Private Placement Purchase Agreement
Private Placement Purchase Agreement, dated as of June 8, 2000 (this
"Agreement"), between Global Technologies, Ltd., a Delaware corporation (the
"Company"), and the investors signatory hereto (each, a "Subscriber" and
collectively, the "Subscribers").
In consideration of the mutual covenants contained in this Agreement and
for other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the Company and the Subscribers hereby agree as
follows:
1. Certain Representations; Opinion of Counsel; Certain Confirmations.
(a) The Company represents and warrants to the Subscribers as follows:
(i) All filings which the Company has made with the Securities
Exchange Commission ("SEC") during the past 12 months are
correct and accurate in all material respects and in all
material respects state all facts necessary to make such
filings not misleading. There has been no material adverse
change in the business, assets or financial condition of the
Company since the most recent such filing.
(ii) The Company has the full power and authority to enter into
this Agreement and to carry out the transactions contemplated
hereby, all proceedings required to be taken by it or its
Common Stockholders to authorize the execution, delivery and
performance of this Agreement and the agreements relating
hereto have been properly taken and this Agreement and the
Note constitute valid and binding obligations of the Company,
enforceable in accordance with their respective terms.
(iii) Neither the execution, delivery nor performance of this
Agreement by the Company will, with or without the giving of
notice or the passage of time, or both, conflict with, result
in a default, right to accelerate or loss of rights under, or
result in the creation of any lien, charge or encumbrance
pursuant to, any provision of the Company's certificate of
incorporation or by-laws or any franchise, mortgage, deed of
trust, lease, license, agreement, understanding, law, rule or
regulation or any order, judgment or decree to which the
Company is a party or by which it may be bound or affected.
(iv) The Company acquired the full record and beneficial ownership
of and made full payment for the USW Collateral Shares (as
defined in Section 3(a)) on or before April 6, 1999. The
Company's holding period under Rule 144 ("Rule 144")
promulgated under the Securities Act of 1933, as amended (the
"Securities Act") for the USW Collateral Shares began no later
than April 6, 1999.
(v) The Company owns the entire record and beneficial interest in
the USW Collateral Shares, free and clear of all liens, claims
and encumbrances.
(vi) The security interest which the Company is granting to
Subscriber in the USW Collateral Shares under Section 3 is a
perfected first and prior security interest under the Uniform
Commercial Code of the State of New York (the "Uniform
Commercial Code").
(vii) No financing statements are on file against the Company with
respect to any Collateral (as defined in Section 3).
(viii) The Company confirms that neither it nor any other person
acting on its behalf has provided any Subscriber or agent or
counsel thereof with any information that constitutes or might
constitute material non-public information. The Company
understands and confirms
that the Subscribers shall be relying on this representation
in effecting transactions in securities of the Company.
(ix) The foregoing representations and warranties will continue to
be true and correct on the Closing Date and will survive
conversion of the Notes.
(b) Counsel to the Company is concurrently herewith rendering an opinion
to Subscriber in respect of the validity of the securities issued
hereby and on certain other matters.
(c) The Rule 144 holding period of Subscriber, as pledgee of the USW
Collateral Shares under this Agreement, commenced on April 6, 1999 and
on foreclosure Subscriber will be permitted publicly to sell the USW
Collateral Shares, subject to compliance with the non-holding period
requirements of Rule 144.
2. Purchase of Units.
(a) At a closing (the "Closing") to occur at the offices of Xxxxxxxx
Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, XX 00000 simultaneously herewith or at such other time as
the parties may agree (the "Closing Date"), each Subscriber will
severally and not jointly for $1,000,000 per Unit (as defined below)
purchase from the Company, and the Company will sell to each
Subscriber, the number of Units set forth below opposite such
Subscriber's name below. Each Unit consists of a secured convertible
note of the Company in the form of Exhibit A and in the principal
amount of $1,000,000 (the "Notes"). Such purchase by the Subscribers
is part of an offering in which an aggregate of 4 Units will be sold
simultaneously with such sale to Subscriber. The full purchase price,
less the (fees contemplated in Section 6(a)) will be paid in full and
in cash at the Closing.
(b) As more fully set forth in the Note, the principal of each Note and
the accrued interest thereunder is convertible into shares
("Conversion Shares") of Class A common stock of the Company , par
value $.01 per share ("Common Stock"), at an initial Conversion Price
(subject to adjustment) of $2 per Conversion Share.
(c) The Note sets forth terms and conditions under which the Company has
the right to prepay the Note, no less than $1,000,000 of the then
outstanding principal amount under the Note, upon payment of a
prepayment premium which consists of cash and certain shares of Common
Stock ("Prepayment Shares") or warrants in the form of Exhibit A
("Prepayment Warrants").
(d) As more fully set forth in Section 3, the Company's secured
obligations (as defined in such Section) are collateralized by certain
shares ("USW Collateral Shares") of common stock of USW.
(e) The Conversion Shares, the Prepayment Shares and the shares ("Warrant
Shares") issuable on exercise of the Prepayment Warrants are
hereinafter sometimes collectively referred to as the "Note Shares."
(f) Note Shares shall be issued free of all restrictive legends if the
conversion of the Notes, exercise of the Warrants or issuance of the
Prepayment Shares occurs at any time while a Registration Statement
(as defined below) is effective under the Securities Act or, in the
event there is not an effective Registration Statement at such time,
if no legend is required under applicable requirements of the
Securities Act. The Company agrees that, in the event any Note Shares
are issued with a legend in accordance with this Section, it will,
within three trading days after request therefor by a Subscriber,
replace such Note Shares with unlegended shares at such time as such
legend would not have been required under this Section had such
issuance occurred on the date of such request. The Company may not
make any notation on its records or give instructions to any transfer
agent of the Company which enlarge the restrictions of transfer set
forth in this Section.
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3. GRANT OF SECURITY INTERESTS
(a) To secure the obligations of the Company to Subscriber under the Note
and under this Agreement, including with respect to conversion (the
"secured obligations"), the Company hereby grants to Subscriber, for
each Unit, a security interest in 250,000 shares of common stock of
USW, which the Company owns free and clear of any transfer
restrictions (the "USW Collateral Shares"), and in all dividends and
distributions which USW at any time makes with respect to the USW
Collateral Shares, and in the proceeds thereof. The collateral
aforesaid is hereinafter collectively referred to as the
"Collateral."
(b) To perfect Subscribers' security interest in the Collateral, the
Company will concurrently herewith in the State of New York deliver
to the Subscribers stock certificates for the USW Collateral Shares,
together with a stock power therefor endorsed in blank with a
medallion signature guarantee and certified board resolutions with a
medallion signature guarantee. As soon as possible after the Closing,
the Company shall cause the USW Collateral Shares to be registered in
the name of the Subscribers as pledge.
(c) Upon default by the Company under any of the secured obligations,
Subscribers shall be entitled to all rights afforded under the
Uniform Commercial Code to a secured creditor upon default by his
debtor, including, without limitation, the right to recover costs of
collection, it being understood that the Company hereby also grants
to Subscribers such rights and waivers as under the Uniform
Commercial Code a debtor may make available to a secured creditor by
express agreement or waiver.
(d) The Company shall be entitled to vote the Collateral until default,
and Subscribers shall be entitled to vote the Collateral from and
after default.
(e) Certain other Provisions.
(i) The Company agrees that until Discharge of the Notes (as
hereinafter defined), the Company will not assign or transfer any
interest in the Collateral or grant any security interests in the
Collateral. "Discharge of the Notes" shall occur when the Company
shall have paid in full all principal, interest and other amounts
owing under all Notes issued to all Purchasers.
(ii) In no event shall the Company seek or obtain any injunctive or
similar relief against any sale or proposed sale by Subscribers
of any Collateral. The Company expressly waives its rights to any
such relief, and it acknowledges that recovery of damages
constitutes sufficient remedy for any such sale which is found to
be improper.
(iii) The security interests granted hereunder shall not be discharged
or in any way affected by the extension or other modification of
any of the secured obligations, or by any other act or omission
(other than Discharge of the Notes) which would otherwise
discharge the security interest at law or in equity.
(iv) Upon Discharge of the Notes, Subscribers shall release, to the
Company all Collateral on which Subscribers have not theretofore
foreclosed.
(v) Subscribers shall at their option and as they deem appropriate
determine whether and when to proceed against any one or more
obligors, guarantors or kind or types of collateral, and it shall
not thereby release or discharge any other obligor, guarantor or
collateral.
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4. Registration.
(a) The Company represents that it is eligible to file registration
statements on Form S-3 for resales of securities by shareholders of
the Company.
(b) The Company will within 30 days after the Closing Date file a
registration statement on Form S-3 (or on Form S-1 if Form S-3 is not
available) (the "Registration Statement") for the non-underwritten
public sale by Subscribers of all Conversion Shares, Prepayment
Shares and Warrant Shares which have theretofore been issued or which
may thereafter be issued.
(c) The Company shall use its best efforts to cause the Registration
Statement to become effective not later than 90 days after the date
of filing, and to remain effective for two years. The registration
shall, if necessary, be accompanied by blue sky clearances in such
states as Subscriber may reasonably request.
(d) The Company shall pay all expenses of the registration hereunder,
other than Subscriber's brokerage fees, discounts or commissions, and
transfer taxes, if any.
(e) Subscriber may assign its registration rights to assignees of the
Note or of the Note Shares. The provisions of this Section (e) are
for the benefit of the Subscriber and Subscriber's personal
representatives and permitted assigns.
(f) In connection with registration under this Section, the Company and
the Subscribers agree to the terms set forth in Annex A as to
indemnity.
(g) Should Subscriber from time to time or times give to the Company
notice that it has assigned all or any part of the Note or the Note
Shares, the Company shall, at no cost to Subscribers, within five
business days file a supplement to the registration statement to
reflect the name(s) of the transferee(s) as (a) selling
shareholder(s).
5. Certain Additional Representations.
Each Subscriber for itself and for no other Subscriber represents and
warrants to the Company as follows:
(a) Such Subscriber is purchasing the Units solely for investment solely
for its own account and not with a view to or for the resale or
distribution or of Units, or of the Note or any Note Shares. Such
Subscriber is acquiring the securities offered and sold under this
Agreement in the ordinary course of its business and does not have
any agreement or understanding, directly or indirectly, with any
person or entity to distribute any of such securities.
(b) Such Subscriber understands that it may sell or otherwise transfer
the Units, the Note, the Note Shares and the USW Collateral Shares
only if such transaction is duly registered under the Securities Act
under the Registration Statement or otherwise, or if such Subscriber
shall have received the favorable opinion of counsel to Subscriber (a
copy which will be delivered to the Company prior to such sale or
transfer) to the effect that such sale or other transfer may be made
in the absence of registration under the Securities Act and
registration or qualification in every applicable state. Nothing in
the preceding sentence shall detract or limit from the
representations and warranties made by the Company in Section 1(a).
Such Subscriber realizes that such securities are not a liquid
investment.
(c) Such Subscriber has not relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities Act) in
evaluating the risks and merits of this investment. Such Subscriber
has the
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knowledge and experience to evaluate the Company and the risks and
merits relating thereto.
(d) Such Subscriber is an "accredited investor" as such term is defined
in Rule 501(c) of the Securities Act and shall be such on the date
any shares are issued to Subscriber; such Subscriber acknowledges
that such Subscriber is able to bear the economic risk of losing
Subscriber's entire investment in the shares and understands that an
investment in the Company involves substantial risks; such Subscriber
has the power and authority to enter into this agreement, and the
execution and delivery of, and performance under this agreement shall
not conflict with any rule, regulation, judgment or agreement
applicable to such Subscriber; and Subscriber has invested in
previous transactions involving restricted securities.
(f) Such Subscriber represents and warrants that it has had the
opportunity to ask questions of, and to receive answers from,
officers of the Company as to all matters relating to the Company.
Nothing in the preceding sentence, and nothing that any Subscriber
has discovered or may have discovered in the course of any due
diligence examinations, in any way relieves or limits the liability
of the Company for representations and warranties by the Company in
this Agreement.
6. Fees and Expenses.
(a) The Company will at Closing pay a total of $15,000 to Xxxxxxxx
Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP for their services as counsel
to the Subscribers in connection herewith.
(b) Except as aforesaid, each party shall bear its own expenses in
connection with this transaction. Each party represents to the other
that no broker has acted in respect of this transaction at the
instance of the representing party.
7. This Agreement may not be changed or terminated except by written agreement
of the Company and a majority-in-interest of the Purchasers. It shall be
binding on the parties and on their personal representatives and permitted
assigns. It sets forth all agreements of the parties. Except as set forth
in Section 3(f)(ii), it shall be enforceable by decrees of specific
performance (without posting bond or other security) as well as by other
available remedies. This Agreement may be signed in counterparts. This
Agreement shall be governed by the internal laws of the State of New York.
The federal and state court courts in New York City shall have exclusive
jurisdiction over this instrument and the enforcement thereof. Service of
process shall be effective if by certified mail, return receipt requested.
Trial by jury is waived.
IN WITNESS WHEREOF, the parties hereto have caused this Private Placement
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
GLOBAL TECHNOLOGIES, LTD.
By:
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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[SIGNATURE PAGE FOR SUBSCRIBERS FOLLOW]
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ADVANTAGE FUND II LTD.
By:
----------------------------------------
Name:
Title:
Purchase Price for Units: $2,000,000
Address for Notice:
x/x XXXXX
Xxxx Xxxxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx Antilles
Facsimile: 011-599-9732-2008
Attention: X.X. Xxxxx
With copies to:
Genesee International Inc.
00000 XX 0xx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and
(000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
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XXXX INVESTMENT GROUP LTD.
By:
----------------------------------------
Name:
Title:
Purchase Price for Units: $2,000,000
Address for Notice:
0000 Xxxx 00xx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
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ANNEX A
INDEMNIFICATION
The Company and the Subscribers hereby agree that the following terms and
conditions shall apply to any action or litigation arising from the Registration
Statement.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Subscriber,
the officers, directors, agents, brokers (including brokers who offer and
sell Conversion shares, Prepayment Shares and Warrant Shares (for purposes
of this Annex, "Registrable Securities") as principal as a result of a
pledge or any failure to perform under a margin call of Common Stock),
investment advisors and employees of each of them, each person who controls
any such Subscriber (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act of 1934, as amended) and the officers,
directors, agents and employees of each such controlling person, to the
fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of any prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that
(1) such untrue statements or omissions are based solely upon information
regarding such Subscriber furnished in writing to the Company by such
Subscriber expressly for use therein, or to the extent that such
information relates to such Subscriber or such Subscriber's proposed method
of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Subscriber expressly for use in the
Registration Statement, such prospectus or such form of prospectus or in
any amendment or supplement thereto or (2) the use by such Subscriber of an
outdated or defective prospectus after the Company has notified such
Subscriber in writing that the prospectus is outdated or defective (an
"Advice") and prior to the receipt by such Subscriber of written notice
from the Company that such prospectus is again current and complete. The
Company shall notify the Subscribers promptly of the institution, threat or
assertion of any proceeding, litigation or other legal action of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) INDEMNIFICATION BY SUBSCRIBERS. Each Subscriber shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
persons, to the fullest extent permitted by applicable law, from and
against all Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review) arising solely out of or
based solely upon any untrue statement of a material fact contained in the
Registration Statement, any prospectus, or any form of prospectus, or in
any amendment or supplement thereto, or arising solely out of or based
solely upon any omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading to the extent,
but only to the extent, that such untrue statement or omission is contained
in any information so furnished in writing by such Subscriber to the
Company specifically for inclusion in the Registration Statement or such
prospectus or to the extent that such information relates to such
Subscriber or such Subscriber's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing
by such Subscriber expressly for use in the Registration Statement, such
prospectus or such form of prospectus, or in any amendment or supplement
thereto or to the extent such Loss was directly caused by such Subscriber's
failure, subsequent to its receipt of the Advice contemplated in paragraph
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(a) above in this Annex, to discontinue disposition of the Registrable
Securities and such Loss would have been avoided by such Subscriber's
compliance with such Advice. In no event shall the liability of any selling
Subscriber hereunder be greater in amount than the dollar amount of the net
proceeds received by such Subscriber upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be brought
or asserted against any person or entity entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party shall promptly notify the
person or entity from whom indemnity is sought (the "Indemnifying Party")
in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except
(and only) to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
(d) An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay
such fees and expenses; or (2) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding;
or (3) the named parties to any such Proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
(e) All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Annex) shall be paid to the Indemnified Party, as incurred, within ten
Business Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; PROVIDED, that the
Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(f) CONTRIBUTION. If a claim for indemnification under paragraph (a) or (b) of
this Annex is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions
that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
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fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in paragraph (c) to this Annex, any reasonable
attorneys' or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms.
(g) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Annex were determined by PRO RATA allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Annex, no Subscriber
shall be required to contribute, in the aggregate, any amount in excess of
the amount by which the proceeds actually received by such Subscriber from
the sale of the Registrable Securities subject to the Proceeding exceeds
the amount of any damages that such Subscriber has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(h) The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties
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