except as set forth on Schedule 4.20,
no employee, officer, stockholder or director of SEI or member of his or her
immediate family is indebted to SEI, nor is SEI indebted (or committed to make
loans or extend or guarantee credit) to any of them, other than (i) for payment
of salary for services rendered, (ii) reimbursement for reasonable expenses
incurred on behalf of SEI, and (iii) for other standard employee benefits made
generally available to all employees (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of
SEI). To the best knowledge of SEI, none of such persons has any direct or
indirect ownership interest in any firm or corporation with which SEI is
affiliated or with which SEI has a business relationship, or any firm or
corporation that competes with SEI, except that employees, stockholders,
officers, or directors of SEI and members of their immediate families may own
stock in publicly traded companies that may compete with SEI. To the best
knowledge of SEI, no officer, director, or stockholder or any member of their
immediate families is, directly or indirectly, interested in any material
contract with SEI (other than as set forth on Schedule 4.20).
4.21 Manufacturing and Marketing Rights. Except as set forth in
Schedule 4.21, SEI has not granted rights to manufacture, produce, assemble,
license, market, or sell its products to any other person and is not bound by
any agreement that affects SEI's exclusive rights to develop, manufacture,
assemble, distribute, market, or sell its products.
4.22 Stock Purchase Agreement. SEI has executed a form of the Stock
Purchase Agreement and delivered it to each other party thereto, and the Stock
Purchase Agreement constitutes the valid and binding obligations of SEI,
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the rights of creditors generally.
4.23 Disclosure. Neither this Agreement nor any Schedule hereto nor any
certificate or other document referenced herein or therein and furnished to the
Purchaser by SEI contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or herein, in light of the circumstances under which they were made, not
misleading. There is no material fact known to SEI, or to the reasonable belief
of SEI, relating to the business, properties, affairs, operations, condition
(financial or otherwise) or prospects of SEI that materially adversely affects
the same or materially adversely affects the ability of SEI to perform its
obligations under this Agreement, the Securities, the Security Agreement or any
other document or agreement contemplated hereby or thereby that has not been
disclosed to the Purchaser by SEI. No claim made by the Purchaser that is based
on an alleged breach of the representation and warranty contained in the
preceding sentence shall result in liability of SEI to the Purchaser if SEI
proves that the Purchaser had actual knowledge of the same material fact prior
to the Closing under this Agreement, the burden of proof of such knowledge being
on SEI.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER.
The obligation of Purchaser to purchase and pay for the Securities to
be purchased by it on the Closing Date shall be subject to the satisfaction on
or before the Closing Date of the conditions hereinafter set forth, which
conditions are solely for the Purchaser's benefit and may be waived only in
writing by it.
5.1 Securities and Security Documents. The Securities and the Security
Documents shall have been duly executed and delivered by the parties thereto in
the respective definitive forms of such documents approved by Purchaser.
Arrangements which Purchaser, in Purchaser's sole discretion, deems satisfactory
shall have been made for such instruments to be duly filed, delivered or
recorded in all places necessary to perfect and maintain the liens respectively
purported to be created thereby and all governmental charges payable in
connection therewith shall have been paid (or payment shall have been provided
for) in full, and shall be in full force and effect and no term or condition
thereof shall have been amended, modified or waived without the prior written
consent of Purchaser.
5.2 Proceedings Satisfactory. All proceedings taken on or prior to the
Closing Date in connection with the issuance of the Securities and the
consummation of the transactions contemplated hereby and all documents and
instruments relating thereto shall be reasonably satisfactory in form and
substance to Purchaser and Purchaser's counsel; and Purchaser and Purchaser's
counsel shall have received copies of such documents, instruments, and
certificates of officers of the Issuers in form and substance reasonably
satisfactory to Purchaser and Purchaser's counsel, all as Purchaser or they may
reasonably request in connection therewith.
5.3 Other Securities and Related Transactions; Intercreditor Agreement.
The Purchaser shall have reviewed and approved the form, terms and provisions of
all the Other Securities Documents, and such Other Securities Documents shall
have been duly executed and delivered by the parties thereto in the respective
forms so approved, and all transactions relating to the Other Securities shall
have been consummated in accordance with the terms so approved. The Purchaser
shall have reviewed and approved the Intercreditor Agreement, and such
Intercreditor Agreement shall have been duly executed and delivered by the
parties thereto in the
respective forms so approved.
5.4 Security Agreements. The Purchaser shall have received Security
Agreements in substantially the forms of Exhibit D and E, duly executed by each
of Antigua, SEI and Southhampton which evidence the security interests granted
Purchaser in the assets of Antigua, SEI and Southhampton, respectively, to
secure the obligations of Antigua under the Note and the guarantees by
Southhampton and SEI of the obligations of Antigua as set forth herein and the
Guaranties.
5.5 Stock Purchase Agreement; Capital Investment. The Purchaser shall
have reviewed and approved the terms and conditions of the Stock Purchase
Agreement and all other documents and agreements to be executed in connection
with the acquisition by SEI of all of the outstanding capital stock of Antigua.
The Stock Purchase Agreement and all other such documents and agreements shall
have been executed and delivered by all parties thereto, and SEI shall have
acquired all of the outstanding stock of Antigua.
5.6 Representations True, etc.; Compliance Certificate. All
representations and warranties of the Loan Parties contained in Sections 2, 3
and 4 shall be true and not misleading, in each case on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date; each of the Loan Parties shall have
performed all agreements on its part required to be performed under this
Agreement on or prior to the Closing Date; no Default or Event of Default shall
have occurred and be continuing; none of the Loan Parties shall have
consolidated with, merged into, or sold, leased or otherwise disposed of its
properties as an entirety or substantially as an entirety to any Person (except
as contemplated in the Stock Purchase Agreement); all conditions specified in
Section 5 shall have been satisfied; and Purchaser shall have received (i)
certificates signed by the Chairman of the Board of Directors, the President or
the Principal Financial Officer of Antigua, SEI and Southhampton, respectively,
dated the Closing Date, certifying to the effect specified in this Section, and
(ii) such other certificates and assurances reasonably requested by Purchaser.
5.7 Opinion of Counsel. The Loan Parties shall provide Purchaser with
the written legal opinions of Xxxxxxx & Xxxxx, counsel to Antigua, Bonn,
Luscher, Xxxxxx & Xxxxxxx, counsel to SEI, and Xxxxxx, Jonsson & Yeadon, counsel
to Southhampton, addressed to the Purchaser and otherwise in forms and substance
reasonably satisfactory to Purchaser.
5.8 Approval of VSE. The Agreement and the issuance of the Warrant, to
the extent required, shall have received the consent and approval of the VSE.
5.9 Commitment for Public Offering. Southhampton shall have entered
into a letter of intent with Cruttenden Xxxx, Inc., as lead
underwriter, to commence as soon as practicable (in the discretion of Cruttenden
Xxxx, Inc.) a public offering of securities to be issued by Southhampton; and
Southhampton shall have paid Cruttenden Xxxx, Inc. all fees and expenses to be
paid upon execution, and under the terms, of the letter of intent.
6. PREPAYMENT AND SUBORDINATION OF THE NOTE.
6.1 Prepayment. The Note shall not be subject to prepayment of
principal except as set forth in the Note and in this Section 6. Interest on the
Note shall be prepaid monthly in advance as provided therein. Upon notice given
as provided below, Antigua, at its option, may prepay the Note in whole or in
part at any time at par (less any prepaid but unaccrued interest as of the date
of prepayment), without premium. In addition, if at any time there occurs a
Refinancing (as defined in Section 10 below), then, within 15 business days of
the consummation of such Refinancing, Antigua shall prepay the Note in whole,
and not in part, at par (less any prepaid but unaccrued interest thereon as of
the date of prepayment) without premium. Antigua will give written notice of
prepayment of the Note pursuant to this Section 6.1 to Purchaser not less than
ten (10) business days prior to the date fixed for such prepayment in such
notice, which notice shall specify the amount so to be prepaid and the date
fixed for such prepayment. Upon the giving of notice of any prepayment as
provided in this Section, Antigua will prepay on the date therein fixed for
prepayment the principal amount of the Note so to be prepaid as specified in
such notice, unless such notice is revoked not later than three (3) days prior
to the date fixed for prepayment therein.
6.2 Subordination. Except as disclosed on Schedule 6.2, and except as
provided for in the Subordination Agreement, dated as of May 7, 1997, by and
between LaSalle Business Credit, Inc., Imperial Bank Arizona and Purchaser (the
"Subordination Agreement")and the Intercreditor Agreement, the indebtedness
evidenced by the Note shall not be subordinated to any existing or future debt
of the Loan Parties.
7. FINANCIAL INFORMATION; COMPLIANCE CERTIFICATES; MAINTENANCE OF RECORDS.
Southhampton has or will engage an accounting firm from the group
commonly known as the "Big Six" to audit and review its financial statements.
Southhampton will furnish to Purchaser, so long as Purchaser shall hold the
Note:
(a) within thirty (30) days after the end of each month in
each fiscal year, an unaudited consolidated balance sheet of Southhampton and
the related consolidated statements of income and stockholders' equity, such
consolidated balance sheet to be as of the end of such month and such statements
of income and stockholders' equity to be for the month and, for the period from
the beginning of the fiscal year to the end of such month, in each case with
comparative statements (where available) for the
corresponding period in the prior fiscal year;
(b) within forty-five (45) days after the end of each fiscal
quarter in each fiscal year (other than the last fiscal quarter in each fiscal
year), an unaudited consolidated balance sheet of Southhampton and the related
consolidated statements of income, stockholders' equity and cash flows, such
consolidated balance sheet to be as of the end of such fiscal quarter and such
consolidated statements of income, stockholders' equity and cash flows to be for
the fiscal quarter and for the period from the beginning of the fiscal year to
the end of such fiscal quarter, in each case with comparative statements for the
corresponding period in the prior fiscal year;
(c) within ninety (90) days after the end of each fiscal year,
a consolidated balance sheet of Southhampton and the related consolidated
statements of income, stockholders' equity and cash flows, prepared in
accordance with GAAP and audited by its independent public accountants, such
consolidated balance sheet to be as of the end of such fiscal year and such
consolidated statements of income, stockholders' equity and cash flows to be for
the period from the beginning of the fiscal year to the end of such fiscal year,
in each case with comparative statements for the prior fiscal year;
(d) promptly following receipt by Southhampton, each audit
response letter, accountant's management letter and other written report
submitted to Southhampton by its independent public accountants in connection
with an annual or interim audit or review of the books of Southhampton;
(e) concurrently with sending or making available the same,
all press releases, reports and financial statements that Southhampton sends or
makes available to its shareholders generally or directors generally; and
(f) immediately upon becoming aware of (i) any Default, Event
of Default or other default in the performance of any covenant, agreement or
condition contained in this Agreement, the Securities or the Security Documents,
or (ii) any Default or, Event of Default under any other Southhampton
Indebtedness or Antigua Indebtedness, a certificate of the President, a Vice
President or the Principal Financial Officer of Southhampton, specifying such
Default, Event of Default or other default and the nature and status thereof.
8. INSPECTION.
8.1 Inspection. So long as Purchaser shall hold the Note, Purchaser and
Purchaser's authorized representatives shall have the right to visit and inspect
any of the properties of Southhampton, SEI and/or Antigua, to examine the books
of account and records of Southhampton, SEI and/or Antigua, to be provided with
copies and extracts therefrom (at Southhampton's expense), to discuss the
affairs, finances and accounts of Southhampton, SEI and/ or Antigua with, and to
be advised as to the same by, its and their officers and employees, and its
independent public accountants (and Southhampton, SEI and/or Antigua authorizes
such independent public accountants to discuss such Loan Parties' financial
matters with Purchaser and Purchaser's representatives, regardless of whether
any representative of such Loan Party is present), all upon reasonable prior
notice and at such reasonable times and intervals as Purchaser may desire.
Southhampton, SEI and Antigua will likewise afford Purchaser the opportunity to
obtain any information, to the extent such Loan Party possesses such information
or can acquire it without unreasonable effort or expense, necessary to verify
the accuracy of any of the representations and warranties made by such Loan
Party hereunder.
Neither Purchaser nor its representatives shall (a) use any such
information in any manner detrimental to Southhampton, SEI or Antigua, as the
case may be, or (b) disclose, divulge, provide or make accessible any such
information to any person or entity (other than limited disclosures to their
representatives to the extent necessary to evaluate matters related solely to
Southhampton, SEI or Antigua).
9. COVENANTS.
The Loan Parties jointly and severally covenant and agree that on and
after the date hereof, so long as any Note shall be outstanding:
9.1 Payment of Note. Antigua shall pay the principal of and interest on
the Note on the dates and in the manner provided in the Note and this Agreement.
The obligation of Antigua described in the preceding two (2) sentences is
absolute and unconditional, irrespective of any tax or accounting treatment of
such obligation.
9.2 Guaranty of Payment. Southhampton and SEI shall directly,
primarily, absolutely and unconditionally guarantee the payment of the Note in
accordance with the terms of the form of Guaranty attached hereto as Exhibit C.
9.3 Limitations on Distributions and Investments. Except to the extent
necessary to make payments under indebtedness incurred in connection with the
Other Securities Documents, none of the Loan Parties shall, directly or
indirectly, (1) declare or pay any dividend or make any distribution on their
capital stock or ownership interests (other than dividends payable in shares of
such of its own equity securities as are not (a) entitled by their terms to any
redemptions, dividends or other cash payments, or (b) cumulative or
participating preferred stock), (2) redeem, retire, purchase or otherwise
acquire for value any shares of any class of its own capital stock or ownership
interests other than by the issuance of their own capital stock in exchange
therefor, (3), except as otherwise provided in the Subordination Agreement,
prepay, purchase, repurchase, redeem, defease or otherwise acquire
or retire for value, prior to scheduled maturity, any indebtedness that is
subordinated to the Note, other than in the ordinary course of business, or (4)
make any Restricted Investments.
9.4 Limitation on Indebtedness. None of the Loan Parties shall,
directly or indirectly, create, incur, assume, guarantee, suffer to exist or
otherwise in any manner become liable or commit to become liable with respect to
any indebtedness, including, but not limited to pari passu indebtedness or
indebtedness senior to the Note, except for (a) the Note, (b) indebtedness
existing on the Closing Date which is set forth in Schedules 2.6, 3.6, or 4.6,
respectively, and any extension of maturity, refinancing or modification of the
terms thereof; provided, however, that (i) such extension, refinancing or
modification is pursuant to terms that are not less favorable to the Loan
Parties than the terms of the indebtedness being extended, refinanced or
modified and (ii) after giving effect to the extension, refinancing or
modification, the principal amount of such indebtedness is not greater than the
amount of indebtedness outstanding immediately prior to such extension,
refinancing or modification, and the obligors on such indebtedness have not
changed; (c) additional indebtedness of the Loan Parties that at any time
outstanding does not exceed an aggregate amount of (i) 85% of accounts
receivable, (ii) 55% of inventory, and (iii) 80% of tangible assets, subject to
the Purchaser's approval pursuant to Section 7.2 hereof; (d) existing
indebtedness with respect to capital lease obligations including such capital
lease obligations set forth on Schedules 2.7, 3.7 and 4.7 hereto; (e)
indebtedness to trade creditors incurred in the ordinary course of business; and
(f) indebtedness that is subordinated to the Note.
9.5 Limitations on Liens. None of the Loan Parties shall, directly or
indirectly, create, incur, assume or suffer to exist or otherwise cause or
suffer to become effective any lien of any kind, other than Permitted Liens.
9.6 Observance of Statutes, Regulations and Orders. The Loan Parties
shall remain at all times in material compliance with all statutes or other
rules or regulations of any governmental body, including any environmental law,
the violation of which might materially affect adversely the business, business
prospects, properties, conditions (financial or otherwise) or operations of the
Issuers or the ability of the Issuers to perform their respective obligations
under this Agreement or the Securities and the Security Documents.
9.7 Corporate Existence. The Loan Parties shall do or cause to be done
all things necessary to preserve and keep in full force and effect their
respective corporate existence in accordance with their rights (charter and
statutory), licenses and franchises; provided, however, that none of the Loan
Parties shall be required to preserve any such right, license or franchise if
the respective Board of Directors shall determine in good faith in accordance
with the respective charter that the preservation thereof is no longer
desirable in the conduct of the business of the Loan Parties, taken
collectively, and that the loss thereof is not adverse in any material respect
to the Loan Parties or the value of the Securities.
9.8 Taxes. The Loan Parties shall pay, prior to delinquency, all
material taxes, assessments and governmental levies that may be imposed upon
them except as contested in good faith and by appropriate proceedings.
9.9 Limitations on Transactions with Affiliates. None of the Loan
Parties shall make any payment to or investment in, or enter into any
transaction with, any Affiliate, including, without limitation the purchase,
sale or exchange of property or the rendering of any service, except pursuant to
the reasonable requirements of their existing or proposed businesses, provided
that such transaction is on terms comparable to those generally available on an
arm's-length basis in equivalent transactions with third parties, as evidenced
by a resolution of the disinterested members of the respective Boards of
Directors adopted in good faith to that effect.
9.10 Investment Company Act. None of the Loan Parties shall become an
investment company subject to registration under the Investment Company Act of
1940, as amended.
9.11 Maintenance of Properties. The Loan Parties shall maintain,
preserve, protect and keep their properties in good repair, working order and
condition (ordinary wear and tear excepted), and make necessary and proper
repairs, renewals and replacements so that their business carried on in
connection therewith may be properly conducted at all times consistent with past
practices of the Loan Parties.
9.12 Books and Records. The Loan Parties shall keep books and records
that accurately reflect all of its material business affairs and transactions.
9.13 Maintenance of Insurance. The Loan Parties shall, at all times, at
their sole cost and expense, maintain insurance against loss or damage to the
property and assets comprising their respective portion and share of the
Collateral (as defined in the Security Documents) with responsible and reputable
insurance companies or associations reasonably satisfactory to Purchaser,
licensed to write insurance in the state where such Collateral is situated and
which have a Best's rating of A or better, in such amounts and covering such
risks as are usually carried by companies engaged in similar businesses and
owning similar property in the same general area as the area in which such
property is located including, without limitation, fire, public liability,
property damage, miscellaneous equipment, inventory, comprehensive general and
automobile liability, workers' compensation and employer's liability, and errors
and omissions. Subject to the Intercreditor Agreement:
(i) All such insurance policies covering the
Collateral shall name Antigua, SEI or Southhampton, as
appropriate, as named insured and shall name Purchaser as
additional named insured without Purchaser being liable for
premiums or other costs or expenses. Each such policy shall
provide for all losses to be paid to Antigua, SEI or
Southhampton, as appropriate, and for losses to be adjusted
with the insurer by Antigua, SEI or Southhampton; provided
that, if the insurer shall have received written notice from
Purchaser that an Event of Default has occurred and is
continuing unremedied, any such payment for loss or
destruction of or damage to the Collateral shall be paid
directly to Purchaser and any such adjustments shall be made
solely by Purchaser. All such insurance payments received by
Purchaser while an Event of Default shall have occurred and be
continuing unremedied shall be held or applied by Purchaser as
provided in subsection (vii) of this Section 9.13.
(ii) The Loan Parties shall furnish to the Purchaser
within ten (10) days of the date hereof insurance
certificates, in form and substance satisfactory to Purchaser,
evidencing compliance by the Issuers with the terms of this
Section 9.13.
(iii) At least thirty (30) days prior to the
expiration of each such policy, the Loan Parties shall furnish
Purchaser with evidence satisfactory to Purchaser of the
payment of premium and the reissuance of a policy continuing
insurance in force as required by this Agreement. All such
policies or certificates shall contain a provision that such
policies will not be canceled or materially amended, which
term shall include any reduction in the scope or limits of
coverage, without at least thirty (30) days' prior written
notice by such insurer to Purchaser. In the event the Loan
Parties fail to provide, maintain, keep in force or deliver
and furnish to Purchaser the policies of insurance required by
this Section 9.13, the Purchaser may, but shall not be
obligated to, procure such insurance or single interest
insurance for such risks covering Purchaser's interest, and
the applicable Loan Party will pay all premiums thereon
promptly upon demand by Purchaser, together with interest
thereon at the rate then applicable to the advances made to
the hereunder from the date of expenditure by Purchaser until
reimbursement by the appropriate Loan Party.
(iv) All policies of insurance required to be
furnished by the Loan Parties pursuant to this Section 9.13
shall have attached thereto the "Lender's Loss Payable
Endorsement" or its equivalent, or a loss payable clause
acceptable to Purchaser, for the benefit of Purchaser.
(v) The Loan Parties shall observe and comply with
the requirements of all policies of insurance required to be
maintained in accordance with this Agreement and shall so
perform and satisfy the requirements of the companies writing
such policies so that at all times companies of good standing
satisfactory to Purchaser shall be willing to write and to
continue such insurance.
(vi) Upon request by Purchaser, the Loan Parties
shall furnish Purchaser a certificate of an officer of such
Loan Parties containing a detailed list of the insurance
policies of such Loan Parties required by or referred to in
this Section 9.13 then outstanding and in force.
(vii) All insurance money received by Purchaser shall
be held by Purchaser to secure the performance by the Loan
Parties of their obligations under this Agreement and the
other Security Documents.
9.14 Accounting Changes. The Loan Parties shall not in their respective
consolidated financial statements, (i) make or permit any change in accounting
principles or reporting practices, except as permitted by GAAP or (ii) change
their respective fiscal years.
9.15 Merger, Consolidation or Sale. None of the Loan Parties shall
consolidate or merge with or into, or sell, transfer, lease or convey all or
substantially all of its assets to, any Person other than pursuant to the terms
of the Stock Purchase Agreement. Any such action will be construed as a "Change
of Control" and shall be subject to the repurchase provisions contained in
Section 9.16.
9.16 Change of Control. If at any time there is a Change of Control of
any of the Loan Parties, other than as contemplated by the Stock Purchase
Agreement, then the Loan Parties shall, within 30 days following the occurrence
of any such event, send a notice to Purchaser offering to repurchase the Note at
the par amount thereof, plus interest accrued and unpaid on the Note to the date
of such repurchase. If Purchaser desires to accept such offer, Purchaser must
advise the Loan Parties of such acceptance within 30 days of the date of
receiving such notice. The Loan Parties shall then repurchase the Note so
tendered for repurchase by Purchaser by paying the purchase price to Purchaser
(or any person or persons designated by Purchaser in such acceptance notice), in
immediately available funds, within five days of the Loan Parties' receipt of
Purchaser's acceptance notice. As used herein, "Change of Control" shall mean
(i) the acquisition, directly or indirectly, by any person or group (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
of the beneficial ownership of securities of any of the Loan Parties possessing
more than fifty (50%) of the total combined voting power of all outstanding
securities of any of the Loan Parties; (ii) a merger or
consolidation in which any of the Loan Parties is not the surviving entity,
except for a transaction the principal purpose of which is to change the state
in which any of the loan parties is incorporated; (iii) the sale, transfer or
other disposition of all or substantially all of the assets of any of the Loan
Parties; (iv) a complete liquidation or dissolution of any of the Loan Parties;
or (v) any reverse merger in which any of the Loan Parties is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of any of the Loan Parties' outstanding securities
are transferred to or acquired by a person or persons different from the persons
holding those securities immediately prior to such merger.
9.17 Compliance with ERISA. The Loan Parties shall not permit any ERISA
affiliate to (i) terminate any Welfare Plan so as to result in any material
liability of the Issuer or ERISA Affiliate to the PBGC, (ii) permit to exist any
other event or condition that presents a material risk of such termination by
the PBGC of any Welfare Plan, including, but not limited to, the occurrence of
any Reportable Event, (iii) withdraw, or permit any ERISA Affiliate to incur any
withdrawal liability with respect to any Multiemployer Plan or (iv) permit a
Reportable Event to occur with respect to any Welfare Plan which would present a
material risk to the Issuer of incurring a material liability on account of such
Welfare Plan. All capitalized terms used in this section and not defined herein
shall have the meanings ascribed thereto under ERISA or the Code.
9.18 Employee Stock Option Plans. Antigua shall not authorize or issue
options or rights to purchase any shares of its capital stock to any person or
entity other than SEI; SEI shall not authorize or issue options or rights to
purchase any shares of its capital stock to any person or entity other than
Southhampton; and Southhampton shall not authorize the issuance of options to
purchase more than ten percent (10%) of the outstanding shares of Southhampton
Common Stock, on a fully-diluted basis, pursuant to any employee stock option
plan or similar plan providing for the issuance to officers, directors or
employees of or consultants to the Loan Parties or any of their Affiliates of
options, warrants or other rights to purchase Southhampton Common Stock or
Southhampton Preferred Stock.
9.19 Sale of Assets. None of the Loan Parties shall sell, lease,
transfer or dispose of any of its interest in its properties or assets, whether
real, personal or mixed, or tangible or intangible, other than in the ordinary
course of business consistent with prudent business practice (which includes the
disposition in a commercially reasonable manner of equipment and inventory that
is obsolete).
9.20 Restriction on Creation and Ownership of Subsidiaries; Restriction
on Transfer of Subsidiary Interest. None of the Loan Parties shall create or
suffer to exist any subsidiary, unless the Loan Parties shall have obtained
Purchaser's prior written consent. The Loan Parties shall not transfer, sell or
otherwise hypothecate
its interest in any subsidiary without the prior written consent of Purchaser.
9.21 Disclosure of Environmental Claims. Each Loan Party shall provide
Purchaser with written notice as to the existence of any environmental claim
known to such Loan Party on or effecting any real property owned or leased by
such Loan Party or on or affecting any real property upon which such Loan Party
has a lien securing any indebtedness.
9.22 Consolidated Capital Expenditures. None of the Loan Parties shall
make or incur any capital expenditure which would cause the aggregate of all
capital expenditures for the Loan Parties taken together in any 12-month period
to be in excess of $3,500,000.
9.23 Restricted Payments. None of the Loan Parties shall make (directly
or indirectly) or cause or permit any Person controlled by the Loan Parties to
make (directly or indirectly) any (i) Restricted Payment (as defined in Section
10.1 below) if the Restricted Payment would cause the aggregate of all
Restricted Payments in any 12-month period to exceed fifty percent (50%) of the
excess of the year-to-date aggregate net income of the Loan Parties over the
aggregate of any Restricted Payments theretofore made by the Loan Parties during
that year, or (ii) Restricted Investment (as defined in Section 10.1 below).
9.24 Preservation of Collateral. The Loan Parties shall act at all
times in such a manner as to preserve the value of the Collateral, and shall
refrain from taking any action with respect to the Collateral that would have a
material adverse effect on the value of the Note.
9.25 Board Seat. The Loan Parties shall, within thirty (30) days after
written request by Purchaser, take appropriate action, including, but not
limited to, amendment of its certificate of incorporation and bylaws, to provide
for an additional seat on its Board of Directors and elect a representative
appointed by Purchaser to fill such board seat. The Loan Parties shall use their
best efforts to re-elect such director or an alternative director appointed by
Purchaser for as long a period of time as requested by Purchaser, not to exceed
five years from the date hereof.
9.26 Issuance of Additional Shares. In the event that, after the date
hereof, it is determined that the aggregate issued and outstanding shares of
Southhampton Common Stock, and any options, warrants or rights to purchase
Southhampton Common Stock, are greater than the number of outstanding shares of
Southhampton Common Stock, on a fully diluted basis, as reflected on Schedule
3.3, the number of shares of Southhampton Common Stock issuable upon exercise of
the Warrant shall be adjusted such that the number of shares issuable upon
exercise of the Warrant will equal the same percentage of the outstanding shares
of Southhampton Common Stock
on a fully diluted basis as of the date hereof.
10. DEFINITIONS.
10.1 Definitions. Except as otherwise specified or as the context may
otherwise require, the following terms shall have the respective meanings set
forth below whenever used in this Agreement:
"Affiliate" means a Person (1) that directly or indirectly controls, or
is controlled by, or is under common control with, the Issuers, (2) that
beneficially owns ten percent (10%) or more of the voting securities of the
Issuers, or (3) ten percent (10%) or more of the voting securities (or in the
case of a Person that is not a corporation, ten percent ( 10%) or more of the
equity interest) of which is owned by the Issuers. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Person" shall include an individual, a corporation, an association, a
partnership, a trust or estate, a government, foreign or domestic, and any
agency or political subdivision thereof, or any other entity.
"Refinancing" shall mean any transaction, or series of transactions
entered into (regardless of when consummated) within a consecutive 183 day
period, pursuant to which the Loan Parties borrow funds, issue debt and/or
equity securities or otherwise raise capital with gross proceeds to the Loan
Parties of $3,000,000 or more.
"Restricted Investment" shall mean any investment except:
(a) investments in property used or useful in the business of
the Loan Parties;
(b) investments in direct obligations of the United States of
America, or any agency thereof, which represents the full faith and credit of
the United States of America, maturing in twelve (12) months from the date of
origin thereof;
(c) investments, deposits, certificates of deposit or bankers'
acceptances maturing within twelve (12) months from the date of origin thereof,
issued by a bank or trust company organized under the laws of the United States
of America or any state thereof, having capital, surplus and undivided profits
of not less than $100,000,000;
(d) receivables or notes arising from the sale of goods and
services in the ordinary course of business of the Loan Parties;
(e) investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business;
(f) investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business;
(g) investments consisting of (i) compensation of employees,
officers and directors of the Loan Parties so long as the Board of Directors
determines that such compensation is in the best interests of the Loan Parties;
(ii) travel advances, employee relocation loans and other employee loans and
advances in the ordinary course of business; (iii) loans to employees, officers
or directors relating to the purchase of equity securities of the Loan Parties;
and (iv) other loans to officers or employees approved by the Board of
Directors, provided that the aggregate investments under subsections (iii) and
(iv) aforesaid shall not exceed $250,000 at any time; and
(h) other investments aggregating not in excess of $100,000 at
any time.
"Restricted Payment" shall mean (a) except as otherwise provided in
Section 9.3 above, any direct or indirect dividend or other distribution of
assets, properties, cash, rights, obligations, partnership interests, limited
liability company interests or securities paid, made, declared or authorized by
the Loan Parties on or in respect of any class of such Loan Party's capital
stock, (b) any direct or indirect payment by or on behalf of the Loan Parties in
connection with the redemption, purchase, retirement or other acquisition of its
capital stock, and (c) except as provided in the Subordination Agreement, the
payment before maturity of any indebtedness that is subordinate to or pari passu
with the Note.
10.2 Accounting Terms. All accounting terms used herein which are not
expressly defined in this Agreement have the meanings respectively given to them
in accordance with GAAP, all computations made pursuant to this Agreement shall
be made in accordance with GAAP, and all balance sheets and other financial
statements shall be prepared in accordance with GAAP, except in the case of
unaudited financial statements which are subject to year-end audit adjustments
and the absence of footnotes.
11. EVENTS OF DEFAULT; REMEDIES.
11.1 Events of Default Defined; Acceleration of Maturity. If any of the
following events ("Events of Default") shall occur and be continuing for the
applicable periods set forth below (for any reason whatsoever and whether it
shall be voluntary or involuntary or by operation of law or otherwise):
(a) default shall be made by Antigua in the payment of all or
any portion of the principal of, or premium (if any) on, the Note when and as
the same shall become due and payable, whether at stated maturity, by
acceleration, by notice of prepayment or otherwise; or
(b) default shall be made by Antigua in the payment of any
interest on the Note when and as such interest shall become due and payable, and
such default shall have continued for a period of five (5) business days; or
(c) default shall be made by any of the Loan Parties in the
performance or observance of any covenant contained in Sections 7 and 9 hereof;
(d) default shall be made by any of the Loan Parties in the
performance or observance of any other covenant, agreement or condition
contained in this Agreement or the Securities or the Security Documents or any
indebtedness of the Loan Parties, including, but not limited to, the Other
Securities, the Other Securities Documents or any other debt owed by the Loan
Parties, whether such debt is senior or subordinate to the Note, and except as
set forth in subsections (a), (b) and (c) of this Section 11.1, such default
shall have continued for a period of ten (10) days after such default shall
first have become known to the Loan Parties; provided, however, that if the
nature of the default is such that it cannot reasonably be cured within said
period, then the Loan Parties shall have such additional period of time as may
reasonably be necessary (but in no event to exceed thirty (30) days) to
effectuate such cure; or
(e) any of the Loan Parties shall (1) apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(2) be generally unable to pay its debts as such debts become due, (3) make a
general assignment for the benefit of its creditors, (4) commence a voluntary
case under the Federal Bankruptcy Code (as now or hereafter in effect), (5) file
a petition seeking to take advantage of any other law providing for the relief
of debtors, (6) fail to controvert in a timely or appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary case
under such Bankruptcy Code, (7) take any action under the laws of its
jurisdiction of incorporation analogous to any of the foregoing, or (8) take any
corporate action for the purpose of effecting any of the foregoing; or
(f) a proceeding or case shall be commenced, without the
application or consent of the Loan Parties, in any court of competent
jurisdiction, seeking (1) the liquidation, reorganization, dissolution, winding
up, or composition or readjustment of the debts of the Loan Parties
respectively, (2) the appointment of a trustee, receiver, custodian, liquidator
or the like of the Loan Parties respectively or of all or any substantial
part of their respective assets, or (3) similar relief in respect of the Loan
Parties under any law providing for the relief of debtors, and such proceeding
or case shall continue undismissed, or unstayed and in effect, for a period of
sixty (60) days; or an order for relief shall be entered in an involuntary case
under such Bankruptcy Code, against the Loan Parties, respectively; or action
under the laws of the jurisdiction of incorporation of the Loan Parties
analogous to any of the foregoing shall be taken with respect to the Loan
Parties respectively and shall continue unstayed and in effect for any period of
sixty (60) days; or
(g) a final judgment for the payment of money shall be
rendered by a court of competent jurisdiction against the Loan Parties and the
Loan Parties shall not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay of execution thereof within thirty
(30) days from the date of entry thereof and within said period of thirty (30)
days, or such longer period during which execution of such judgment shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal, and such judgment together with all other such judgments
shall exceed in the aggregate $50,000; or
(h) any representation or warranty made by the Loan Parties in
this Agreement or any Security Document or in any certificate or other
instrument delivered pursuant hereto or thereto or in connection with any
provision hereof of thereof shall be false or incorrect in any material respect
as of the date made; then, upon the occurrence of any Event of Default, the
unpaid principal amount of the Note, together with the interest accrued thereon
and all other amounts payable by the Issuers hereunder, shall automatically
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by the
Loan Parties.
The provisions of this Section are subject, however, to the condition
that if, at any time after the Note shall have so become due and payable,
Antigua shall pay all arrears of interest on the Note and all payments on
account of the principal of the Note which shall have become due otherwise than
by acceleration, with interest on such principal and, to the extent permitted by
law, on overdue payments of interest, at the rate specified in the Note and all
Events of Default (other than nonpayment of principal of and accrued interest on
Note, and amounts equal to premium as aforesaid, due and payable solely by
virtue of acceleration) shall be remedied or waived pursuant to Section 13,
then, and in every such case, the holder of such Note, by written notice to
Antigua, may rescind and annul any such acceleration and its consequences; but
no such action shall affect any subsequent Default or Event of Default or impair
any right consequent thereon.
11.2 Suits for Enforcement. If any Event of Default described in
Subsection (a) or (b) of Section 11.1 above with respect to the Note, shall have
occurred and be continuing, then the Purchaser may proceed to protect and
enforce its rights, either by suit in equity
or by action at law, or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the exercise of
any power granted in this Agreement, or such holder may proceed to enforce the
payment of all sums due upon the Note or to enforce any other legal or equitable
right of such holder.
Each of the Loan Parties covenants that, if it shall default in the
making of any payment due under the Note or in the performance or observance of
any agreement contained in this Agreement, it will pay to Purchaser such further
amounts, to the extent lawful, as shall be sufficient to pay the costs and
expenses of collection or of otherwise enforcing Purchaser's rights, including
reasonable counsel fees and costs and expenses incurred in connection with any
restructuring, refinancing, workout, bankruptcy or other similar transaction or
proceeding. The obligations set forth in this paragraph shall survive the
payment in full of the Note.
11.3 Remedies Cumulative; Remedies Not Waived. No remedy herein
conferred upon Purchaser is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. No course of dealing between the Issuers and Purchaser
and no delay or failure in exercising any rights hereunder shall operate as a
waiver of any rights of Purchaser.
11.4 Security Documents. Each of the Loan Parties and the Purchaser
hereby agree to the terms of the Security Documents and Purchaser and any
assignee of the Note shall be bound thereby and by any amendments to such
documents approved in accordance with this Agreement.
12. REGISTRATION, TRANSFER AND EXCHANGE OF NOTE; LOST, ETC., NOTES. Antigua
will keep at its principal executive office a register in which, subject to such
reasonable regulations as it may prescribe, but at its expense (other than
transfer taxes, if any), it will provide for the registration and transfer of
the Note.
The Note may not be sold, transferred, pledged or hypothecated unless
the proposed transaction does not require registration or qualification under
federal or state securities laws or unless the proposed transaction is
registered or qualified as required. Any transferee of the Note shall be deemed
to have made the representations set forth in Section 1.3 of this Agreement.
Upon receipt by Antigua of evidence satisfactory to it of the loss,
theft, destruction or mutilation of the Note, and (in case of loss, theft or
destruction) of indemnity reasonably satisfactory to it, upon surrender and
cancellation of such Note or receipt of such indemnity, Antigua will make and
deliver in lieu of such Note a new Note in the same denomination and dated as of
the date to which interest has been paid thereon.
Notwithstanding the foregoing provisions of this Section, if any
certificate evidencing the Note is lost, stolen or destroyed, then the affidavit
of a holder's Secretary or Assistant Secretary (or other responsible official),
setting forth the circumstances with respect to such loss, theft or destruction,
shall be accepted as satisfactory evidence thereof.
13. AMENDMENT AND WAIVER.
13.1 Amendment and Waiver. Any term, covenant, agreement or condition
of this Agreement, the Note or the Security Documents may, with the written
consent of the Loan Parties as authorized by their respective Board of
Directors, be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument signed by the Purchaser.
13.2 Effect of Amendment or Waiver. Any amendment or waiver pursuant to
Section 13.1 shall be binding upon the holder of the Note, upon each future
holder of the Note and upon the Loan Parties, in each case whether or not a
notation thereof shall have been placed on the Note.
14. TAXES.
The Loan Parties will pay all taxes (including interest and penalties),
other than taxes imposed on the income of the holders of the Securities, which
may be payable in respect of the execution and delivery of this Agreement or of
the execution and delivery of any of the Securities or of any amendment of, or
waiver or consent under or with respect to, this Agreement or any of the
Securities and will save Purchaser and all subsequent holders of the Securities
harmless against any loss or liability resulting from nonpayment or delay in
payment of any such tax. The obligations of the Issuers under this Section shall
survive the payment of the Note and the exercise of the Warrant.
15. MISCELLANEOUS.
15.1 Fees and Expenses. The Loan Parties jointly and severally agree to
pay Cruttenden Xxxx, Inc. upon the Closing Date a funding fee equal to five
percent (5%) of the amount of the Note issued at the Closing, 3% of which shall
be paid at the Closing and 2% of which shall be added to the principal amount of
the Note. In addition, the Loan Parties agree, whether or not the transactions
contemplated hereby are consummated, to pay all reasonable legal expenses
incident to such transaction, or filing or recording of any financing statement,
mortgage, security agreement, document or other instrument, with respect to this
Agreement or any of the Securities or Security Documents. The obligations of the
Loan Parties under this Section shall inure to the benefit of Cruttenden Xxxx,
Inc. as a third party beneficiary of this Agreement and shall survive the
payment of the Note and the exercise of the Warrant.
The Loan Parties agree that Purchaser may withhold from the purchase
price payable in accordance with Section 1.2 the funding fee and all other fees
and expenses otherwise payable by the Loan Parties on the Closing Date in
accordance with this Section 15.1 .
15.2 Reliance on and Survival of Representations. All agreements,
representations and warranties of the Loan Parties herein and in the Security
Documents and in any certificates or other instruments delivered pursuant to
this Agreement or the Security Documents shall (A) be deemed to be material and
to have been relied upon by Purchaser, notwithstanding any investigation
heretofore or hereafter made by Purchaser or on Purchaser's behalf, and (B)
survive the execution and delivery of this Agreement and of the Securities, and
shall continue in effect so long as any Security is outstanding; provided,
however, that all statements as to factual matters contained herein shall be
deemed to be representations and warranties by the Loan Parties hereunder solely
as of the date of such representation or warranty.
15.3 Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by the Loan Parties, Purchaser and Purchaser's
respective successors and assigns, and, in addition, shall inure to the benefit
of and be enforceable by each person who shall from time to time be a holder of
any portion of the Note. The Loan Parties may not assign their rights under this
Agreement or Security Documents.
15.4 Indemnification. The Loan Parties agree to defend (with counsel
reasonably satisfactory to Purchaser), protect, indemnify and hold harmless
Purchaser, each affiliate or subsidiary of Purchaser, and each of their
respective officers, directors, employees, attorneys and agents (each an
"Indemnified Party") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature (including, without limitation, the
disbursements and the reasonable fees of counsel for each Indemnified Party in
connection with any investigative, administrative or judicial proceeding,
whether or not the Indemnified Party shall be designated a party thereto), which
may be imposed on, incurred by, or asserted against, any Indemnified Party
(whether direct, indirect or consequential and whether based on any federal,
state or local laws or regulations including, without limitation, securities,
environmental and commercial laws and regulations, under common law or in
equity, or based on contract or otherwise) in any manner relating to or arising
out of this Agreement, the Securities and the Securities Agreement, the Other
Securities and the Other Securities Agreement, the Stock Purchase Agreement, the
Intercreditor Agreement, the Subordination Agreement or any other agreement,
act, event or transaction related or attendant thereto; provided, however, that
the Loan Parties shall not have any obligation hereunder to any Indemnified
Party with respect to matters caused by or resulting from the willful misconduct
or gross negligence of such Indemnified Party. To the extent that the
undertaking to indemnify set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Loan Parties shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Indemnified
Party on demand, and, failing prompt payment, shall, together with interest
thereon from the date incurred by each Indemnified Party until paid by Loan
Parties, be added to the Obligations of Issuers and be secured by the
Collateral. The provisions of this Section 15.4 shall survive the satisfaction
and payment of the other obligations herein and the termination of this
Agreement.
15.5 Notices. All notices and other communications provided for in this
Agreement shall be in writing and delivered, telecopied or mailed, first class
postage prepaid, addressed:
(i) if to Antigua:
THE ANTIGUA GROUP, INC.
0000 Xxxxx 00xx Xxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: L. Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(ii) if to Southhampton:
SOUTHHAMPTON ENTERPRISES, CORP.
0000 Xxxxxxxxx Xxx
Xxxxxx, Xxxxx 00000
Attention: L. Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(ii) if to SEI:
SOUTHHAMPTON ENTERPRISES, INC.
0000 Xxxxxxxxx Xxx
Xxxxxx, Xxxxx 00000
Attention: L. Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(iv) if to Purchaser, at the address set forth on
Purchaser's signature page and as may be designated by notice to the Issuers;
and
(v) if to any subsequent holder of the Securities, to
the address as may be hereafter specified by notice to the Issuers.
Any such notice or communication shall be deemed to have been duly
given when delivered, telecopied or mailed as aforesaid.
15.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
15.7 Governing Law. This Agreement and the Note and (unless otherwise
provided) all amendments, supplements, waivers and consents relating hereto or
thereto shall be governed by and construed in accordance with the laws of the
State of California without regard to principles of conflicts of law.
15.8 Arbitration. The parties hereto agree that in the event of any
dispute arising in connection with the construction or enforcement of this
Agreement or in connection with the issuance of the Securities, such dispute
shall be submitted to arbitration, such arbitration proceedings to be held in
Orange County, California, in accordance with the rules then obtaining of the
National Association of Securities Dealers, Inc., and this agreement to
arbitrate shall be specifically enforceable. Any award rendered in any such
arbitration proceeding shall be final and binding on each of the parties, and
judgment may be entered thereon in the Superior Court of the State of California
for the County of Orange or any other court of competent jurisdiction; provided,
however, that the arbitrators shall be required to follow the law and any errors
of law shall be appealable to the Orange County Superior Court or to a reference
proceeding under the rules thereof. The costs and fees of any such arbitration
proceeding shall be borne by the respective parties thereto, but the arbitrators
may in their discretion award costs and reasonable attorneys' fees to the
prevailing party. Notwithstanding any of the foregoing, this Section 15.8 shall
not apply to the enforcement by any holder of any of the Securities of its
rights thereunder at law or in equity in the event of an actual or alleged
default by Company of its obligations under the Note or under the Warrant, as
the case may be.
15.9 Waiver of Jury Trial. PURCHASER, EACH SUBSEQUENT HOLDER OF A
SECURITY, BY ITS ACCEPTANCE THEREOF, AND THE LOAN PARTIES, EACH HEREBY AGREE TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES, OR ANY OTHER
AGREEMENTS RELATING TO THE SECURITIES OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION. The scope of this waiver is intended to
be all encompassing of any and all disputes that may be filed in any court,
which are not submitted to arbitration pursuant to Section 15.8 hereof, and that
relate to the subject matter of this transaction, including without limitation,
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Purchaser and the Loan Parties each acknowledge that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on the waiver in entering into this Agreement, and that each
will continue to rely on the waiver in their related future dealings. Purchaser
and the Loan Parties further represent and warrant that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE SECURITIES, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE SECURITIES. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the Court.
15.10 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys, fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
15.11 No Commissions. Except for the fee payable to Cruttenden Xxxx,
Inc. and referred to in Section 15.1 above, the Loan Parties hereby represent
and warrant to Purchaser that no Person is entitled to any brokerage commission,
finders' fee or other compensation arising out of or connected with the
transactions contemplated by this Agreement.
15.12 Invalidity. The invalidity of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement or of this Agreement as a whole.
IN WITNESS WHEREOF, this Securities Purchase Agreement is executed as
of the date first above written.
ANTIGUA: THE ANTIGUA GROUP, INC.
a Nevada corporation
By: /s/ Xxxxxx X. Xxxxxxx
Its: Vice President - Finance
SOUTHHAMPTON: SOUTHHAMPTON ENTERPRISES CORP.
a British Columbia, Canada corporation
By: /s/ Xxxxxx X. Xxxxxx, Xx.
Its: President
SEI: SOUTHHAMPTON ENTERPRISES, INC.
a Texas corporation
By: /s/ Xxxxxx X. Xxxxxx, Xx.
Its: Secretary
PURCHASER: THE CRUTTENDEN XXXX BRIDGE FUND, LLC
a California limited liability company
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Manager
Address for Notices and Payments:
The Cruttenden Xxxx Bridge Fund, LLC
c/o Cruttenden Xxxx Incorporated
00000 Xxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Exhibits
Exhibit A Form of Note
Exhibit B Form of Warrant
Exhibit C Guaranty Agreement
Exhibit D Security Agreement
Exhibit E Security and Pledge Agreement (Southhampton)
Exhibit F Security and Pledge Agreement (SEI)
Exhibit G Financial Statements of Antigua
Exhibit H Financial Statements of Southhampton
Exhibit I Financial Statements of SEI
