11903-00011/846195.2
Exhibit 10.26
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
THIS CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this agreement"), dated as
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of March 8, 2001, among Pen Interconnect, Inc, a Nevada corporation (the
"Company"), and the investors signatory hereto (each such investor is a
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"Purchaser" and all such investors are, collectively, the "Purchasers").
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WHEREAS, subject to the terms and conditions set forth in this Agreement
and in accordance with Section 4(2) under the Securities Act of 1933, as amended
(the "Securities Act"), the Company desires to issue and sell to the Purchasers
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and the Purchasers, severally and not jointly, desire to purchase from the
Company, (i) an aggregate principal amount of $300,000 of the Company's 8%
Secured Convertible Debentures, due twelve months from issuance, which shall be
in the form of Exhibit A (the "Debentures"), and which are convertible into
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shares of the Company's common stock, $0.001 par value per share (the "Common
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Stock") and (ii) certain warrants (as defined in Section 1.1(a)(ii) hereof).
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NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Closing
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(a) (i) The Closing. Subject to the terms and conditions set
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forth in this Agreement, the Company shall issue and sell to the Purchasers and
the Purchasers shall, severally, and not jointly, purchase from the Company,
over the period of time described herein, the Debentures for an aggregate
purchase price of $300,000. The closing of the purchase and sale of the
Debentures (the Closing") shall take place at the offices of Pen Interconnect
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Inc. ("PENC"), located at 0000 X. XxxXxxxxx Xxxx., Xxxxx 000, Xxxxx Xxx, XX
00000, immediately following the execution hereof or such later date as the
parties shall agree. The date of the Closing is hereinafter referred to as the
"Closing Date."
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(ii) On the Closing Date, the parties shall deliver or shall cause to
be delivered the following: (A) the Company shall deliver to each Purchaser: (1)
Debentures registered in the name of such Purchaser in the aggregate principal
amount of 100% of the purchase price indicated below such Purchaser's name on
the signature page to this Agreement, (2) a Common Stock purchase warrant, in
the form of Exhibit D, registered in the name of such Purchaser, pursuant to
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which such Purchaser shall have the right to acquire, 0 five year warrants at an
exercise price of $.05, (3) the legal opinion of [ ], outside counsel to
the Company, in the form of Exhibit C, (4) an executed Registration Rights
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Agreement, dated the date hereof, among the Company and the Purchasers, in the
form of Exhibit B (the "Registration Rights Agreement"), (5) Transfer Agen0t
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Instructions, in the form of Exhibit E, delivered to and acknowledged in writing
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by the Company's transfer agent (the "N/A"), (6) an executed Security
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Agreement, dated the date hereof, between the Company and the Purchasers, in
the form of Exhibit F (the "N/A"), and (7) an executed Escrow Agreement, dated
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as of the date hereof, between the Company, the Purchasers and the escrow agent
(the "Escrow Agent") set forth therein, in the form of Exhibit H (the "N/a");
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and (B) each Purchaser will deliver to the Company: (1) 100% of the purchase
price indicated below such Purchaser's name on the signature page to this
Agreement in United States dollars in immediately available funds by wire
transfer to an account designated in writing by the Company for such purpose,
and (2) executed originals of this Agreement, the Registration Rights Agreement,
Security Agreement and the Escrow Agreement.
(iii) If each of the conditions set forth in Section 1.1(b), other than
the condition in Section 1.1(b)(iii), have been either satisfied by the Company
or waived by each Purchaser, then after the receipt by each Purchaser of a
compliance certificate from the Company certifying that it has satisfied all the
applicable conditions in Section 1.1(b), (A) the Company will, against delivery
of the amounts set forth in clause (B) in this paragraph, deliver to each
Purchaser, Debentures in the aggregate principal amount of 100% of the purchase
price indicated below such Purchaser's name on the signature page to this
Agreement which shall be included within the definition of Debentures, and (B)
each Purchaser will deliver to the Company, 100% of the purchase price
indicated below such Purchaser's name on the signature page to this Agreement in
United States Dollars in immediately available funds by wire transfer to an
account designated in writing by the Company for such purpose.
(b) Conditions precedent to the purchase of Debentures.
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Notwithstanding anything to the contrary contained in this Agreement, the
obligation of a Purchaser to purchase the securities described in Section
1.1(a)(iii) above is subject to the satisfaction by the Company or waiver by
each Purchaser of each of the following conditions as the Funding Date:
(i) Accuracy of the Company's Representations and Warranties. The
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representations and warranties of the Company contained in this Agreement shall
be true and correct as of the date when made (other than representations and
warranties which relate to a specific date, which shall not include
representations and warranties relating to the "date hereof" which
representations and warranties shall be true as of such specific date);
(ii) Performance by the Company. The Company shall have performed,
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satisfied and complied with all covenants, agreements and conditions required by
the Transaction Documents to be performed by closing.
1.2 Certain Defined Terms. For purposes of this Agreement,
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"Conversion Price," "Original Issue Date" and "Trading Day" shall have the
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meanings set forth in the Debentures; "Business Day" shall mean any day except
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Saturday, Sunday and any day which shall be a federal legal holiday in the
United States or a day on which banking institutions in the State of New York or
the Commonwealth of Pennsylvania are authorized or required by law or other
governmental action to close. A "Person" means an individual or corporation,
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partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. The Company hereby
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makes the following representations and warranties to the Purchasers:
(a) Organization and Qualification. The Company is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of Utah with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Company has no subsidiaries other than as set forth in Schedule 2.1(a)
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(collectively the "Subsidiaries"). Each of the Subsidiaries is an entity, duly
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incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities (as
defined below) or any of this Agreement, the Registration Rights Agreement, the
Security Agreement, the Escrow Agreement, the Transfer Agent Instructions or the
Warrants (collectively, the "Transaction Documents"), (y) have or result in a
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material adverse effect on the results of operations, assets, prospects, or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (z) adversely impair the Company's ability to perform fully on a
timely basis its obligations under any of the Transaction Documents (any of (x),
(y) or (z), a "Material Adverse Effect").
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(b) Authorization; Enforcement. The Company has the requisite
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corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each of
the Transaction Documents has been duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms. Neither the Company nor any Subsidiary is in violation of any
of the provisions of its respective certificate or articles of incorporation,
by-laws or other organizational or charter documents.
(c) Capitalization. The number of authorized, issued and outstanding
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capital stock of the Company is set forth in Schedule 2.1(c). No shares of
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Common Stock are entitled to preemptive or similar rights, nor is any holder of
the securities of the Company entitled to preemptive or similar rights arising
out of any agreement or understanding with the Company by virtue of any of the
Transaction Documents. Except as a result of the purchase and sale of the
Debentures and the Warrants and except as disclosed in Schedule 2.1(c), there
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are no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
The issue and sale of the Underlying Shares (as hereinafter defined) will not
obligate the Company to issue shares of Common Stock or other securities to any
person other than the Purchaser and will not result in a right of any holder of
Company securities to adjust the exercise or conversion or reset price under
such securities.
(d) Issuance of the Debentures and the Warrants. The Debentures will
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be duly and validly issued, free and clear of all liens, encumbrances and rights
of first refusal of any kind (collectively, "Liens"). On the date hereof, the
Company will have (and will, at all times while Debentures and the Warrants are
outstanding, maintain) an adequate reserve of duly authorized shares of Common
Stock, reserved for issuance to the holders of such Debentures and Warrants, to
enable it to perform its conversion, exercise and other obligations under this
Agreement. Such number of reserved and available shares of Common Stock shall
not be less than the sum of 200% of the number of shares of Common Stock which
would be issuable upon (i) conversion in full of the Debentures assuming such
conversion occurred on the Original Issue Date, and the Debentures remain
outstanding for one year and all interest is paid in shares of Common Stock and
(ii) exercise in full of the Warrants. All such authorized shares of Common
Stock shall be duly reserved for issuance to the holders of the Debentures and
the Warrants. The shares of Common Stock issuable upon conversion of the
Debentures and upon exercise of the Warrants are collectively referred to herein
as the "Underlying Shares." All Underlying Shares shall be duly reserved for
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issuance to the holders of the Debentures and the Warrants. The Debentures, the
Warrants and the Underlying Shares are collectively referred to herein as, the
"Securities." When deposited with the Escrow Agent in accordance with the
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Escrow Agreement and issued to the Purchasers in accordance with the Debentures
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and the Warrants, the Underlying Shares will be duly authorized, validly issued,
fully paid and nonassessable, free and clear of all Liens.
(e) No Conflicts. The execution, delivery and performance of the
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Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company=s or any Subsidiary=s certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Company nor any
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Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required pursuant to Section
3.10, (ii) the filing with the Commission of a registration statement meeting
the requirements set forth in the Registration Rights Agreement and covering the
resale of the Underlying Shares by the Purchasers (the "Underlying Shares
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Registration Statement"), (iii) applicable Blue Sky filings, and (iv) in all
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other cases where the failure to obtain such consent, waiver, authorization or
order, or to give such notice or make such filing or registration could not have
or result in, individually or in the aggregate, a Material Adverse Effect
(collectively, the "Required Approvals").
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(g) Litigation; Proceedings. There is no action, suit, inquiry, notice of
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violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an "Action" ) which (i) adversely
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affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. The Company does not have pending before the
Commission any request for confidential treatment of information and the Company
has no knowledge of any expected such request that would be made prior to the
Effectiveness Date (as defined in the Registration Rights Agreement). There has
not been, and to the best of the Company=s knowledge there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company.
(h) No Default or Violation. Neither the Company nor any Subsidiary
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(i) is in default under or in violation of (and no event has occurred which has
not been waived which, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound, (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or regulation
of any governmental authority, in each case of clauses (i), (ii) or (iii) above,
except as could not individually or in the aggregate, have or result in a
Material Adverse Effect. The security interests granted to the Purchasers
pursuant to the Security Agreement and Intellectual Property Security Agreement
will convey and grant to the Purchasers a first priority security interest in
all of the Collateral (as such term is defined in such Agreements).
(i) Private Offering. Assuming the accuracy of the representations and
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warranties of the Purchasers set forth in Sections 2.2(b)-(g), the offer,
issuance and sale of the Securities to the Purchasers as contemplated hereby are
exempt from the registration requirements of the Securities Act. Neither the
Company nor any Person acting on its behalf has taken or is, to the knowledge of
the Company, contemplating taking any action which could subject the offering,
issuance or sale of the Securities to the registration requirements of the
Securities Act including soliciting any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.
(j) Financial StatementsThe financial statements of the Company
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provided to the Purchaser complies in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at that time. Such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved ("GAAP", except as may be
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otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
Since [ ], 2001 except as specifically disclosed to the Purchaser, (a)
there has been no event, occurrence or development that has or that could result
in a Material Adverse Effect, (b) the Company has not incurred any liabilities
(contingent or otherwise) other than (x) liabilities incurred in the ordinary
course of business consistent with past practice and (y) liabilities not
required to be reflected in the Company=s financial statements pursuant to GAAP,
(c) the Company has not altered its method of accounting or the identity of its
auditors and (d) the Company has not declared or made any payment or
distribution of cash or other property to its stockholders or officers or
directors (other than in compliance with existing Company stock option plans)
with respect to its capital stock, or purchased, redeemed (or made any
agreements to purchase or redeem) any shares of its capital stock.
(k) Investment Company. The Company is not, and is not an Affiliate
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(as defined in Rule 405 under the Securities Act) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. No fees or commissions will be payable by the
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Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement. The Company
shall indemnify and hold harmless the Purchasers, their employees, officers,
directors, agents, and partners, and their respective Affiliates, from and
against all claims, losses, damages, costs (including the costs of preparation
and attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as such fees and expenses are incurred.
(m) Solicitation Materials. Neither the Company nor any Person acting
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on the Company=s behalf has solicited any offer to buy or sell the Securities
by means of any form of general solicitation or advertising.
(n) Exclusivity. The Company shall not issue and sell the Debentures
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or the Warrants to any Person other than the Purchasers without the specific
prior written consent of the Purchasers.
(o) Seniority. No indebtedness of the Company is senior to the
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Debentures in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise.
(p) Patents and Trademarks. The Company and its Subsidiaries have, or
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have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights which
are necessary or material for use in connection with their respective businesses
and which the failure to so have would have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). Neither the Company nor any
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Subsidiary has received a written notice that the Intellectual Property Rights
used by the Company or its Subsidiaries violates or infringes upon the rights of
any Person. To the best knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights.
(q) Registration Rights; Rights of Participation. Except as set forth
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on Schedule 6(b) to the Registration Rights Agreement, the Company has not
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granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been satisfied.
Except as set forth on Schedule 6(b) to the Registration Rights Agreement, no
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Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents.
(r) Regulatory Permits. The Company and its Subsidiaries possess all
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certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such permits could not,
individually or in the aggregate, have or result in a Material Adverse Effect
("Material Permits"), and neither the Company nor any such Subsidiary has
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received any notice of proceedings relating to the revocation or modification of
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any Material Permit.
(s) Title. The Company and the Subsidiaries have good and marketable
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title in fee simple to all real property owned by them which is material to the
business of the Company and its Subsidiaries and good and marketable title in
all personal property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all Liens, except
for Liens granted to the Purchasers pursuant to the Security Agreement and for
other Liens as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries. Any real property and facilities held under lease
by the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and its Subsidiaries are in compliance
and do not interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
(t) Labor Relations. No material labor problem exists or, to the
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knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(u) Disclosure. The Company confirms that neither it nor any other
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Person acting on its behalf has provided any of the Purchasers or its agents or
counsel with any information that constitutes or might constitute material
non-public information. The Company understands and confirms that the
Purchasers shall be relying on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf of
the Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(v) Solvency. Based on the financial condition of the Company as of
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the Closing Date, (i) the Company's fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).
(w) Application of Takeover Protections. The Company and its Board
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of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company's issuance of
the Securities and the Purchasers' ownership of the Securities.
(x) Until at least two (2) years after the effectiveness of the
Registration Statement on Form S-3 or such other appropriate Registration
Statement, the Company will (i) cause the Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, (ii) comply in all
respects with its reporting and filing obligations under the Exchange Act, (iii)
comply with all reporting requirements that is applicable to an issuer with a
class of Shares registered pursuant to Section 12(g) of the Exchange Act, and
(iv) comply with all requirements related to any registration statement filed
pursuant to this Agreement. The Company will not take any action or file any
document (whether or not permitted by the 1933 Act or the Exchange Act or the
rules thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said Acts until the later of
(y) two (2) years after the effective date of the Registration Statement on Form
S-3 or such other appropriate Registration Statement, or (z) the sale by the
Subscribers of all the Company Shares, and Securities issuable by the Company
pursuant to this Agreement. Until at least two (2) years after the Warrants
have been exercised, the Company will use its commercial best efforts to
continue the listing of the Common Stock on the NASDAQ National Market System
and will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NASD and NASDAQ.
2.2 Representations and Warranties of the Purchasers. Each Purchaser
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hereby for itself and for no other Purchaser represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
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organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of Transaction Documents has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms.
(b) Purchaser Status. At the time such Purchaser was offered the
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Securities, it was, and at the date hereof it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(c) Experience of such Purchaser. Such Purchaser, either alone or
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together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(d) Ability of such Purchaser to Bear Risk of Investment. Such
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Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(e) Access to Information. Such Purchaser acknowledges that it has
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reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
(f) General Solicitation. Such Purchaser is not purchasing the
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Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
(g) Reliance. Such Purchaser understands and acknowledges that (i) the
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Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Stock Transfer Restrictions. (i) Any Securities offered may only
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be disposed of pursuant to an effective registration statement under the
Securities Act, to the Company or pursuant or to an available exemption from or
in a transaction not subject to the registration requirements of the Securities
Act, and in compliance with any applicable federal and state securities laws.
In connection with any transfer of Securities other than pursuant to an
effective registration statement or to the Company, except as otherwise set
forth herein, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act. Any such transferee shall agree in writing to be
bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement; (ii) In the case of
U.S. securities, the Purchasers agree to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
Underlying Shares shall contain the legend set forth above nor any other
legend if the conversion of Debentures or the exercise of the Warrants, as the
case may be, occurs at any time while an Underlying Shares Registration
Statement is effective under the Securities Act or the holder is relying on Rule
144 promulgated under the Securities Act ("Rule 144") in connection with the
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resale of such Underlying Shares, or in the event there is not an effective
Underlying Shares Registration Statement, and Rule 144 is not then available for
resale of the Underlying Shares, at such time as such legend is not required
under applicable requirements of the Securities Act (including, without
limitation, judicial interpretations and pronouncements issued by the staff of
the Commission). The Company shall cause its counsel to issue the legal opinion
included in the Transfer Agent Instructions to the Company=s transfer agent on
the Effective Date. The Company agrees that following the Effective Date, it
will, no later than three Trading Days following the delivery by a Purchaser to
the Company of a certificate or certificates representing such Underlying Shares
issued with a restrictive legend, deliver to such Purchaser certificates
representing such Underlying Shares which shall be free from all restrictive and
other legends. 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.
3.2 Acknowledgment of Dilution. The Company acknowledges that the
----------------------------
issuance of Underlying Shares upon the conversion of the Debentures and the
exercise of the Warrants will result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligation to deliver the Underlying
Shares to the investor upon conversion of the Debentures and the exercise of the
Warrants is unconditional and absolute, subject to the limitations set forth in
the Debentures or the Warrants, as the case may be, regardless of the effect of
any such dilution.
3.3 Furnishing of Information. After the Closing Date, and thereafter,
-------------------------
for as long as the Purchasers own Securities, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as the
Purchasers own Securities, if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act such information as is required for the Purchasers to sell the
Securities under Rule 144 promulgated under the Securities Act. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including causing its attorneys to render
and deliver any legal opinion required in order to permit a Purchaser to receive
Underlying Shares free of all restrictive legends and to subsequently sell
Underlying Shares under Rule 144 upon receipt of a notice of an intention to
sell or other form of notice having a similar effect. Upon the request of any
such Person, the Company shall deliver to such Person a written certification of
a duly authorized officer as to whether it has complied with such requirements.
3.4 Integration. The Company shall not, and shall use its best efforts
-----------
to ensure that, no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers.
3.5 Increase in Authorized Shares. If on any date the Company would
-------------------------------
be, if a notice of conversion or exercise (as the case may be) were to be
delivered on such date, precluded from issuing (a) 200% of the number of
Underlying Shares as would then be issuable upon a conversion in full of the
Debentures and (b) the number of Underlying Shares issuable upon exercise in
full of the Warrants (the "Current Required Minimum"), in either case, due to
------------------------
the unavailability of a sufficient number of authorized but unissued or reserved
shares of Common Stock, then the Board of Directors of the Company shall
promptly prepare and mail to the stockholders of the Company proxy materials
requesting authorization to amend the Company's certificate or articles of
incorporation to increase the number of shares of Common Stock which the Company
is authorized to issue to at least such number of shares as reasonably requested
by the Purchasers in order to provide for such number of authorized and unissued
shares of Common Stock to enable the Company to comply with its issuance,
conversion exercise and reservation of shares obligations as set forth in this
Agreement, the Debentures and the Warrants (the sum of (x) the number of shares
of Common Stock then outstanding plus all shares of Common Stock issuable upon
exercise of all outstanding options, warrants and convertible instruments, and
(y) the Current Required Minimum, shall be a reasonable number). In connection
therewith, the Board of Directors shall (a) adopt proper resolutions authorizing
such increase, (b) recommend to and otherwise use its best efforts to promptly
and duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the earlier to occur of the
sixtieth (60th) day after delivery of the proxy materials relating to such
meeting and the ninetieth (90th) day after request by a holder of Securities to
issue the number of Underlying Shares in accordance with the terms hereof) and
(c) within five (5) Business Days of obtaining such stockholder authorization,
file an appropriate amendment to the Company's certificate or articles of
incorporation to evidence such increase.
The Company is currently seeking shareholder approval for an increase I
authorized shares. It is anticipated that this will be achieved by July 1,
2001.
3.6 Reservation and Listing of Underlying Shares. (a) The Company
------------------------------------------------
shall (i) in the time and manner required by any national securities exchange,
market, trading or quotation facility on which the Common Stock is then traded,
prepare and file with such national securities exchange, market, trading or
quotation facility on which the Common Stock is then traded an additional shares
listing application covering a number of shares of Common Stock which is not
less than the Initial Minimum, (ii) take all steps necessary to cause such
shares of Common Stock to be approved for listing on any such national
securities exchange, market or trading or quotation facility on which the Common
Stock is then listed as soon as possible thereafter, and (iii) provide to the
Purchasers evidence of such listing, and the Company shall maintain the listing
of its Common Stock thereon. If the number of Underlying Shares issuable upon
(x) conversion in full of the then outstanding Debentures and (y) exercise in
full of the then unexercised portion of the Warrants, exceeds eighty-five
percent (85%) of the number of Underlying Shares previously listed on account
thereof with any such required exchanges, then the Company shall take the
necessary actions to immediately list a number of Underlying Shares as equals no
less than the then Current Required Minimum.
(b) The Company shall maintain a reserve of shares of Common Stock for
issuance upon conversion of the Debentures in full and upon exercise in full of
the Warrants in accordance with this Agreement, in such amount as may be
required to fulfill its obligations in full under the Transaction Documents,
which reserve shall equal no less than the then Current Required Minimum.
(c) The Company shall at all times cause the number of shares of Common
Stock reserved for the benefit of the Purchasers for delivery to the Purchasers
in accordance with the Debentures and the Warrant to be not less than 200% of
the shares of Common Stock issuable upon conversion in full of the Debentures
and exercise in full of the Warrant; and within five Business days following the
receipt by the Company of the Purchaser's notice that such minimum number of
Underlying Shares is not reserved, the Company shall promptly register a
sufficient number of shares of Common Stock to comply with such requirement.
3.7 Conversion and Exercise Procedures. The Transfer Agent
-------------------------------------
Instructions, the Escrow Agreement, the Conversion Notice (as defined in the
Debentures) and the Form of Election to Purchase (as defined in the Warrants)
sets forth the totality of the procedures with respect to the conversion of the
Debentures and the exercise of the Warrants, including the form of legal
opinion, if necessary, that shall be rendered to the Company's transfer agent
and such other information and instructions as may be reasonably necessary to
enable the Purchasers to convert their Debentures and their Warrants, as the
case may be.
3.8 Conversion and Exercise Obligations of the Company. The Company
-----------------------------------------------------
shall honor conversions of the Debentures and exercise of the Warrants and shall
deliver Underlying Shares in accordance with the respective terms, conditions
and time periods set forth in the Debentures and the Warrants.
3.9 Subsequent Financing; Limitation on Registrations. (a) Subject to
--------------------------------------------------
Section 3.9(d) and (e), from the date hereof through the ninetieth (90th)
Trading Day following the Effective Date, the Company will not offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition) any of its or its
Affiliates' equity or equity equivalent securities (including the issuance of
any debt or other instrument at any time over the life thereof convertible into
or exchangeable for Common Stock).
(b) Subject to Section 3.9(d) and (e), the Company shall not, directly
or indirectly, offer, sell, grant any option to purchase, or otherwise dispose
of (or announce any offer, sale, grant or any option to purchase or other
disposition) any of its equity or equity-equivalent securities or securities of
any of its Affiliates that are exchangeable or convertible (directly or
indirectly) for shares of Common Stock, including the issuance of any debt or
other instrument at any time over the life thereof convertible into or
exchangeable for Common Stock (collectively, a "Subsequent Placement") from the
--------------------
date hereof until the expiration of the 180th Trading Day after the Effective
Date, unless (A) the Company delivers to each of the Purchasers a written notice
(the "Subsequent Placement Notice") of its intention to effect such Subsequent
----------------------------
Placement, which Subsequent Placement Notice shall describe in reasonable detail
the proposed terms of such Subsequent Placement, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Placement shall be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (B) such Purchaser shall not have notified the Company by
6:30 p.m. (New York City time) on the tenth Trading Day after its receipt of the
Subsequent Placement Notice of its willingness to provide (or to cause its sole
designee to provide), subject to completion of mutually acceptable
documentation, financing to the Company on the same terms set forth in the
Subsequent Placement Notice. If the Purchasers shall fail to notify the Company
of their intention to enter into such negotiations within such time period, the
Company may effect the Subsequent Placement substantially upon the terms and to
the Persons (or Affiliates of such Persons) set forth in the Subsequent
Placement Notice; provided, that the Company shall provide the Purchasers with a
--------
second Subsequent Placement Notice, and the Purchasers shall again have the
right of first refusal set forth above in this paragraph (a), if the Subsequent
Placement subject to the initial Subsequent Placement Notice shall not have been
consummated for any reason on the terms set forth in such Subsequent Placement
Notice within thirty (30) Trading Days after the date of the initial Subsequent
Placement Notice with the Person (or an Affiliate of such Person) identified in
the Subsequent Placement Notice. If the Purchasers shall indicate a willingness
to provide financing in excess of the amount set forth in the Subsequent
Placement Notice, then each Purchaser shall be entitled to provide financing
pursuant to such Subsequent Placement Notice up to an amount equal to such
Purchaser=s pro-rata portion of the aggregate number of Securities purchased by
such Purchaser under this Agreement, but the Company shall not be required to
accept financing from the Purchasers in an amount in excess of the amount set
forth in the Subsequent Placement Notice.
(c) Except for (x) Underlying Shares, (y) other "Registrable
Securities" (as such term is defined in the Registration Rights Agreement) to be
registered, and securities of the Company permitted pursuant to Section 6(c) of
the Registration Rights Agreement to be registered, in the Underlying Shares
Registration Statement in accordance with the Registration Rights Agreement, and
(z) Common Stock permitted to be issued pursuant to Section 3.9 (e), the Company
shall not, for a period of not less than ninety (90) Trading Days after the
Effective Date, without the prior written consent of the Purchasers (i) issue or
sell any of its or any of its Affiliates= equity or equity-equivalent securities
pursuant to Regulation S promulgated under the Securities Act, or (ii) register
any securities of the Company.
Any days after the Effective Date that a Purchaser is unable to sell Underlying
Shares under the Underlying Shares Registration Statement shall be added to such
ninety (90) Trading Day period.
(d) With respect to Section 3.9(a) and (b), the ninety (90) and one
hundred and eighty (180) Trading Day periods shall be extended for the number of
Trading Days during such period (A) in which trading in the Common Stock is
suspended by any securities exchange or market or quotation system on which the
Common Stock is then listed, or (B) during which the Underlying Shares
Registration Statement is not effective, or (C) during which the prospectus
included in the Underlying Shares Registration Statement may not be used by the
holders thereof for the resale of Underlying Shares.
(e) The restrictions contained in Section 3.9(a) ,and (b) shall not
apply to (i) the granting of options or warrants to employees, officers and
directors of the Company, and the issuance of Common Stock upon exercise of such
options or warrants granted under any stock option plan heretofore or
hereinafter duly adopted by the Company.
..
3.10 Certain Securities Laws Disclosures; Publicity. The Company
--------------------------------------------------
shall: (i) on the Closing Date, issue a press release reasonably acceptable to
the Purchasers disclosing the transactions contemplated hereby, (ii) file with
the Commission a Report on Form 8-K disclosing the transactions contemplated
hereby within ten Business Days after the Closing Date, and (iii) timely file
with the Commission a Form D promulgated under the Securities Act. The Company
shall, no less than two Business Days prior to the filing of any disclosure
required by clauses (ii) and (iii) above, provide a copy thereof to the
Purchasers for their review. The Company and the Purchasers shall consult with
each other in issuing any other press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency or stock market or trading facility with respect to the
transactions contemplated hereby and neither party shall issue any such press
release or otherwise make any such public statement, filings or other
communications without the prior written consent of the other, except that if
such disclosure is required by law or stock market regulation, in which such
case the disclosing party shall promptly provide the other party with prior
notice of such public statement, filing or other communication. Notwithstanding
the foregoing, the Company shall not publicly disclose the names of the
Purchasers, or include the names of the Purchasers in any filing with the
Commission, or any regulatory agency, trading facility or stock market without
the prior written consent of the Purchasers, except to the extent such
disclosure (but not any disclosure as to the controlling Persons thereof) is
required by law or stock market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure.
3.11 Transfer of Intellectual Property Rights . Except in connection
------------------------------------------
with the sale of all or substantially all of the assets of the Company or
licensing arrangements in the ordinary course of the Company's business, the
Company shall not transfer, sell or otherwise dispose of any Intellectual
Property Rights, or allow any of the Intellectual Property Rights to become
subject to any Liens, or fail to renew such Intellectual Property Rights (if
renewable and it would otherwise lapse if not renewed), without the prior
written consent of the Purchasers.
3.12 Use of Proceeds. The Company shall use the net proceeds from the
----------------
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company=s debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle any
outstanding litigation.
3.13 Reimbursement. So long as Purchasers have complied with the terms
-------------
and conditions of this Agreement, if any Purchaser becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
Person, including stockholders of the Company, solely as a result of acquiring
the Securities under this Agreement, the Company will reimburse such Purchaser
for its reasonable legal and other expenses (including, but not limited to, the
cost of any investigation, preparation or travel) incurred in connection
therewith, as such expenses are incurred. The reimbursement obligations of the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliates of the Purchasers who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchasers and any such
Affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchasers and
any such Affiliate and any such Person. The Company also agrees that neither
the Purchasers nor any such Affiliates, partners, directors, agents, employees
or controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result of
acquiring the Securities under this Agreement.
3.14 Non-Disclosure of Non-Public Information (a) The Company shall not
----------------------------------------
disclose non-public information to the Purchasers or their advisors or
representatives unless prior to disclosure of such information the Company
identifies such information as being non-public information and the Purchasers
enter into a non-disclosure agreement in form mutually acceptable to the Company
and the Purchasers.
(b) The Company represents that it does not disseminate non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts. Notwithstanding the
foregoing or anything herein to the contrary, the Company will immediately
notify the Purchasers of any event or the existence of any circumstance (without
any obligation to disclose the specific event or circumstance) of which it
becomes aware, (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Underlying Shares
Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements, therein in light of the circumstances in which they were
made, not misleading.
3.15 Shareholder Rights Plan. No claim will be made or enforced by the
-----------------------
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities or shares of Common Stock under the Transaction Documents.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. At the Closing, the Company shall reimburse the
-----------------
Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to Xxxxxxxxx
& Associates $153,000 for the preparation and negotiation of the Transaction
Documents. The amount contemplated by the immediately preceding sentence shall
be retained by the Purchasers and shall not be delivered to the Company at the
Closing. Other than the amount contemplated herein, and except as otherwise
specified in the Registration Rights Agreement and the Security Agreement, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all stamp and other taxes and duties levied in
connection with the issuance of the Securities.
4.2 Entire Agreement; Amendments. The Transaction Documents, together
-----------------------------
with the Exhibits and Schedules thereto and Transfer Agent Instructions, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.
4.3 Notices. Any and all notices or other communications or deliveries
-------
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 5:00 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 5:00 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Company: Pen Interconnect Inc.
0000 X. XxxXxxxxx Xxxx., Xxxxx 000
Xxxxx Xxx, XX 00000
Facsimile No.: [ ] [714/436-9728]
Attn: Xxxxx Xxxxx[ ]
With copies to: __________________________
__________________________
If to a Purchaser: To the address set forth under such Purchaser's name
on the signature pages hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 Amendments; Waivers. No provision of this Agreement may be waived
--------------------
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and each of the Purchasers or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon and
------------------------
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Except as set forth in
Section 3.1(a), the Purchasers may not assign this Agreement or any of the
rights or obligations hereunder without the consent of the Company this
provision shall not limit any Purchaser's right to transfer securities or
transfer or assign rights under the Registration, Rights Agreement.
4.7 No Third-Party Beneficiaries. This Agreement is intended for the
------------------------------
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 Governing Law. All other questions concerning the construction,
--------------
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the State of New York, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of the any
of the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. (USE SAME DISTRICT LANGUAGE AS NOTE).
4.9 Survival. The representations, warranties, agreements and
--------
covenants contained herein shall survive the Closing and the delivery, exercise
and conversion of the Warrants or the Debentures, as the case may be.
4.10 Execution. This Agreement may be executed in two or more
---------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 Severability. In case any one or more of the provisions of this
------------
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.12 Remedies . In addition to being entitled to exercise all rights
--------
provided herein or granted by law, including recovery of damages, each of the
Purchasers will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. The parties hereto agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any
breach of its obligations described in the foregoing sentence and hereby agrees
to waive in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
4.13 Independent Nature of Purchasers' Obligations and Rights. The
------------------------------------------------------------
obligations of each Purchaser under any Transaction Document is several and not
joint with the obligations of any other Purchaser and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by the Transaction Document. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Secured Convertible
Debenture Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
PEN INTERCONNECT INC.
By: Xxxxxx Xxxxx
-------------
Name: [Xxxxxx Xxxxx ]
Title: [ CEO ]
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
INVESTORS
(1)
ALFA CAPITAL
By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title:
Purchase Price for Debentures: $125,000
Address for Notice:
____________________
____________________
____________________
Facsimile No.:
Attn:
With copies to:
(2)
AMRO INT"L S.A.
-----------------
By: /s/ X.X. Xxxxxxxx
Name: X.X. Xxxxxxxx
Title:
Purchase Price for Debentures: $75,000
Address for Notice:
_______________
_______________
_______________
Facsimile No.:
Attn:
With copies to:
(3)
WOO XXXXX XXX
By: /s/ Woo Xxxxx Xxx
Name: Woo Xxxxx Xxx
Title:
Purchase Price for Debentures: $100,000
Address for Notice:
_______________
_______________
_______________
Facsimile No.:
Attn:
With copies to:
________________________________________________________________________________
__________________
-------------------------------------------------------------------------------
------------------
Confidential Draft
Dated March 8, 2001
SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
Among
PEN INTERCONNECT INC.
and
THE INVESTORS SIGNATORY HERETO
Dated as of March 8, 2001
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