EXHIBIT 10.27
TeleHubLink Corporation
Xxx Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
March 26, 2001
To: CFE, Inc.
c/o General Electric Capital Corporation
000 Xxxx Xxxxx Xx.
Xxxxxxxx, XX 00000
CFE, Inc.
c/o General Electric Capital Corporation
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Ladies and Gentlemen:
The undersigned, TELEHUBLINK CORPORATION (the "Company"), a Delaware
corporation, hereby agrees with you, the "Investor," as follows:
1. Authorization. The Company has authorized the issuance and sale of the
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15% Convertible Promissory Note (the "Note"), the form of which is attached
hereto as Exhibit A to Investor for the aggregate principal amount of Two
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Million, Five Hundred Thousand and no/100 Dollars ($2,500,000.00) (the "Required
Payment"). The Company's common stock, $0.01 par value per share (the "Common
Stock") issuable upon conversion of any outstanding principal and interest under
the Note as set forth in Section 3.2 hereof is sometimes referred to herein as
the "Securities."
2. Sale and Purchase of Note. Upon the terms and subject to the conditions
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herein contained, the Company agrees to sell to the Investor, and the Investor
agrees to purchase from the Company, at the Closing (as hereinafter defined) on
the Closing Date (as hereinafter defined) the Note, and the Investor shall pay
to the Company the Required Payment.
3. Closing.
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3.1 Procedure. The closing (the "Closing") of the sale to and purchase
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by the Investor of the Note for the Required Payment shall occur at the offices
of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP in Atlanta, Georgia, at the hour of
10:00 A.M., Eastern standard time, on March 26, 2001, or on such different time
or day as the Investor and the Company shall agree (the "Closing Date"). At the
Closing, the Company will deliver to the Investor an executed copy
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of the Note, against delivery to the Company of payment by wire transfer in an
amount equal to the Required Payment by the Investor.
3.2 Conversion. Any outstanding principal and interest on the Note
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shall be convertible into shares of Common Stock and the Company shall have
authorized sufficient shares of Common Stock for such conversion, without the
payment of any additional consideration by the Investor (i) at any time at the
sole option of the Investor, or (ii) automatically simultaneously with the
consummation of an equity offering by the Company where the gross proceeds to
the Company from such equity offering are at least Ten Million Dollars
($10,000,000), with the proceeds of the Note included in such calculation of
gross proceeds of such equity offering all in accordance with the provisions of
Section 2 of the Note.
4. Other Terms.
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4.1 Security. To secure all indebtedness, liabilities, and obligations
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of Company of any nature whatsoever which Investor may now or hereafter have,
own or hold, an which are now or hereafter owing to Investor pursuant to the
Note (the "Liabilities"), the Company shall execute in favor of the Investor the
Security Agreement, in the form attached hereto as Exhibit B, together with all
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such other documents as the Investor may reasonably request in order to perfect
or maintain the perfection of the Investor's security interest thereunder.
4.2 Agreements Regarding Interest and Other Charges. The Investor and
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the Company hereby agree that the only charge imposed or to be imposed by the
Investor upon the Company for the use of money is and will be the interest
required under the Note, which interest will be at the rates which are or will
be expressed in simple interest terms in the Note as of the date of such Note.
The Company hereby acknowledges and agrees that the Investor has not imposed on
it any minimum borrowing requirements, reserve or escrow balances, or
compensating balances relating in any way to this Agreement. In no event shall
the amount of interest due and payable under this Agreement, the Note or any of
the other financing documents exceed the maximum rate of interest allowed by
applicable law and, in the event any such payment is inadvertently made by the
Company or inadvertently received by the Investor, such excess sum shall be
credited as a payment of principal. It is the express intent hereof that the
Company not pay and the Investor not receive, directly or indirectly or in any
manner, interest in excess of that which may be lawfully paid under applicable
law.
5. Representations and Warranties by the Company. In order to induce the
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Investor to enter into this Agreement and to purchase the Note, the Company
hereby covenants with, and represents and warrants to the Investor as follows:
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5.1 Organization; Power; Qualification; Capital Stock.
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(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Company has
the corporate power and authority to own or lease and operate its properties and
to carry on its business as it is now being and hereafter proposed to be
conducted. The Company is duly qualified, in good standing and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its businesses requires such qualification or authorization, except
for such jurisdictions where the failure to so qualify or be authorized would
not be reasonably likely to have a Materially Adverse Effect.
(b) The Common Stock or other equity securities issuable upon
conversion of the Note in accordance with its terms, shall be prior to issuance,
duly authorized and reserved for issuance and, when issued, will be duly
authorized, validly issued, fully paid and nonassessable Common Stock or other
equity securities, free and clear of all Liens and restrictions.
5.2 Authorization. The Company has the corporate power and has taken
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all necessary corporate action to authorize it to issue, sell and deliver the
Note and to execute, deliver and perform this Agreement and the Note, in
accordance with their respective terms, and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Company and is, along with the Note, a legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium, or other
laws affecting the enforcement of creditors' rights generally or by general
equitable principles (regardless of whether such enforceability is considered in
an action, suit or proceeding in equity or at law).
5.3 Subsidiaries. The Subsidiaries of the Company are listed on
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Schedule 5.3. Each such Subsidiary is a corporation duly organized, validly
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existing and in good standing under the laws of the jurisdiction of its
incorporation. Each such Subsidiary has the corporate power and authority to own
or lease and operate its properties and to carry on its business as it is now
being and hereafter proposed to be conducted. Each Subsidiary is duly qualified,
in good standing and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization, except for such jurisdictions where the failure
to so qualify or be authorized would not be reasonably likely to have a
Materially Adverse Effect. The Company owns all of the outstanding capital stock
of each Subsidiary, except as set forth on Schedule 5.3.
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5.4 Compliance with Other Documents and Contemplated Transactions. The
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execution, delivery and performance by the Company of this Agreement and the
Note in accordance with their respective terms, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) require
any consent, approval, authorization, permit or license which has not already
been obtained from, or require the Company to effect any filing or registration
which has not already been effected with, any federal, state or local regulatory
authority, (ii) violate any Applicable Law with respect to the Company, except
any such violation which would not be reasonably likely to have a Materially
Adverse Effect, (iii) conflict with, result in a breach of, or constitute a
default under (a) the Certificate of Incorporation or the
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Bylaws of the Company or (b) any indenture, agreement, credit facility or other
instrument to which the Company or any Subsidiary of the Company is a party or
by which any such company or its properties may be bound or (iv) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Company or any of its
Subsidiaries.
5.5 Compliance with Law. Except as set forth in Schedule 5.5, hereto,
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the Company is in substantial compliance with all Applicable Laws, except any
non-compliance which would not be reasonably likely to have a Materially Adverse
Effect.
5.6 Title to Properties. Except as set forth on Schedule 5.6, the
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Company has good and marketable title to, or a valid leasehold interest in, all
of its assets. None of such assets is subject to any Liens, except for Permitted
Liens. Except for financing statements evidencing Permitted Liens, no financing
statement under the Uniform Commercial Code and no other filing which names the
Company as debtor or which covers or purports to cover any of the Company's
assets is on file in any state or other jurisdiction, and the Company has not
signed any such financing statement or filing (except as described above) or any
security agreement that has not been terminated, authorizing any secured party
thereunder to file any such financing statement or filing.
5.7 Litigation. There is no action, suit or proceeding pending or, to
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the best of the Company's knowledge, threatened against or in any other manner
relating directly and adversely to, the Company or any of its properties in any
court or before any arbitrator of any kind or before or by any governmental
body, except as described on Schedule 5.7 attached hereto, and no such action,
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suit, proceeding or investigation (i) calls into question the validity of this
Agreement, or (ii) if determined adversely to the Company, would be reasonably
likely to have a Materially Adverse Effect.
5.8 Taxes. All federal, state and other tax returns of the Company and
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its Subsidiaries required by law to be filed have been duly filed and all
federal, state and other taxes, assessments and other governmental charges or
levies upon the Company and any of its Subsidiaries and any of their properties,
income, profits and assets, which are due and payable, have been paid, except
any such taxes, assessments or other governmental charges or levies (i) the
payment of which is being contested in good faith by appropriate proceedings,
(ii) for which adequate reserves have been provided on the books of the Company
and (iii) as to which no Lien other than a Permitted Lien has attached and no
foreclosure, distraint, sale or similar proceedings have been commenced. The
charges, accruals and reserves on the books of the Company in respect of taxes
are, in the judgment of the Company, adequate.
5.9 Financial Statements. The Company has furnished or caused to be
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furnished to the Investor its consolidated audited balance sheet and statements
of operations and cash flows for the fiscal year ended January 29, 2000 and its
consolidated unaudited balance sheet and statements of operations and cash flows
for the nine (9) month period ending October 28, 2000 (collectively, the
"Financials"), which as of the date hereof are complete and correct in all
respects and present fairly in accordance with generally accepted accounting
principles the Company's financial position on and as at such dates and the
results of operations for the periods
then ended. There are no liabilities, contingent or otherwise, of the Company
which are not disclosed in such Financials.
5.10 No Adverse Change. Since January 29, 2000, there has occurred no
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event which is reasonably likely to have a Materially Adverse Effect.
5.11 ERISA. The Company and each ERISA Affiliate and each of their
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respective Plans are in substantial compliance with ERISA and the Internal
Revenue Code (the "Code"), and neither the Company nor any of its ERISA
Affiliates has incurred any accumulated funding deficiency with respect to any
such Plan within the meaning of ERISA or the Code. The Company has not incurred
any material liability to the Pension Benefit Guaranty Corporation or any
successor thereto in connection with any such Plan. The assets of each such Plan
which is subject to Title IV of ERISA are sufficient to provide the benefits
under such Plan for which the Pension Benefit Guaranty Corporation or any
successor thereto would guarantee payment if such Plan were terminated, and such
assets are also sufficient to provide all other benefits due under the Plan
prior to and upon termination. No Reportable Event has occurred and is
continuing with respect to any such Plan. No such Plan or trust created
thereunder, or any party in interest, fiduciary, trustee or administrator
thereof, has engaged in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) which would subject such Plan
or any other Plan of the Company, or any of its ERISA Affiliates, any trust
created thereunder, or any party in interest, fiduciary, trustee or
administrator thereof, or any party dealing with any such Plan or any such trust
to the tax or penalty on "prohibited transactions" imposed by Section 502 of
ERISA or Section 4975 of the Code. Neither the Company nor any of its ERISA
Affiliates is a participant in or obliged to make any payment to a
Multi-employer Plan.
5.12 Absence of Default, etc. The Company is in compliance with all
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the provisions of its Certificate of Incorporation and Bylaws, and no event has
occurred or failed to occur, which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, or which with the passage of
time or giving of notice or both would constitute a default or breach by the
Company under any indenture, agreement, credit facility or other instrument
(collectively, the "Company Agreements") or under any judgment, decree or order
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or their properties may be bound or affected,
except any such default or breach which would not be reasonably likely to have a
Materially Adverse Effect. All Company Agreements are in full force and effect,
and the Company has no knowledge that any party to any Company Agreement is
seeking or presently intends to seek to (i) terminate, amend or modify such
Company Agreement or (ii) upon expiration of such Company Agreement, not renew
such Company Agreement on terms substantially similar to those currently
contained in such Company Agreement.
5.13 Intellectual Property Rights. The Company owns or possesses
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sufficient legal rights to all patents, patent applications, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, know-how, concepts,
computer programs and software, technical data, proprietary rights, proprietary
processes and other information necessary for its business as previously
conducted, as now conducted and as currently proposed to be conducted by the
Company (each such item, the "Company Intellectual Property") without any
conflict
with or infringement of the rights of others. Schedule 5.13 contains a complete
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list of all issued patents, service marks, trademarks and registered copyrights
of the Company, any pending applications therefor and registrations, renewals,
extensions and the like thereof and all other patentable Company Intellectual
Property as to which the Company intends to file applications describing where
the Company is currently in the application process. Except for proprietary
information agreements with its employees and consultants, and licenses or
agreements entered into in the ordinary course of the Company's business,
consistent with past practices, there are no outstanding options, licenses, or
agreements of any kind relating to any of the Company Intellectual Property, nor
is the Company bound by or a party to any options, licenses, or agreements of
any kind with respect to the patents, patent applications, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, know-how, concepts,
computer programs, technical data, proprietary rights, proprietary processes and
information of any other person or entity. No person or entity has the right to
purchase any of the Company Intellectual Property owned by the Company. Each of
the federal, state and other governmental registrations with any country
pertaining to the Company Intellectual Property is valid and in full force and
effect. No claims are pending against the Company by any person with respect to
the use of any Company Intellectual Property or challenging or questioning the
validity or effectiveness of any license or agreement relating to the same. To
the best of the Company's knowledge, none of its employees, agents or
contractors is obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or is subject to any judgment,
decree, or order of any court or administrative agency, that would interfere
with the use of such employee's best efforts to promote the interests of the
Company, or that would conflict with the Company's business as it is currently
proposed to be conducted. To the best of the Company's knowledge, neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as currently proposed will conflict with or result in a breach of the
terms, conditions, or provisions of, or constitute a default under, any
contract, covenant, or instrument under which any of such employees is now
obligated. The Company has no plan to, and does not believe it is or will be
necessary to utilize, any inventions of any of its employees (or individuals it
currently intends to hire) made prior to their employment by the Company that
would infringe the rights of others. Schedule 5.13 sets forth a list of all
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jurisdictions in which the Company is operating under a trade name, and each
jurisdiction in which any such trade name is registered. No patent listed on
Schedule 5.13 has been or is now involved in any interference, reissue,
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reexamination or opposition proceeding, nor is the Company aware of any
potentially interfering patent or patent application of any third party. No
person or entity is presently selling or marketing a product which is covered by
such patents, and such patents have not been challenged or threatened in any
way. None of the current or former employees of the Company are named as an
inventor on any pending patent application. All patents listed on Schedule 5.13
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are currently in compliance with formal legal requirements (including payment of
filing, examination and maintenance fees and proofs of working or use), and,
there is nothing which would render such patents invalid or unenforceable, and
they are not subject to any maintenance fees or taxes or actions falling due
within ninety days after the date of Closing.
5.14 Environmental Matters. Except as is described on Schedule 5.14
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attached hereto:
(a) The Property does not contain, in, on or under, including,
without limitation, the soil and groundwater thereunder, any Hazardous Materials
in violation of Environmental Laws or in amounts that could give rise to
material liability under Environmental Laws.
(b) The Company is in substantial compliance with all applicable
Environmental Laws, and there is no condition which could interfere with the
continued operation of any of the Properties in substantial compliance with
Environmental Laws, or impair the financial condition of Company.
(c) The Company has not received from any governmental authority
or any other Person any complaint, notice of violation, alleged violation,
investigation or advisory action or notice of potential liability regarding
matters of environmental protection or permit compliance under applicable
Environmental Laws with regard to the Properties, nor is the Company aware that
any governmental authority is contemplating delivering to the Company any such
notice. There has been no pending or, to the Company's knowledge, threatened
complaint, notice of violation, alleged violation, investigation or notice of
potential liability under Environmental Laws with regard to any of the
Properties.
(d) Hazardous Materials have not been generated, treated, stored,
disposed of, at, on or under any of the Property, except in substantial
compliance with all Environmental Laws, or in a manner that could give rise to
material liability under Environmental Laws nor have any Hazardous Materials
been transported or disposed of from any of the Properties to any other
location, except in substantial compliance with all Environmental Laws, nor in a
manner that could reasonably be anticipated to give rise to material liability
under Environmental Laws.
(e) The Company is not a party to any governmental,
administrative actions or judicial proceedings pending under any Environmental
Law with respect to any of the Properties, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to any of the Properties.
(f) There has been no release or threat of release of Hazardous
Materials into the environment at or from any of the Properties, or arising from
or relating to the operations of the Company, in violation of Environmental Laws
or in amounts that could give rise to material liability under Environmental
Laws.
5.15 Investment Company Act; Public Utility Holding Company Act. The
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Company is not: (i) an "investment company" or a Company "controlled by an
investment company" or (ii) required to register, in each case, under the
provisions of the Investment Company Act of 1940, as amended, and neither the
entering into or performance by the Company of this Agreement violates any
provision of such Act or requires under such Act any consent, approval or
authorization of, or registration with, the Securities and Exchange Commission
(the "Commission") or any other governmental or public body or authority
pursuant to any provisions of such Act. The Company is not a "public utility
holding company" within the meaning of the Public Utility Holding Company Act of
1935, as amended.
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None of the transactions contemplated by this Agreement (including, without
limitation, the use of proceeds from the sale of the Securities) will violate or
result in a violation of Section 7 of the Securities and Exchange Act of 1934,
as amended, or any regulation issued pursuant thereto including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System.
5.16 Payment of Wages. The Company is in compliance in all material
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respects with the Fair Labor Standards Act, as amended, and the Company has in
all material respects paid all minimum and overtime wages required by law to be
paid to its employees.
5.17 Securities Laws. The Company and, to the best of the Company's
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knowledge, any underwriters, sales agents, representatives or brokers
representing or acting, or who have in the past represented or acted, on behalf
of the Company have complied with all material federal and state securities laws
in connection with the offer and sale of all securities in the Company,
including the Note. The offer, sale and issuance of the Note is, and any
previous private placement of securities effected by the Company was, exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act") and from the registration or qualification requirements
of the laws of any applicable state or other jurisdiction, and neither the
Company nor anyone on its behalf will take any action hereafter that would or
would likely cause the loss of such exemption.
5.18 Agreements with Affiliates and Management Agreements. Except as
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set forth on Schedule 5.18 attached hereto, the Company does not have (i) any
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material agreements or binding arrangements of any kind with any Affiliates, or
(ii) any management or consulting agreements of any kind with any third party.
5.19 Disclosure; SEC Filings. There is no fact which the Company has
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not disclosed to the Investor in writing which has or will have a Materially
Adverse Effect. The information contained in this Agreement, the Financials and
in any writing furnished pursuant hereto or in connection herewith, does not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or herein or necessary to make the statements
therein or herein not misleading. Additionally, the Company has delivered to the
Investor, true and complete copies of each registration statement, report and
proxy or information statement, including, without limitation, any annual
reports to stockholders incorporated by reference in any of such reports, in
form (including exhibits and any amendments thereto) required to be filed with
the Commission since December 31, 1998 (collectively, the "Company SEC
Reports"). As of the respective dates the Company SEC Reports were filed, or, if
any such Company SEC Report was amended, as of the date such amendment was
filed, each of the Company SEC Reports (i) complied in all respects with all
applicable requirements of the Securities Act and the Exchange Act, and the
rules and regulations promulgated thereunder, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, misleading. Each of the audited
financial statements and unaudited interim financial statements of the Company
(including any related notes and schedules) included (or incorporated by
reference) in its Annual Reports on Form 10-KSB for each of the last two fiscal
years and its Quarterly Reports on Form 10-QSB for all interim periods
subsequent thereto, as amended, fairly present, in conformity with
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generally accepted accounting principles, the financial position of the Company
as of its date and the results of operations and changes in financial position
for the period then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements).
6. Conditions Precedent to Investor's Obligations at the Closing. The
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obligation of the Investor to execute this Agreement is subject to the prior
fulfillment of the following conditions:
6.1 Representations and Warranties. The representations and warranties
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of the Company under this Agreement shall be true and correct as of the date
hereof.
6.2 No Material Adverse Change. There shall not have occurred any (i)
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change in the financial condition, business, assets or prospects of the Company
or any of its Subsidiaries that constitutes a Materially Adverse Effect with
respect to the Company and its Subsidiaries taken as a whole, (ii) substantive
change in local, state or federal governmental regulations affecting the
business of the Company or any of its Subsidiaries or the business proposed to
be conducted by the Company or any of its Subsidiaries that would be reasonably
likely to have a Materially Adverse Effect, (iii) material adverse change in the
Company's industry generally or (iv) threatened, instituted or pending action,
proceeding, application or counterclaim by or before any governmental,
regulatory or administrative agency or authority, domestic or foreign, which
seeks to restrain or prohibit the transactions contemplated by this Agreement or
seeks damages in connection therewith or resulting therefrom, seeks to impose
any limitations on the ability of the Investor effectively to acquire or to hold
or to exercise full rights of ownership of the Securities, including, without
limitation, the right to vote the Securities in accordance with their terms or
would otherwise be reasonably likely to have a Materially Adverse Effect on the
Company.
6.3 Qualification Under State Securities Laws. All registrations,
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qualifications, permits and approvals, including approvals of the shareholders,
if required and necessary for the lawful execution, delivery and performance of
this Agreement, including without limitation all such registrations,
qualifications, permits and approvals required prior to the sale of the
Securities shall have been obtained.
6.4 Delivery of Documents. The Investor shall have received the
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following:
(a) copies of resolutions of the Board, certified by an
Authorized Signatory of the Company, authorizing and approving the execution,
delivery and performance of this Agreement, and all other documents and
instruments to be delivered pursuant hereto and thereto;
(b) a copy of the Bylaws of the Company certified by an
Authorized Signatory of the Company;
(c) a true and complete copy of each and any agreements or
arrangements of any kind among the shareholders of the Company, or otherwise
with respect to the ownership of the Company;
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(d) good standing certificates for the Company and each
Subsidiary of the Company, issued by the Secretary of State of each state in
which each such corporation is incorporated or qualified to do business as a
foreign corporation;
(e) this Agreement duly executed by the Company;
(f) a favorable opinion of Blank Rome Xxxxxx Xxxxxxxxxx LLP,
counsel for the Company, dated the Closing Date substantially in the form of
Schedule 6.4(g) attached hereto;
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(g) the Note duly executed by the Company;
(h) a certificate of incumbency with respect to each Authorized
Signatory; and
(i) such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the Investor
or its counsel, Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, may reasonably request.
6.5 Proceedings and Documents. All corporate and other proceedings and
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actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transactions, shall be reasonably satisfactory in form
and substance to the Investor and to its counsel, Paul, Hastings, Xxxxxxxx &
Xxxxxx LLP.
7. Reports; Confidentiality.
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7.1 Delivery of Reports. Following the Closing, subject to Section 7.2
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below, the Company shall provide the following reports and other information to
the Investor:
(a) within ten (10) days of each month end, monthly financial
statements; and
(b) at the end of each week, a report as to how the Company has
used the proceeds provided hereunder as of that date.
7.2 Confidentiality. Investor acknowledges that the reports provided
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pursuant to Section 7.1 may constitute confidential, nonpublic information
regarding the Company and that such reports may contain material information the
possession of which would prevent Investor from trading in the Company's
securities under Rule 10b-5 promulgated under the Exchange Act.
(a) As a condition to such reports being furnished to Investor,
Investor agrees to treat any and all such information contained therein as
confidential. Investor agrees (i) not to disclose any such confidential
information to any other person, other than to its attorneys, accountants and
Affiliates on a need to know basis, until such information has been made public
in the Company's periodic filings or in the absence of disclosure for a period
of two (2) years
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and (ii) not to purchase or sell any shares of the Company's Common Stock until
termination of this Section 7.2 as specified below.
(b) Investor may terminate this Section 7.2 and the Company's
delivery of reports pursuant to Section 7.1 at any time by following the
procedures set forth below:
(i) Investor shall notify the Company in writing of its
desire to terminate the delivery of reports by the Company to Investor. Upon
receipt of such written notification, the Company will immediately cease
providing the reports, required by Section 7.1 hereto, to the Investor.
(ii) Thereafter, this Section 7.2 shall terminate upon
the earlier of (x) the filing by the Company of its next periodic report under
the Exchange Act whether on Form 10-Q or Form 10-K or (y) the Company's notice
to Investor that all remaining confidential information furnished to Investor
has been publicly disclosed or has been determined to no longer constitute
material information as to which trading restrictions would apply, which notice
shall be promptly provided to Investor upon the Company's determination as
specified above.
8. Enforcement.
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8.1 Remedies at Law or in Equity. If any Default shall occur or if any
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representation or warranty made by or on behalf of the Company in this Agreement
or in any certificate, report or other instrument delivered under or pursuant to
any term hereof shall be untrue or misleading in any respect as of the date of
this Agreement or as of the date it was made, furnished or delivered, the
Investor may proceed to protect and enforce its rights by suit in equity or
action at law, whether for the specific performance of any term contained in
this Agreement or for an injunction against the breach of any such term or in
aid of the exercise of any power granted in this Agreement, or to enforce any
other legal or equitable right of the Investor, or to take any one or more of
such actions. In the event the Investor brings such an action against the
Company, the prevailing party in such dispute shall be entitled to recover from
the losing party all fees, costs and expenses of enforcing any right of such
prevailing party under or with respect to this Agreement, including, without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
8.2 Cumulative Remedies. None of the rights, powers or remedies
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conferred upon the Investor shall be mutually exclusive, and each such right,
power or remedy shall be cumulative and in addition to every other right, power
or remedy, whether now or hereafter available at law, in equity, by statute or
otherwise.
8.3 No Implied Waiver. Except as expressly provided in this Agreement,
-----------------
no course of dealing between the Company and the Investor and no delay in
exercising any such right, power or remedy conferred hereby now or hereafter
existing at law, in equity, by statute or otherwise, shall operate as a waiver
of, or otherwise prejudice, any such right, power or remedy.
11
9. Definitions. Unless the context otherwise requires, the terms defined in
-----------
this Section 9 shall have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
herein defined.
"Affiliate" shall mean any Person which directly or indirectly
controls, is controlled by, or is under common control with, the indicated
Person. For purposes of this definition "control" when used with respect to any
Person includes, without limitation, the direct or indirect beneficial ownership
of more than fifty percent (50%) of the voting securities or voting equity or
partnership interests of such Person, or the power to direct or cause the
direction of the management or policies of such Person, whether by contract or
otherwise.
"Agreement" shall mean this Note Purchase Agreement.
"Applicable Law" shall mean all provisions of constitutions, statutes,
rules, regulations, and orders of governmental bodies or regulatory agencies
applicable to the Company, including, without limitation, Environmental Laws,
and Title 17 of the United States Code and all orders and decrees of all courts
and arbitrators in proceedings or actions to which the Company is a party or by
which it is bound.
"Authorized Signatory" shall mean such senior personnel of the Company
as may be duly authorized and designated in writing by the Company to execute
documents, agreements and instruments on behalf of the Company.
"Board" shall mean the Board of Directors of the Company.
"Closing" shall have the meaning assigned to it in Section 3 hereof.
"Closing Date" shall have the meaning assigned to it in Section 3
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall have the meaning assigned to it in Section 5.15
hereof.
"Common Stock" shall have the meaning assigned to it in Section 1
hereof.
"Company" shall have the meaning assigned to it in the introductory
paragraph hereof.
"Company Agreements" shall have the meaning assigned to it in Section
5.12 hereof.
"Company Intellectual Property" shall have the meaning assigned to it
in Section 5.13 hereof.
"Company SEC Reports" shall have the meaning assigned to it in Section
5.19 hereof.
12
"Default" shall mean (i) a default or failure in the due observance or
performance of any covenant, condition or agreement on the part of the Company
or any of its Subsidiaries to be observed or performed under the terms of this
Agreement, if such default or failure in performance shall remain unremedied for
ten (10) days, or (ii) a default under any senior credit facility of the
Company.
"Environmental Laws" shall mean any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, permit
conditions, decrees or requirements of any governmental authority regulating,
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including, without limitation, those relating
to releases, discharges, emissions or disposals to air, water, land or ground
water, to the withdrawal or use of ground water, to the use, handling or
disposal of polychlorinated biphenyals, asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances (including,
without limitation, petroleum, crude oil or any fraction thereof, or other
hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous or
other controlled, prohibited or regulated substances, including, without
limitation, any provisions under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.)
------
or the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. ss.
6901, et seq.).
------
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as in effect on the date hereof and as such Act may be amended thereafter
from time to time.
"ERISA Affiliate" shall mean any Person which is an "Affiliate" of the
Company within the meaning of Section 414 of the Code and which, together with
the Company, is treated as a single employer for purposes of such Section 414.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Financials" shall have the meaning ascribed thereto in Section 5.9
hereof.
"Hazardous Materials" shall mean all toxic and hazardous substances
and wastes and petroleum products.
"Investor" shall have the meaning assigned to it in the introductory
paragraph of this Agreement.
"Lien" shall mean with respect to any Property, any mortgage, lien,
pledge, charge, security interest or other encumbrance of any kind, whether or
not filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement and any lease deemed to
constitute a security interest and any option or other agreement to give any
security interest).
"Materially Adverse Effect" shall mean any materially adverse effect
upon the business operation, assets, liabilities, financial condition, results
of operations or business prospects of the Company or any of its Subsidiaries,
or upon the ability of the Company to
13
operate its current teleservices business or to develop and market its
encryption security technology, or the ability of the Company to perform this
Agreement, or to perform under the Note, resulting from any act, omission,
situation, status, event or undertaking, either singly or taken together;
provided, however, that in no event shall Materially Adverse Effect include the
effects of any future general economic conditions or technological changes,
including, without limitation, conditions or changes which affect prevailing
interest rates.
"Permitted Liens" shall mean (a) Liens existing on the Closing Date
and disclosed on Schedule 5.6 hereto; (b) Liens imposed by governmental
------------
authorities for taxes, assessments or other charges not yet subject to penalty
or which are being contested in good faith and by appropriate proceeding, if
adequate reserves with respect thereto are maintained on the books of the
Company in accordance with generally accepted accounting principles; (c)
statutory Liens of carriers, warehousemen, mechanics, materialmen, landlords,
repairmen, or other like Liens arising by operation of law in the ordinary
course of business; (d) Liens securing the performance of bids, trade contracts
(other than borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business; (e) easements, rights of way, zoning, similar
restrictions and other similar encumbrances or title defects which, singularly
or in the aggregate, do not in any case materially detract from the value of the
property, or materially interfere with the ordinary conduct of the business of
the Company and its Subsidiaries; and (f) pledges or deposits made in the
ordinary course of business in connection with workers compensation,
unemployment insurance and other types of Social Security legislation.
"Person" shall include any natural person, corporation, limited
liability company, trust, association, company, partnership, joint venture and
other entity and any government, governmental agency, instrumentality or
political subdivision.
"Plan" shall mean an employee benefit plan within the meaning of
Section 3(3) of ERISA or any other plan maintained for employees of any Person
or any ERISA Affiliate of such Person.
"Property" shall mean any real property or personal property, plant,
building, facility, structure, underground storage tank or unit, equipment,
inventory or other asset, owned, leased or operated by the Company or any
Subsidiary of the Company (including, without limitation, any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).
"Reportable Event" shall have the meaning set forth in Title IV of
ERISA.
"Required Payment" shall have the meaning assigned to it in Section 1
hereof.
"Securities" shall have the meaning assigned to it in Section 1
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" shall mean (i) any corporation of which fifty percent
(50%) or more of the voting stock, or any partnership of which fifty percent
(50%) or more of outstanding
14
partnership interests, is at any time owned by the Company, or by one or more
Subsidiaries of the Company, or by the Company and one or more Subsidiaries of
the Company, and (ii) any other entity which is controlled or capable of being
controlled by the Company or by one or more Subsidiaries of the Company or by
the Company and one or more Subsidiaries of the Company.
10. Miscellaneous.
-------------
10.1 Waivers and Modifications. The Investor will not be deemed as a
-------------------------
consequence of any act, delay, failure, omission, or forebearance or for any
other reason: (i) to have waived, or to be estopped from exercising, any of its
rights or remedies under this Agreement, or (ii) to have modified, changed,
amended, terminated, rescinded, or superseded any of the terms of this
Agreement, unless such waiver, modification, amendment, change, termination, or
rescission is express, in writing and signed by a duly authorized officer of the
Investor. No single or partial exercise by the Investor of any right or remedy
will preclude the exercise of any other right or remedy, and a waiver expressly
made in writing on one occasion will be effective only in that specific instance
and only for the precise purpose for which given, and will not be construed as a
consent to or a waiver of any right or remedy on any future occasion. No notice
to or demand on the Company in any instance will entitle the Company to any
other or future notice or demand in similar or other circumstances.
10.2 Notices. All notices, requests, consents and other communications
-------
required or permitted hereunder shall be in writing and shall be delivered, or
mailed first class postage prepaid, registered or certified mail,
(a) If to the Investor, to the address first above written or at
such other address as the Investor may specify by written notice
to the Company,
or
(b) If to the Company, at the address first above written or at
such other address as the Company may specify by written notice
to the Investor,
and each such notice, request, consent and other communication shall for all
purposes of the Agreement be treated as being effective or having been given
when delivered, if delivered personally, by e-mail or facsimile with
confirmation of receipt or by overnight courier or, if sent by mail, at the
earlier of its actual receipt or three (3) days after the same has been
deposited in a regularly maintained receptacle for the deposit of United States
mail, addressed and postage prepaid as aforesaid.
10.3 Survival of Representations and Warranties, etc. All
-----------------------------------------------
representations and warranties made in, pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement, any
investigation at any time made by or on behalf of the Investor, and the sale and
purchase of the Note and Securities and payment therefor. All statements
contained in any certificate, instrument or other writing delivered by or on
behalf of
15
the Company pursuant hereto or in connection with or contemplation of the
transactions herein contemplated shall constitute representations and warranties
by the Company hereunder. Any claim against the Company based upon any
inaccuracy in any of the representations or breach of any of the warranties
hereunder must be asserted against the Company, either by written notice given
to the Company specifying with reasonable particularity the claimed inaccuracy
or breach or by institution of an action at law or suit in equity against the
Company and the serving of the process and complaint with respect thereto upon
the Company, within two (2) years from the Closing Date.
10.4 Severability. Should any one or more of the provisions of this
------------
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement,
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
10.5 Parties in Interest. All the terms and provisions of this
-------------------
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not. Subject to the immediately preceding sentence, this Agreement
shall not run to the benefit of or be enforceable by any Person other than a
party to this Agreement and its successors and assigns.
10.6 Headings. The headings of the Sections and paragraphs of this
--------
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
10.7 Choice of Law. It is the intention of the parties that the
-------------
internal substantive laws, and not the laws of conflicts, of the State of New
York shall govern the enforceability and validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties.
10.8 Expenses. The Company will promptly pay (i) all out-of-pocket
--------
expenses of the Investor in connection with the preparation, negotiation,
execution and delivery of this Agreement, and the transactions contemplated
hereunder and thereunder, whether or not the transactions contemplated by this
Agreement are consummated, including, but not limited to, the reasonable fees
and disbursements of counsel for the Investor, being Paul, Hastings, Xxxxxxxx &
Xxxxxx LLP, provided such expense reimbursement shall be subject to a cap of
$75,000, and (ii) all costs and out-of-pocket expenses of obtaining performance
under this Agreement and the other agreements referenced herein or of preparing,
negotiating, executing and delivering any amendment of or consent or waiver
under this Agreement or the other agreements referenced herein at the Company's
request, including but not limited to, reasonable fees and expenses of counsel
for the Investor.
10.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument. Delivery of an executed
16
counterpart of this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
17
[NOTE PURCHASE AGREEMENT SIGNATURE PAGE]
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
undersigned, whereupon this letter shall become a binding contract between you
and the undersigned.
Very truly yours,
TELEHUBLINK CORPORATION
By:
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Name:
----------------------------
Title:
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By:
------------------------------------
Name:
----------------------------
Title:
----------------------------
The foregoing Agreement is hereby
accepted as of the date first above written.
THE INVESTOR:
CFE, INC.
By:
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Name:
----------------------------
Title:
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