Convertible Debenture And Warrant Purchase Agreement By And Among
Xxxxxxx Inc. (The "Purchaser") And Crys-Tel Xxxxxxxxxxxxxxxxxx.xxx, Inc.
CONVERTIBLE DEBENTURE AND WARRANT PURCHASE AGREEMENT
By and Among
XXXXXXX INC.
(the "Purchaser")
and
CRYS-TEL XXXXXXXXXXXXXXXXXX.XXX, INC.
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Dated as of April 6, 1999
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TABLE OF CONTENTS
Article I Certain Definitions 1
Article II Purchase of Debentures 3
Article III Representations and Warranties 4
Article IV Other Agreements of the Parties 8
Article V Conditions Precedent to Closing 12
Article VI Termination 14
Article VII Legal Fees 15
Article VIII Miscellaneous 15
Exhibit A Convertible Debenture
Exhibit B Conversion Procedures
Exhibit C Warrant
Exhibit D Escrow Agreement
Exhibit E Power of Attorney
Schedule List of Purchasers and Warrant Holders
Schedule 2.1 (c) Term Sheet
Schedule 3.1 (a) Subsidiaries
Schedule 3.1 (c) Capitalization
Schedule 3.1 (f) Required Consents and Approvals
Schedule 3.1 (9) Litigation
Schedule 3.1 (1) Prior Sales of Securities under Rule 504
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CONVERTIBLE DEBENTURE PURCHASE AGREEMENT dated as of April 6, 1999 (this
"Agreement'), by and among Crys-Tel Xxxxxxxxxxxxxxxxxx.xxx, Inc., a Florida
corporation (the "Company'), and the purchasers listed on Schedule I attached
hereto (each individually, the "Purchaser" and collectively, the "Purchasers").
WHEREAS, the Company desires to issue and sell to the Purchaser and the
Purchaser desire to acquire certain of the Company's 0% Convertible Debentures,
due April 5, 2004 (the "Convertible Debentures").
IN CONSIDERATION of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate," means, with respect to any Person, any Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with") shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities by contract or otherwise.
"Business Day " means any day except Saturday, Sunday and any day, which is a
legal holiday, or a day on which banking institutions in the state of New York
are authorized or required by law or other government actions to close, between
the hours of 9:30 a.m. and 6:00 p.m. New York Time.
"Xxxxx" means X.X. Xxxxx, Inc., with its offices at 0000 Xxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000.
"Closing" shall have the meaning set forth in Section 2.1 01.
"Closing Date" shall mean the date of Closing, as set forth in Section 2.1 (b).
"Code" means the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder as in effect on the date hereof
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.001 per
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"Debentures" means the 0% Convertible Debentures of the Company, due
April 5 2004, an example of which is attached hereto as Exhibit A.
"Disclosure Documents" means the disclosure package delivered to the Purchaser
in connection with the offering by the Company of the Debentures and the
Schedules to this Agreement furnished by or on behalf of the Company pursuant
to Section 3.1.
"Escrow Agent" means the firm which holds the common shares in escrow, herein
the firm of Xxxxxx, Xxxxxxxxxx & Xxxxxxxx, LLP, 6 3 0 Xxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, XX 100 1 7; Tel: 212983-0532; Fax: 000-000-0000.
"Exchange Act" means the Securities Exchange Act of 19 3 4, as amended.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in Section 3.1
"NASD" means the National Association of Securities Dealers, Inc.
"Per Share Consideration" shall have the meaning set forth in Section 2.1
"Person" means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, Joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Purchase Price" shall have the meaning set forth in Section 2.1
"Required Approvals" shall have the meaning set forth in Section 3.1
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiaries" shall have the meaning set forth in Section 3.1 (a).
"Underlying Shares," means the shares of Common Stock into which the Debentures
are convertible in accordance with the terms hereof and the Debenture, and the
shares of Common Stock for which the Warrants can be exercised in accordance
with the terms hereof and the Warrant.
"Warrants" means the common stock purchase warrants issued to GEM Limited
and/or its assigns as part of its compensation, an example of which is attached
hereto as Exhibit C.
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ARTICLE II
PURCHASE OF DEBENTURES
Section 2.1. Purchase of Debentures; Closing
(a) Subject to the terms and conditions herein set forth, the Company shall
issue and sell to the Purchasers, and the Purchasers shall purchase from the
Company on the Closing Date the number of Debentures listed opposite the
Purchaser's name on Schedule 1, which shall have the respective rights,
preferences and privileges set forth in Exhibit A (the "Debenture"), at a price
per Debenture of US $1,000.00 (the "Per Debenture Consideration"). The Per
Debenture Consideration multiplied by the number of Debentures to be purchased
by the Purchaser hereunder is hereinafter referred to as the "Purchase Price."
The total principal amount of Debentures to be purchased by the Purchasers and
the total Purchase Price shall be $ 333,000.
(b) The closing of the purchase and sale of the Debentures (the "Closing)
shall take place at the offices of the Escrow Agent, Xxxxxx, Gottbetter &
Xxxxxxxx, LLP, immediately following the execution hereof, or at such other
time and/or place as the Purchaser and the Company may agree, provided,
however, in no case shall the Closing take place later than the fifth day after
the last of the conditions listed in Article V is satisfied or waived by the
appropriate party. The date of the Closing is hereinafter referred to as the
"Closing Date".
(c) At the Closing, (I) the Company shall deliver to the Purchaser (A) one
or more Debentures purchased hereunder, registered in the name of the
Purchaser, (B) all documents, instruments and writings required to have been
delivered at or prior to Closing by the Company pursuant to this Agreement, and
(II) the Purchaser shall deliver to the Company (A) the Purchase Price as
determined pursuant to this Article I in United States dollars in immediately
available funds by wire transfer to an account designated in writing by the
Company prior to the Closing and (B) all documents, instruments and writings
required to have been delivered at or prior to Closing by the Purchaser
pursuant to this Agreement. At this time, the Company shall also deliver to GEM
Limited, or its assigns, the Warrants pursuant to the term sheet (the "Term
Sheet") dated April 1, 1999, between Xxxxx and the Company, attached hereto as
Schedule 2.1 (c).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3. 1. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
(a) Organization and Qualification. The Company is a corporation, duly
incorporated, validly existing and in good standing wider the laws of the
jurisdiction of its incorporation, 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 3.1 (a) (collectively, the "Subsidiaries"). Each of the
Subsidiaries is a corporation, duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, with the full
corporate 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 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 reasonably be expected to have, individually or in the aggregate, a
material adverse effect on (a) the results of operations, assets, prospects, or
financial condition of the Company and the Subsidiaries, or (b) the Purchaser's
rights under this Agreement, the Escrow Agreement, the Debenture and the
Warrants (a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized, issued and outstanding capital stock of
the Company and each of the Subsidiaries is set forth in Schedule 3.1 (c). No
shares of Common Stock are entitled to preemptive or similar rights. Except as
specifically disclosed in the Disclosure Documents, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or, except as a result of the purchase and
sale of the Debentures hereunder, 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. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, bylaws or other charter documents.
(d) Issuance of Debentures. The Debentures have been duly and validly
authorized for issuance, offer and sale pursuant to this Agreement and, when
issued and delivered as provided hereunder against payment in accordance with
the terms hereof, shall be valid and binding obligations of the Company
enforceable in accordance with their terms. The Company has and at all times
while the Debentures are outstanding will maintain an adequate reserve of
shares of Common Stock to enable it to perform its obligations under this
Agreement and the Debentures. When issued in accordance with the terms hereof
and the Debentures, the Underlying Shares will be duly authorized, validly
issued, fully paid and nonassessable.
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(e) No Conflicts. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not (1) conflict with or
violate any provision of its certificate of incorporation or bylaws or
(ii) subject to obtaining the consents referred to in Section 3 -I (f),
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 of, any agreement,
indenture or instrument to which the Company is a party, or (iii) to the
knowledge of the Company result in a violation of any law, rule, regulation,
order, judgment, injunction, or decree or other restriction of any court or
governmental authority to which the Company is subject (including Federal and
state securities laws and regulations), or by which any property or asset of
the Company is bound or affected, except in the case of each of clauses
(ii) and (iii), such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in
the aggregate, have 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, do not have a Material Adverse Effect.
(f) Consents and Approvals. Except as specifically set forth in
Schedule 3.1(f) neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, 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 this Agreement, other than the
making of the applicable blue-sky filings under state securities laws, and
other than, in all cases, where the failure to obtain such consent, waiver,
authorization or order, or to give or make such notice or filing, would not
materially impair or delay the ability of the Company to effect the Closing and
deliver to the Purchaser the Debentures free and clear of all Liens
(collectively, the "Required Approval's.
(g) Litigation; Proceedings. Except as specifically disclosed in
Schedule 3.I (g) there is no action, suit, notice of violation, proceeding or
investigation pending or, to the best 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, governmental or administrative
agency or regulatory authority (Federal, State, county, local or foreign) which
(i) relates to or challenges the legality, validity or enforceability of this
Agreement or the Debentures (ii) could, individually or in the aggregate, have
a Material Adverse Effect or (iii) could, individually or in the aggregate,
materially impair the ability of the Company to perform fully on a timely basis
its obligations under this Agreement.
(h) No Default or Violation. Neither the Company nor any Subsidiary (1) is
in default under or 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, except such conflicts or defaults as do not have a
Material Adverse Effect, (ii) is in violation of any order of any court,
arbitrator or governmental body, except for such violations as do not have a
Material Adverse Effect, or (iii) is in violation of any statute, rule or
regulation of any governmental authority which could (individually or in the
aggregate) (x) adversely affect the legality, validity or enforceability of
this Agreement, (y) have a Material Adverse Effect or (z) adversely impair the
Company's ability or obligation to perform fully on a timely basis its
obligations under this Agreement.
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(i) Certain Fees. No fees or commission will be payable by the Company to
any investment banker or bank with respect to the consummation of the
transactions contemplated hereby, except for a ten percent (10%) fee paid to
Xxxxx as a consulting fee.
(j) Disclosure Documents. The Disclosure Documents 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.
(k) Non-Registered Offering. Neither the Company nor any Person acting on
its behalf has taken or will take any action (including, without limitation,
any offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Debentures
under the Securities Act) which might subject the offering, issuance or sale of
the Debentures to the registration requirements of Section 5 of the Securities
Act.
(l) Not a Reporting Company; Eligibility to use Exemption under 504(b). The
Company is not subject to the reporting requirements of Section I 3 or Section
15 (d) of the Exchange Act. The Company has not sold any securities tinder Rule
504(b) in the last twelve months, except as disclosed in Schedule 3.I (I). The
Company is eligible to issue securities exempt from registration pursuant to
Rule 504 of Regulation D promulgated under the Securities Act.
Section 3.2. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
(a) Organization; Authority. The Purchaser is a Corporation duly and
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. The Purchaser has the requisite power and authority to enter
into and to consummate the transactions contemplated hereby and otherwise to
carry out its obligations hereunder and thereunder. The purchase of the
Debentures by the Purchaser hereunder has been duly authorized by all necessary
action on the part of the Purchaser. Each of this Agreement has been duly
executed and delivered by the Purchaser or on its behalf and constitutes the
valid and legally binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
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(b) Investment Intent. The Purchaser is acquiring the Debentures and the
Underlying Shares for its own account for investment purposes only and not with
a view to or for distributing or reselling such Debentures or Underlying Shares
or any part thereof or interest therein, without prejudice, however, to the
Purchaser's right, subject to the provisions of this Agreement, at all times to
sell or I otherwise dispose of all or any part of such Debentures or Underlying
Shares in compliance with applicable State securities laws and under an
exemption from registration under Rule 504 of the Securities Act.
(c) Purchaser Status. At the time the Purchaser was offered the Debentures,
it was, and at the date hereof, it is, and at the Closing Date, it will be, an
"accredited investor" as defined in Rule 501 (a) under the Securities Act.
(d) Experience of Purchaser. The Purchaser, either alone or 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 Debentures, and has so evaluated the
merits and risks of such investment.
(e) Ability of Purchaser to Bear Risk of Investment. The Purchaser is able
to bear the economic risk of an investment in the Debentures and, at the
present time, is able to afford a complete loss of such investment.
(f) Prohibited Transactions. The Debentures to be purchased by the
Purchaser are not being acquired, directly or indirectly, with the assets of
any "employee benefit plan", within the meaning of Section 3 (3) of the
Employee Retirement Income Security Act of 1974, as amended.
(g) Access to Information. The Purchaser acknowledges receipt of the
Disclosure Documents and further acknowledges that it has been afforded (1) 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 Debentures and the merits and risks of
investing in the Debentures; (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 in
the Common Stock; and (ill) 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 Debentures and to verify the accuracy and completeness of
the information contained in the Disclosure Documents.
(h) Reliance. The Purchaser understands and acknowledges that (i) the
Debentures are being offered and sold, and the Underlying Shares are being
offered, 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 that the
Company will rely upon the accuracy and truthfulness of, the foregoing
representations and the Purchaser hereby consents to such reliance.
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The Company acknowledges and agrees that the Purchaser makes no representation
or warranty with respect to the transactions contemplated hereby other than
those specifically set forth in Article III herein.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
Section 4.1. Manner of Offering. The Debentures and Warrants are being issued
pursuant to Rule 504(b) of Regulation D of the Securities Act of I933. The
Debentures, Warrants and the Underlying Shares will be exempt from restrictions
on transfer, and will carry no restrictive legend. The Company will use its
best efforts to insure that no actions are taken that would jeopardize the
availability of the exemption from registration under Rule 504(b) for the
Debentures, the Warrants and the Underlying Shares.
Section 4.2. Furnishing of Information. As long as the Purchaser owns
Debentures, the Warrants or Underlying Shares, the Company will promptly
furnish to it all annual and quarterly reports comparable to those required by
Section 1 3 (a) or 1 5 (d) of the Exchange Act.
Section 4.3. Notice of Certain Events. The Company shall (i) advise the
Purchaser promptly after obtaining knowledge thereof, and, d requested by the
Purchaser, confirm such advice in writing, of (A) the issuance by any state
securities commission of any stop order suspending the qualification or
exemption from qualification of the Debentures or the Common Stock for offering
or sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or other regulatory authority, or
(B) any event that makes any statement of a material fact made in the
Disclosure Documents untrue or that requires the making of any additions to or
changes in the Disclosure Documents in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading,
(ii) use its best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption from qualification of the Debentures
or the Common Stock tinder any state securities or Blue Sky laws, and (iii) if
at any time any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from qualification of
the Debentures or the Common Stock tinder any such laws, use its best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time.
Section 4.4. Copies and Use of Disclosure Documents. The Company shall furnish
the Purchaser, without charge, as many copies of the Disclosure Documents, and
any amendments or supplements thereto, as the Purchaser may reasonably request.
The Company consents to the use of the Disclosure Documents, and any amendments
and supplements thereto, by the Purchaser in connection with resales of the
Debentures or the Underlying Shares other than pursuant to an effective
registration statement.
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Section 4.5. Modification to Disclosure Documents. If any event shall occur as
a result of which, in the reasonable judgment of the Company or the Purchaser,
it becomes necessary or advisable to amend or supplement the Disclosure
Documents in order to make the statements therein, in the light of the
circumstances at the time the Disclosure Documents were delivered to the
Purchaser, not misleading, or if it is necessary to amend or supplement the
Disclosure Documents to comply with applicable law, the Company shall promptly
prepare an appropriate amendment or supplement to the Disclosure Documents (in
form and substance reasonably satisfactory to both the Purchaser and Company)
so that (i) as so amended or supplemented the Disclosure Documents will not
include an untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to Purchaser, not misleading
and (ii) the Disclosure Documents will comply with applicable law.
Section 4.6. Blue Sky Laws. The Company shall cooperate with the Purchaser in
connection with the qualification of the Debentures, the Warrants and the
Underlying Shares under the securities or Blue Sky laws of such jurisdictions
as the Purchaser may request and to continue such qualification at all times
through the fifth anniversary of the Closing Date; provided, however, that
neither the Company nor its Subsidiaries shall be required in connection
therewith to qualify as a foreign corporation where they are not now so
qualified.
Section 4.7 Integration. The Company shall not and shall use its best efforts
to ensure that no Affiliate 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
Debentures, the Warrants or the Underlying Shares in a manner that would
require the registration under the Securities Act of the sale of the
Debentures, the Warrants or Underlying Shares to the Purchaser.
Section 4.8 Furnishing of Rule 144A Materials. The Company shall, for so long
as any of the Debentures, the Warrants or Underlying Shares remain outstanding
and during any period in which it is not subject to Section 1 3 or 1 5 (d) of
the Exchange Act, make available to any registered holder of Debentures, the
Warrants or Underlying Shares in connection with any sale thereof and any
prospective purchaser of such Debentures, Warrants or Underlying Shares from
such Person, the following information in accordance with Rule I44A (d)(4)
under the Securities Act: a brief statement of the nature of the business of
the Company and the products and services it offers and the Company's most
recent audited balance sheet and profit and loss and retained earnings
statements, and similar audited financial statements for such part of the two
preceding fiscal years as the Company has been in operation.
Section 4.9 Solicitation Materials. The Company shall not (i) distribute any
offering materials in connection with the offering and sale of the Debentures,
the Warrants or Underlying Shares other than the Disclosure Documents and any
amendments and supplements thereto prepared in compliance herewith or
(ii) solicit any offer to buy or sell the Debentures, the Warrants or
Underlying Shares by means of any form of general solicitation or advertising.
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Section 4.10 Subsequent Financial Statements. The Company shall furnish to the
Purchaser, promptly after they are filed with the Commission, a copy of all
financial statements for any period subsequent to the period covered by the
financial statements included in the Disclosure Documents.
Section 4.11 Prohibition on Certain Actions. From the date hereof through the
Closing Date, the Company shall not and shall cause the Subsidiaries not to,
without the consent of the Purchaser, (i) amend its Certificate of
Incorporation, bylaws or other charter documents so as to adversely affect any
rights of the Purchaser; (ii) split, combine or reclassify its outstanding
capital stock; (iii) declare, authorize, set aside or pay any dividend or other
distribution with respect to the Common Stock; (IV) redeem, repurchase or offer
to repurchase or otherwise acquire shares of its Common Stock; or (v) enter
into any agreement with respect to any of the foregoing.
Section 4.12. Listing Y, of Underlying Shares. The Company shall use its best
efforts to maintain the quote for its common stock on the NASD OTC Electronic
Bulletin Board (or listing on a national securities exchange or market on which
the Common Stock is listed) during the period that the Debentures may be
converted hereunder by the Purchaser or the Warrants may be exercised, and
shall provide to the Purchaser evidence of such listing.
Section 4.13. Conversion Procedures. Exhibit B attached hereto and made a part
hereof sets forth the procedures with respect to the conversion of the
Debentures, including the forms of Notice of Conversion to be provided upon
conversion, instructions as to the procedures for conversion, the form of legal
opinion, if necessary, that shall be rendered to the Company and such other
information and instructions as may be reasonably necessary to enable the
Purchaser to exercise its right of conversion smoothly and expeditiously.
Section 4.14 Registration of Underlying! Shares. So long as any Warrants remain
unexercised or Debentures remain outstanding, the Company agrees not to file a
registration statement with the Commission, without first having registered the
Underlying Shares for resale with the SEC and for resale in such states of the
United States as the Holders thereof (or the Holders of the Debentures) shall
reasonably request. If the Company shall propose to file with the SEC any
registration statement other than a Form of which would cause, or have the
effect of causing, the Company to become subject to the reporting requirements
of Section 13 or 15(4) of the Exchange Act (a "Reporting Issuer") or to take
any other action the effect of which would be to cause the Underlying Shares to
be issued upon conversion of any then outstanding Debentures to be restricted
securities or cause the Underlying Shares to be issued upon exercise of any
then outstanding Warrants to be restricted securities (as such term is defined
in Section 144 promulgated under the Securities Act), the Company agrees to
give written notification of such to the Holders of the Debentures or the
Warrants then outstanding at least two weeks prior to such filing or taking of
the proposed action. If any Debentures or Warrants are outstanding at the end
of such notice period, the Company agrees to file a registration statement on
Form S-I or SB-2, or such other form of registration statement in which the
Underlying Shares may be included, and to include in such registration
statement the Underlying Shares issuable upon conversion of any then
outstanding Debentures or the exercise of any then outstanding Warrants so as
to permit the public resale thereof. All costs and expenses of registration
shall be borne by the Company.
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Notwithstanding the foregoing, if the Company for any reason shall become a
Reporting Issuer, or shall have taken any action the effect of which would be
to cause the Underlying Shares to be issued upon conversion of any then
outstanding Debentures or the exercise of any then outstanding Warrants to be
restricted securities (as such term is defined in Rule 144 promulgated under
the Securities Act), the Company agrees to immediately file with the SEC and
cause to become effective a registration statement which would permit the
public resale of such Underlying Shares in such states of the United States as
the Holders thereof shall reasonably request. All costs and expenses of such
registration and related Blue-Sky filings shall be borne by the Company.
Section 4.15 Escrow. The Company agrees to enter into the escrow agreement
attached hereto and made part hereof as Exhibit D (the "Escrow Agreement"), and
to issue into said Escrow certificates to be held by the Escrow Agent (as
defined in the Escrow Agreement), registered in the names of the Purchasers and
without any restrictive legend of any kind, pursuant to the terms of such
Escrow Agreement, rounded up to the nearest even 10,000 shares. Such
certificates shall be in denominations of 10,000 shares.
Section 4.16 Attorney-in-Fact. To effectuate the terms and provisions of this
Agreement, the Escrow Agreement, the Debenture and the Warrants, the Company
hereby designates and appoints the Escrow Agent and each of its designees or
agents as attorney-in-fact of the Company, irrevocably and with power of
substitution, with authority to carry out any acts and things necessary or
advisable in the sole discretion of the Escrow Agent to carry out and enforce
this Agreement, the Escrow Agreement, the Debenture and the Warrants, as is
further evidenced by to Exhibit E attached hereto. All acts done under the
foregoing authorization are hereby ratified and approved and neither the Escrow
Agent nor any designee or agent thereof shall be liable for any acts of
commission or omission, for nay error of judgment or for any mistake of fact or
law. This power of attorney being coupled with an interest is irrevocable while
any amount of Debenture remains unpaid, any amount of the Warrants remain
unexercised or any portion of this Agreement or the Escrow Agreement remains
unsatisfied.
Section 4.17 Changes to Rule 504. If any shares of Common Stock required to be
reserved for purposes of conversion of the Debenture or exercise of the
Warrants hereunder require registration with or approval of any governmental
authority under any federal (including by not limited to the Act or similar
federal statute than in force) or state law, or listing on any national
securities exchange, before such shares may be issued upon conversion or
exercise without any restriction on the resale or transfer of the Underlying
Shares, for reasons including by not limited to a material change in Rule 504
of Regulation D promulgated under the Act, the Company will, at its expense, as
expeditiously as possible cause such shares to be duly registered or approved
or listed on the relevant national securities exchange, as the case may be.
Shares of Common Stock issued upon conversion of the Debenture or exercise of
the Warrants shall be registered by the Company under the Act if required by
Section 4.14 and subject to the conditions stated therein.
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ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5.1. Conditions Precedent to Obligations of the Purchaser. The
obligation of the Purchaser to purchase the Debentures is subject to the
satisfaction or waiver by the Purchaser, at or prior to the Closing, of each of
the following conditions:
(a) The Purchaser shall have received the legal opinion, addressed
to and dated the Closing Date of the Counsel for the Company. Such legal
opinion shall address the Company's authority to enter into this Agreement and
the availability of Rule 504 to the offer and sale of the Debentures, the
Warrants and the Underlying Shares;
(b) Accuracy of Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except that representations and warranties that are made as
of a specific date need be true in all material respects only as of such date);
(c) Performance by the Company. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing;
(d) No Material Adverse Effect. Since the date of the financial statements
included in the Company's Disclosure Documents, no event, which had a Material
Adverse Effect, shall have occurred which is not disclosed in the Disclosure
Documents;
(e) No Prohibitions. The purchase of and payment for the Debentures (and
upon conversion thereof, the Underlying Shares) hereunder (i) shall not be
prohibited or enjoined (temporarily or permanently) by any applicable law or
governmental regulation and (ii) shall not subject the Purchaser to any
penalty, or in its reasonable judgment, other onerous condition under or
pursuant to any applicable law or governmental regulation that would materially
reduce the benefits to the Purchaser of the purchase of the Debentures or the
Underlying Shares (provided, however, that such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement);
-------------------------------------------------------------------------------
(f) Company Certificates. The Purchaser shall have received a certificate,
dated the Closing Date, signed by the Secretary or an Assistant Secretary of
the Company and certifying (i) that attached thereto is a true, correct and
complete copy of (A) the Company's Certificate of Incorporation, as amended to
the date thereof, (B) the Company's by-laws, as amended to the date thereof,
(C) resolutions duly adopted by the Board of Directors of the Company
authorizing the execution and delivery of this Agreement, the issuance and sale
of the Debentures, Warrants and the Underlying Shares and the appointment of
the Attorney-in-Fact pursuant to Section 4.16, and (D) a certificate of good
standing from the Secretary of State of Nevada and (ii) the incumbency of
officers executing this Agreement;
(g) No Suspensions of Trading in Common Stock. Trading in the Common Stock
shall not have been suspended by the Commission or the NASD or other exchange
or market on which the Common Stock is listed or quoted (except for any
suspension of trading of limited duration solely to permit dissemination of
material information regarding the Company);
(h) Required Approvals. All Required Approvals shall have been obtained;
(i) Delivery of Debentures. The Company shall have delivered to the Escrow
Agent the certificate(s) representing the Debentures, registered in the name of
the Purchaser, each in form satisfactory to the Purchaser; and
(j) Power of Attorney. The Escrow Agent shall have received a power of
attorney executed on behalf of the Company pursuant to Section 4.16.
Section 5.2. Conditions Precedent to Obligations of the company. The obligation
of the Company to issue and sell the Debentures hereunder is subject to the
satisfaction or waiver by the Company, at or to the Closing, of each of the
following conditions:
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except that representations and warranties that are
made as of a specific date need be true in all material respects only as of
such date);
(b) Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or
complied with by it at or prior to the Closing; and
(c) No Prohibitions. The sale of the Debentures (and upon conversion
thereof, the Underlying Shares) hereunder (i) shall not be prohibited or
enjoined (temporarily or permanently) by any applicable law or governmental
regulation and (ii) shall not subject the Company to any penalty, or in its
reasonable judgment, any other onerous condition under or pursuant to any
applicable law or governmental regulation that would materially reduce the
benefits to the Company of the sale of Debentures or the Underlying Shares to
the Purchaser (provided, however, that such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement).
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ARTICLE VI
TERMINATION
Section 6.1. Termination by Mutual Consent. This Agreement may be terminated at
any time prior to Closing by the mutual consent of the Company and the
Purchaser.
Section 6.2. Termination by the Company or the Purchaser. This Agreement may be
terminated prior to Closing by either the Company or the Purchaser, by giving
written notice of such termination to the other party, if:
(a) the Closing shall not have occurred by April 6, 1999; provided that the
terminating party is not then in material breach of its obligations under this
Agreement in any manner that shall have caused the failure referred to in this
paragraph (a);
(b) there shall be in effect any statute, rule, law or regulation that
prohibits the consummation of the Closing or if the consummation of the Closing
would violate any non-appeal able final judgment, order, decree, ruling or
injunction of any court of or governmental authority having competent
jurisdiction; or
(c) there shall have been an amendment to Regulation D or an interpretive
release promulgated or issued thereunder, which, in the reasonable judgment of
the terminating party, would materially adversely affect the transactions
contemplated hereby.
Section 6.3. Termination by the Company. This Agreement may be terminated prior
to Closing by the Company, by giving written notice of such termination to the
Purchaser, if the Purchaser has materially breached any representation,
warranty, covenant or agreement contained in this Agreement and such breach is
not cured within five (5) business days following receipt by the Purchaser of
notice of such breach.
Section 6.4. Termination by the Purchaser. This Agreement may be terminated
prior to Closing by the Purchaser, by giving written notice of such termination
to the Company, if-
(a) the Company has breached any representation, warranty, covenant or
agreement contained in this Agreement and such breach is not cured within five
(5) business days following receipt by the Company of notice of such breach;
(b) there has occurred an event since the date of the financial statements
included in the Company's disclosure documents which could reasonably be
expected to have a Material Adverse Effect and which is not disclosed in the
Disclosure Documents; or
(c) Trading in the Common Stock has been suspended by the Commission or the
NASD or other exchange or market on which the Common Stock is listed or quoted
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company).
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ARTICLE VII
LEGAL FEES
In the event any Party commences a legal action to enforce its rights under
this Agreement, the Debentures, the Warrants or the Escrow Agreement, the non-
prevailing party shall pay all reasonable costs and expenses (including
reasonable attorney's fees) incurred in enforcing such rights.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1. Fees and Expenses. Except as set forth above, 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 the fees of the Escrow Agent and all stamp and
other taxes and duties levied in connection with the issuance of the Debentures
(and upon conversion thereof, the Underlying Shares) pursuant hereto. The
Purchaser shall be responsible for its own tax liability that may arise as a
result of the investment hereunder or the transactions contemplated by this
Agreement. Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company shall pay (1) all
costs, expenses, fees and all taxes incident to and in connection with: (A) the
preparation, printing and distribution of the Disclosure Documents and all
amendments and supplements thereto (including, without limitation, financial
statements and exhibits), and all preliminary and final Blue Sky memoranda and
all other agreements, memoranda, correspondence and other documents prepared
and delivered in connection herewith (B) the issuance and delivery of the
Debentures and, upon conversion thereof, the Underlying Shares, (C) the
qualification of the Debentures and, upon conversion thereof, the Underlying
Shares for offer and sale under the securities or Blue Sky laws of the several
states (including, without limitation, the fees and disbursements of the
Purchasers' counsel relating to such registration or qualification),
(D) furnishing such copies of the Disclosure Documents and all amendments and
supplements thereto, as may reasonably be requested for use in connection, with
resales of the Debentures and, upon conversion thereof, the Underlying Shares,
and (E) the preparation of certificates for the Debentures and, upon conversion
thereof, the Underlying Shares (including, without limitation, printing and
engraving thereof), (ii) all fees and expenses of the counsel and accountants
of the Company and (iii) all expenses and listing fees on Securities Exchanges,
if any.
Section 8.2. Entire Agreement; Amendments. This Agreement, together with the
Exhibits, Annexes and Schedules hereto, 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.
Section 8.3. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be deemed to have been made
upon facsimile (with transmission confirmation report) at the number designated
below (if delivered on a Business Day during normal business hours where such
notice is to be received) I or the first Business Day following such delivery
(if delivered other than on a Business Day during normal business hours where
such notice is to be received) whichever shall first occur. The addresses for
such communications shall be-.
-------------------------------------------------------------------------------
If to the Company: Xxxxxx Xxx, President
Crys-Tel Xxxxxxxxxxxxxxxxxx.xxx, Inc.
000-0 X00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX
Xxxxxx X0X 0X I
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to: Xxxxxx X. Xxxxx, Esq.
_________________________
_________________________
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Purchasers -
See Schedule I - Schedule of Purchasers (attached hereto)
With copies to: Xxxx X. Xxxxxxxxxx
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP 000 Xxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
Section 8.4 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 the Purchaser, 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.
-------------------------------------------------------------------------------
Section 8.5. 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.
Section 8.6. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
Neither the Company nor the Purchaser f the may assign this Agreement or any
rights or obligations hereunder without the prior written consent o other. The
assignment by a party of this Agreement or any rights hereunder shall not
affect the obligations of such party under this Agreement.
Section 8.7. No Third Party Beneficiaries. This Agreement is intended for
the benefit of the benefit of the parties and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section 8.8. Governing Law. This Agreement shall be governed by and construed
and enforced le of co ' In accordance with the internal laws of the State of
New York without regard to the principles of conflicts of law thereof. Any
action to enforce the terms of this Agreement or any of its exhibits shall be
exclusively brought in the state and/or federal courts in the State and County
of New York.
Section 8.9. Survival. The representations and warranties of the Company and
the Purchaser contained in Article III and the agreements and covenants of the
parties contained in Article IV and this Article VIII shall survive the Closing
(or any earlier termination of this Agreement).
Section 8.10. Counter Signatures 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.
Section 8.11. Publicity. The Company and the Purchaser shall consult with each
other in issuing any press releases or other-wise making public statements with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed.
Section 8.12. 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.
-------------------------------------------------------------------------------
Section 8.13. Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
will be entitled to specific performance of the obligations of the Company
under this Agreement and the Company will be entitled to specific performance
of the obligations of the Purchaser hereunder with respect to the subsequent
transfer of Debentures and the Underlying Shares. Each of the Company and the
Purchaser agrees that monetary damages would 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.
Section 8.14. Conditions Subsequent. The Company agrees that within five (5)
business days after the Closing Date, it will deliver any and all documents,
legal opinion and share certificates required under this Agreement, the Escrow
Agreement, the Debenture and the Warrants, which documents are incorporated
herein by reference, which were not delivered at Closing, Upon receipt of all
the documents, legal opinion and share certificates, the Escrow Agent will
release the Purchase Price less all applicable fees and disbursements to the
Company. In the event that the Company fails to deliver such documents and
share certificates, the transactions contemplated hereunder will be cancelled.
[SIGNATURE PAGE FOLLOWS]
-------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first indicated above.
Company:
CRYS-TEL XXXXXXXXXXXXXXXXXX.XXX, INC.
By:_____________________________
Name: Xxxxxx Xxx
Title: President
Purchasers:
XXXXXXX, INC.
By:_____________________________
Name:
Title:
-------------------------------------------------------------------------------
Exhibit B
Conversion Procedures
1. Holder shall execute Holder Notice of Conversion in the form attached
to the Debenture as Exhibit A.
2. Holder shall send by fax the Holder Notice of Conversion to the Escrow
Agent by 4.00 p.m. New York Time on the date of the Conversion. The Escrow
Agent shall send by fax the Holder Notice of Conversion to the Company by the
end of the Business Day.
3. Holder shall send the original Debenture and Holder Notice of
Conversion to the Escrow Agent, along with a fee of $350, with instructions
regarding names and amount of certificates for the issuance of the Underlying
Shares, and instructions as to the reissuance of the balance of the Debentures,
if conversion is not in full.
4. Company will issue the new Debentures (if any) and will send such new
Debentures by overnight courier within five (5) business days to the Escrow
Agent. The Escrow Agent shall send the Common Shares to the Holder per his
instructions within two business days of receipt of the Notice of Conversion
and will send the new Debentures (if any) to the Holder upon receipt.
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XXXXXX XXXXXXXXXX & XXXXXXXX, LLP
ATTORNEYS AT LAW
000 XXXXX XXXXXX XXX XXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000-0000 -------------- 0000 XXXXXX XXXXXX
TEL: (000) 000-0000 E-MAIL XX&X@XXXXXX.XXX XXXX XXX, XX 00000
FAX: (000)000-0000 TEL:(000) 000-0000
FAX:(000) 000-0000
April 9, 1999
Via Federal Express (000) 000-0000
Mr. Xxxxxxx Xxxxxx
Cry-Tel Telecommunications Inc.
#000-0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX
Xxxxxx X0X 0X0
Re: Purchase and Sale of)% $333,000 Convertible Debentures Of Cry-Tel
Telecommunications Inc.
Dear Xxxx:
In connection with the captioned transaction, which closed on April 6, 1999, I
am enclosing Herewith the escrow agreement which needs to be re-executed by
Xxxxxx Xxx. Please return the signed original to me.
Please call me if you have any questions
Very truly yours:
Xxxxxx Gottbetter & Xxxxxxxx
Xxxxx X. Xxxxx
encl.
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SCHEDULE I
Purchaser Full Amount of Number of Shares
Name & Address Debenture In Escrow
-------------- -------------- ----------------
Xxxxxxx, Inc. $ 333,000 1,200,000
X.X. Xxx 00000
Xxxxxxxxx, Xxxxxx
Phone: 000-00-00000
Warrant Holder Full Number of Number of Shares
Name and Address Warrants in Escrow
-------------- -------------- ----------------
Xxxxxxx, Inc. $400,000 400,000
X.X. Xxx 00000
Xxxxxxxxx, Xxxxxx
Phone: 000-00-00000
X.X. Xxxxx 200,000 200,000
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
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ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of April 6, 1999, by and among
CRYS-TEL Xxxxxxxxxxxxxxxxxx.xxx, Inc., a Florida corporation (the "Company"),
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP (the "Escrow Agent") and the parties who have
executed this Agreement as the Purchaser on the last page hereof (individually,
the "Purchaser" and collectively, the "Purchasers") and X.X. Xxxxx, Inc.
("Xxxxx").
Recitals
A. Simultaneously with the execution of this Agreement, the Purchasers
have entered into a Convertible Debenture and Warrant Purchase Agreement, dated
as of the date hereof (the "Purchase Agreement") incorporated herein by
reference, pursuant to which the Purchasers have agreed to purchase certain
debentures (the "Debentures") of the Company.
B. The Escrow Agent is willing to act as escrow agent pursuant to the
terms of this Agreement with respect to the Purchase Price (as defined in the
Purchase Agreement) to be paid for the Debentures and the delivery of one or
more debentures representing the Debentures registered in the names of the
Purchasers as set forth in the Purchase Agreement (the "Debentures" and,
together with the Ancillary Closing Documents (as defined below), of one or
more warrants representing the Warrants registered in the name of the
Purchasers and Xxxxx or their assigns as set forth in the Purchase Agreement
(the "Warrants") and with respect to shares to be issued by the Company in
respect of conversion of the Debentures or the exercise of the Warrants, (the
Purchase Agreement, Debenture, Ancillary Closing Documents and Warrants
collectively, referred to as the "Consideration").
C. Upon the closing of the transaction contemplated by the Purchase
Agreement (the "Closing") and the occurrence of an event described in Section 2
below, the Escrow Agent shall cause the distribution of the Purchase Price,
Ancillary Closing Documents, the Debentures and the Warrants in accordance with
the terms of this Agreement.
D. All capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Purchase Agreement.
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NOW, THEREFORE, IT IS AGREED:
1. Deposit of Consideration.
(a) Upon execution of this Agreement the Purchasers shall deposit with the
Escrow Agent a copy of the Purchase Agreement, and this Escrow Agreement or a
counterpart thereof, each executed by the Purchasers, and the Purchase Price.
Upon execution of this Agreement The Company shall deliver to the Escrow Agent
(i) the Purchase Agreement or a counterpart thereof signed by the Company,
(ii) this Escrow Agreement or a counterpart thereof signed by the Company,
(iii) certificates (in denominate s previously given to the Company's transfer
agent and free of any restrictive legends) registered in the names of the
Purchasers, as set forth in Schedule I to the Purchase Agreement, representing
a number of common shares of the Company equal to One Million Two Hundred
Thousand (1,200,000), held for the purpose of honoring conversions by the
Purchasers of the Debentures (the "Debenture Escrow Shares"), rounded up to the
nearest Ten Thousand (10,000) shares, (iv) the Debentures, registered in the
names of the Purchasers, (v) Common Stock Purchase Warrants, for the purchase
of Two Hundred Thousand (200,000) shares at an exercise price of $.001 per
share, registered in the name of the Purchaser or its assigns, (vi) Common
Stock Purchase Warrants for the purchase of One Hundred Thousand (100,000)
shares, at an exercise price of $.001 per share, registered in the name of
Xxxxx or its assigns, (vii) two (2) Common Stock Purchase Warrants for the
purchase of One Hundred Thousand (100,000) shares each, at an exercise price of
$1.00 per share and $2.50 per share, respectively, registered in the name of
the Purchaser or its assigns; (viii) Common Stock Purchase Warrants for the
purchase of One Hundred Thousand (100,000) shares, at an exercise price of
$1.45 per share registered in the name of Xxxxx or its assigns; (ix) stock
certificates (in denominations of 10,000 shares each, free of any restrictive
legends) registered in the respective names of the Purchaser, Xxxxx or their
assigns representing a number of common shares of the Company equal to Three
Hundred Thousand (300,000) held for the purpose of honoring the exercise of the
Common Stock Purchase Warrants at an exercise price of $.001 per share (the
"Warrant Escrow Shares"), (x) stock certificates (in denominations of 10,000
shares each with restrictive legends), registered in the respective names of
the Purchaser, Xxxxx or their assigns representing a number of common shares of
the Company equal to Three Hundred Thousand (300,000) shares held for the
purpose of honoring the exercise of the Common Stock Purchase Warrants in
Sections I (a)(vii) and (viii) hereof (the "Restricted Warrants Shares") (the
Debenture Escrow Shares, the Warrant Escrow Shares and the Restricted Warrant
Escrow Shares collectively, the "Escrow Shares"), and (xi) bank wiring
instructions for transfer of the Purchase Price by the Escrow Agent into an
account specified by the Company for such purpose. In addition, upon the
execution of this Agreement the Company shall deposit or cause to be deposited
with the Escrow Agent an opinion of the Company's counsel addressed to the
Purchasers in the form of Exhibit D attached to the Purchase Agreement, the
executed power of attorney in the form of Exhibit F attached to the Purchase
Agreement and the schedules to the Purchase Agreement (such opinion and
schedules being hereinafter referred to as the "Ancillary Closing Documents").
(i) The Purchase Price shall be delivered by the Purchasers to the Escrow
Agent by wire transfer to the following account:
-------------------------------------------------------------------------------
Bank of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
ABA# 000000000
Xxxxxx Gottbetter & Xxxxxxxx, LLP
Acct# 0000000000
Reference: CRSS
(ii) The Debentures, Warrants and Escrow Shares and Ancillary Closing
Documents shall be delivered by the Company to the Escrow Agent at its address
for notice indicated in Section 6(a)(ii).
(b) Until termination of this Agreement as set forth 'n Section 2, all
additional amounts of the Purchase Price paid by or which becomes payable
between the Company and the Purchasers shall be deposited with the Escrow
Agent.
(c) The Escrow Agent agrees to hold the Consideration and the Purchase
Price received by it in accordance with the terms and conditions set forth
herein until it has received all of the consideration;
(d) The Purchasers and the Company understand that the Purchase Price
delivered to the Escrow Agent pursuant to Section I (a) shall be held in escrow
in a non-interest bearing XXXX account until the Closing. The Purchase Price
will be returned promptly to the Purchasers if all of the Consideration is not
received on or before April 6, 1999. After all of the Consideration has been
received by the Escrow Agent, the parties hereto hereby authorize, direct and
instruct the Escrow Agent to promptly effect the Closing in accordance with the
terms set forth below.
2. Terms of Escrow.
(a) The Escrow Agent shall hold the Consideration in escrow until the
earlier to occur of (i) the receipt by the Escrow Agent of the total amount of
the Purchase Price from the Purchaser or (ii) the receipt by the Escrow Agent
of a notice, executed by each of the Company and the Purchaser, stating that
the Purchase Agreement has been terminated or otherwise directing the
disposition of the Consideration.
(b) If the Escrow Agent receives the items referenced in clause
(i) of Section 2(a) prior to its receipt of the notice referenced in clause
(ii) of Section 2(a), then, the Escrow Agent shall deliver as soon as
practicable, but in no event later than three (3) business days, the
Debentures, Warrants and the Ancillary Closing Documents executed by the
Company to the Purchasers or the holders of the Warrants (the "Warrant
Holders") or pursuant to their respective written instructions and shall
deliver immediately to the Company the Purchase Price,
-------------------------------------------------------------------------------
(c) If the Escrow Agent receives the notice referenced in clause (ii) of
Section 2(a) prior to its receipt of the items referenced in clause (i) of
Section 2(a), then the Escrow Agent shall promptly deliver the Purchase Price,
Debentures, Warrants and Ancillary Closing Documents as specified in such
notice. The parties agree that if such notice is silent as to the delivery of
such items, the Escrow Agent shall promptly upon receipt of such notice return
(i) the Purchase Price to the Purchasers, (ii) the Debentures and Warrants to
the Company and (iii) the Ancillary Closing Documents to the party that
delivered the same.
(d) If the Escrow Agent, prior to releasing the Escrow Shares to the
Purchaser, receives a notice of objection pursuant to Section 2(e) of this
Agreement, then and only then, the Escrow Agent shall continue to hold the
Escrow Shares until such time as the Escrow Agent shall receive (1) written
instructions jointly executed by the Purchasers and the Company, directing the
release of the number of Escrow Shares to the Purchaser, or (ii) a certified
copy of a judgment, order or decree of a court of competent jurisdiction
directing the Escrow Agent to release the Escrow Shares to any party hereto or
as such judgment, order or decree shall otherwise specify (including any such
order directing the Escrow Agent to deposit the Escrow Shares into the court
rendering such order, pending determination of any dispute between any of the
parties). In addition, the Escrow Agent shall have the right to deposit any of
the Consideration with a court of competent jurisdiction without liability to
any party if said dispute is not resolved within thirty (30) days of receipt of
any such notice of objection, dispute or otherwise.
(e) At any time, and from time to time during the term of this Agreement,
the Purchasers and/or the Warrant Holders may deliver to the Escrow Agent
written notice (a "Notice of Conversion" or the "Notice of Exercise") that it
has elected to convert the Debentures registered in the names of such
Purchasers, in whole or in part, in accordance with the terms of the 91
Debentures (including, without limitation; giving the required notice to the
Company and tendering to the Company the Debenture(s) to be converted), or that
it has elected to exercise the Warrants registered in the names of such Warrant
Holder, in whole or in part, in accordance with the terms of the Warrants
(including, without limitation, giving the required notice to the Company and
91 tendering to the Company the Warrant(s) to be exercised), and the Notice of
Conversion to be in the form annexed as Exhibit A hereto and the Notice of
Exercise to be in the form annexed as Exhibit B hereto. A fee of $350 shall
accompany every Notice of Conversion or Notice of Exercise delivered to the
Escrow Agent. The Notice of Conversion or Notice of Exercise shall be delivered
by the Purchasers or the Warrant Holders, so that they are received by the
Escrow Agent by 4:00 p.m. New York Time on the date of Conversion or Exercise.
The Escrow Agent shall send the Notice of Conversion or Notice of Exercise to
the Company upon receipt via fax by the end of the Business Day. The Notice of
Conversion or Notice of Exercise shall specify the number of Escrow Shares to
be released by the Escrow Agent. The Company shall have one (1) Business Day
from the transmission of the Conversion or Notice of Exercise by the Escrow
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Agent to object only to the calculation of the number of Escrow Shares to be
released. If the Company falls to object to the calculation of the number of
Escrow Shares to be released within said time, then the Company shall be deemed
to have waived any objections to the calculation of the number of Escrow Shares
set forth in the Purchasers' or Warrant Holders' Notice and directed Escrow
Agent to release same. It being agreed that the Company's only basis for any
objection hereunder shall be to the calculation of the number of Escrowed
Shares to be released. In the event of such an objection, the Parties shall
have one (1) Business Day to agree on the number of Escrow Shares to be
released pursuant to said Conversion or Exercise. In the event that the Parties
cannot agree on the number of Escrow Shares to be released in said time, then
the Company shall commence a legal action in the appropriate state or federal
court in the State and County of New York, within five (5) Business Days of the
transmittal of the Notice of Conversion or Notice of Exercise by the Escrow
Agent to the Company. If the Company does not commence such legal action within
said five (5) Business Days, the Escrow Agent shall release the number of
shares stated in the Notice of Conversion or Notice of Exercise to the
Purchaser and the Company's objection shall be deemed withdrawn and waived with
prejudice. If the Escrow Agent does not receive said objection notice within
the time period set forth above from the Company, the Escrow Agent shall
release from escrow and deliver to the Purchasers unlegended certificates or
instruments representing the number of Escrow Shares issuable to the Purchasers
or the Warrant Holders in accordance with such conversion or exercise on the
second Business Days from the transmittal to the Company of the Notice of
Conversion or the Notice of Exercise. In the event that the certificates
evidencing the Escrow Shares held by the Escrow Agent are not in denominations
appropriate for such delivery to the Purchasers or the Warrant Holders, the
Escrow Agent shall request the Company to cause its transfer agent and
registrar to reissue certificates in smaller denominations. The Escrow Agent
shall, however, immediately release to the Purchasers or the Warrant Holders
certificates representing such lesser number of shares as the denominations in
its possession will allow that is closest to but no more than the actual number
to be released to the Purchasers or the Warrant Holders. Upon receipt of the
reissued shares in lesser denominations from the Company's transfer agent, the
Escrow Agent shall release to the Purchasers or the War-rant Holders, the
balance of the shares due to the Purchasers or the Warrant Holders.
(f) The Escrow Agent agrees to notify in writing by facsimile the Company
each time it releases Escrow Shares to the Purchasers or the Warrant Holders.
Until any such release and notification to the Company, the Escrow Shares shall
not be deemed to be validly issued and outstanding shares of capital stock of
the Company.
(g) The Company agrees that, at any time the conversion price of the
Debentures is such that the number of Debenture Escrow Shares is less than 200%
of the number of shares of Common Stock that would be needed to satisfy full
conversion of all of the Debentures given the then current conversion price
(the 'Full Conversion Shares"), upon five (5) days written notice of such
circumstance to the Company by the Purchasers and/or Escrow Agent, it will
issue additional share certificates, without legend and in the names of each of
the Purchasers, and deliver same to the Escrow Agent, such that the new number
of Debenture Escrow Shares is equal to 200% of the Full Conversion Shares.
-------------------------------------------------------------------------------
3. Duties and Obligations of the Escrow Agent.
(a) The parties hereto agree that the duties and obligations of the Escrow
Agent are only such as are herein specifically provided and no other. The
Escrow Agents duties are as a depositary only, and the Escrow Agent shall incur
no liability whatsoever, except as a direct result of its willful misconduct or
gross negligence.
(b) The Escrow Agent may consult with counsel of its choice, and shall not
be liable for any action taken, suffered or omitted by it in accordance with
the advice of such counsel.
(c) The Escrow Agent shall not be bound in any way by the terms of any
their agreement to which the Purchasers and the Company are parties, whether or
not it has knowledge thereof, and the Escrow Agent shall not in any way be
required to determine whether or to any other agreement has been complied with
by the Purchasers and the Company, or any other party thereto. The Escrow Agent
shall not be bound by any modification, amendment, termination, cancellation,
rescission or suppression of this Agreement unless the same shall be in writing
and signed jointly by each of the Purchasers and the Company, and agreed to in
writing by the Escrow Agent.
(d) If the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands which, in its
opinion, are in conflict with any of the provisions of this Agreement, it shall
be entitled to refrain from taking any action, other than to keep safely all
property held in escrow or to take certain action, until it shall jointly be
directed otherwise in writing by the Purchasers and the Company or by a final
judgment of a court of competent jurisdiction.
(e) The Escrow Agent shall be fully protected in relying upon any written
notice, demand, certificate or document which it, in good faith, believes to be
genuine. The Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form, execution, validity or genuineness of documents or
securities now or hereafter deposited hereunder, or of any endorsement thereon,
or for any lack of endorsement thereon, or for any description therein; nor
shall the Escrow Agent be responsible or liable in any respect on account of
the identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any such document, security or endorsement.
(f) The Escrow Agent shall not be required to institute legal proceedings
of any kind and shall not be required to defend any legal proceedings, which
may be instituted against it or in respect of the Consideration.
-------------------------------------------------------------------------------
(g) If the Escrow Agent at any time, in its sole discretion, deems it
necessary or advisable to relinquish custody of the Consideration, it may do so
by delivering the same to any other escrow agent mutually agreeable to the
Purchasers and the Company and, if no such escrow agent shall be selected
within three days of the Escrow Agent's notification to the Purchasers and the
Company of its desire to so relinquish custody of the Consideration, then the
Escrow Agent may do so by delivering the Consideration to the clerk or other
proper officer of a court of competent jurisdiction as may be permitted by law.
The fee of any court officer shall be borne by the Company. Upon such
delivery, the Escrow Agent shall be discharged from any and all responsibility
or liability with respect to the Consideration and this Agreement and the
Company and the Purchasers shall promptly pay to the Escrow Agent all monies
which may be owed it for its services hereunder, including, but not limited to,
reimbursement of its out-of-pocket expenses pursuant to paragraph (i) below.
(h) This Agreement shall not create any fiduciary duty on the Escrow
Agent's part to the Purchasers or the Company, nor disqualify the Escrow Agent
from representing either party hereto in any dispute with the other, including
any dispute with respect to the Consideration.
(i) The Escrow Agent represents that it is counsel to at least one of the
Purchasers. The parties agree that the Escrow Agent's engagement as provided
for herein is not and shall not be objectionable for any reason.
(j) Upon the performance of this Agreement, the Escrow Agent shall be
deemed released and discharged of any further obligations hereunder.
4. Fees, Expenses and Commissions.
(a) The Escrow Agent fee of $5,000, and all reasonable out-of-pocket
expenses paid or incurred by the Escrow Agent in the administration of its
duties hereunder, including, but not limited to, postage, all outside counsel
to the Escrow Agent and advisors' and agents' fees and all taxes or other
governmental charges, if any, shall be paid from the gross proceeds from the
sale of the Debentures held in escrow. The Escrow Agent shall retain the sum
of $500 from the gross proceeds from the sale of the Debentures for out-of-
pocket expenses, and the Company agrees to pay the Escrow Agent any out-of-
pocket expenses in excess of the $500, upon receipt of an invoice from the
Escrow Agent for such excess amount. The Escrow Agent is directed to pay
itself such Escrow Agent fee and out-of pocket expenses in the amount of $500
from the escrow, at Closing.
(b) The document production fee of $5,000 pursuant to the terms of the
retainer agreement dated April 6, 1999 among Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP
("KGL"), the Company and Xxxxxxx, Inc., will be paid to KGL from the funds held
in escrow at Closing.
(c) The consulting fee of ten percent (10%) of the Purchase Price pursuant
to the terms of the Term Sheet by and between Xxxxx and the Company dated
April 2, 1999, will be paid to Xxxxx from the funds in escrow at Closing.
-------------------------------------------------------------------------------
5. Indemnification.
(a) The Purchasers hereby indemnify and hold free and harmless Escrow Agent
from any and all losses, expenses, liabilities and damages (including but not
limited to reasonable attorney's fees, and amounts paid in settlement)
resulting from claims asserted by the Company against Escrow Agent with respect
to the performance of any of the provisions of this Agreement.
(b) The Company hereby indemnifies and holds free and harmless Escrow Agent
from any and all losses, expenses, liabilities and damages (including but not
limited to reasonable attorney's fees, and amount paid in settlement) resulting
from claims asserted by the Purchasers against Escrow Agent with respect to the
performance of any of the provisions of this Agreement.
(c) The Purchasers and the Company, jointly and severally, hereby indemnify
and hold the Escrow Agent harmless from and against any and all losses,
damages, taxes, liabilities and expenses that may be incurred by the Escrow
Agent, arising out of or in connection with its acceptance of appointment as
the Escrow Agent hereunder and/or the performance of its duties pursuant to
this Agreement, the Purchase Agreement, the Debentures and the Warrants,
including, but not limited to, all legal costs and expenses of the Escrow Agent
incurred defending itself against any claim or liability in connection with its
performance hereunder, provided that the Escrow Agent shall not be entitled to
any indemnity for any losses, damages, taxes, liabilities or expenses that
directly result from its willful misconduct or gross negligence.
(d) In the Event of any legal action between the Parties to this Agreement
to enforce any of its terms, the legal fees of the prevailing Party shall be
paid by the Party(ies) who did not prevail.
6. Miscellaneous.
(a) All Notice of Conversions, Notice of Exercises, Objections, notices,
requests, demands and other communications hereunder shall be in writing, sent
by telecopier, upon proof of sending thereof to the following addresses:
(1) If to the Company:
Xxxxxx Xxx
CRYS-TEL Xxxxxxxxxxxxxxxxxx.xxx, Inc.
000-0 X00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX
Xxxxxx X0X 0XX
Tel: (000) 000-0000
Fax: (000) 000-0000
-------------------------------------------------------------------------------
With copies to:
Xxxxxx X. Xxxxx, Esq.
_________________________
_________________________
Tel: (000) 000-0000
Fax: (619) 236-8182Edward Yau
(ii) If to the Purchasers:
At the fax number set forth in the Purchase Agreement
(iii) If to the Escrow Agent:
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP
Attn: Xxxx X. Xxxxxxxxxx, Esq.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
or at such other address as any of the parties to this Agreement may hereafter
designate in the manner set forth above to the others.
(b) This Agreement shall be construed and enforced in accordance with the
law of the State of New York applicable to contracts entered into and performed
entirely within New York.
(c) 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.
7. Termination of Escrow.
This Escrow Agreement shall be in upon the date hereof and shall terminate 91
either pursuant to Section 2(a) or (d) or upon the earlier of (i) the
conversion of the full amount of the Debentures and the exercise of the total
number of Warrants; or (ii) the Maturity Date of the Debentures. Upon the
termination of the Escrow Agreement, the Escrow Agent shall return any
unconverted Debenture Escrow Shares or unexercised Warrant Escrow Shares to the
Company.
[SIGNATURE PAGE FOLLOWS]
-------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
the day and year first above written.
Escrow Agent: The Company:
XXXXXX XXXXXXXXXX & XXXXXXXX, LLP. CRYS-TEL TELECOMMUNICATIONS, INC.
__________________________________ By: ____________________________
Name: Xxxxxx Xxx
Title: President
Purchasers:
XXXXXXX, INC.
By: ____________________________
Name:
Title:
-------------------------------------------------------------------------------
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be executed by the Registered Holder in order to convert the Debenture)
Except as provided by Section 4(b) of the Debenture, the undersigned hereby
irrevocably elects to convert the above Debenture No. into shares of Common
Stock, $.001 par value per share (the "Common Stock"), of CRYS-TEL
Xxxxxxxxxxxxxxxxxx.xxx, Inc. (the "Company") according to the conditions
hereof, as of the date written below. If shares are to be issued in the name
of a person other than undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith. A fee
of $350 will be charged to the Holder for any conversion by the Escrow Agent.
No other fees will be charged to the Holder, except for such transfer taxes, if
any.
Conversion calculations:
________________________________________
Date to Effect Conversion
________________________________________
Principal Amount of Debentures
to be Converted
________________________________________
Interest to be Converted
________________________________________
Applicable Conversion Price (to the
nearest Hundredth
________________________________________
Number of Shares to be issued upon
Conversion
________________________________________
Signature
________________________________________
Name
________________________________________
Address
-------------------------------------------------------------------------------
EXHIBIT B
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase shares of the Common
Stock $.001 par value per share of CRYS-TEL Xxxxxxxxxxxxxxxxxx.xxx, Inc. at
$_____ per share for a total of $_____ and pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified.
The undersigned represents it is acquiring the shares solely for its own
account and not with a view toward the resale or distribution thereof except in
compliance with applicable securities laws.
________________________________________
(Signature)
________________________________________
(Date)
-------------------------------------------------------------------------------
FORM OF LEGAL OPINION
[Insert Date]
To the Parties Listed As "Purchasers"
in the "Purchase Agreement"
Re: __________________________________
Ladies and Gentlemen:
We have acted as legal counsel to _____________ , A ____________ Corporation
(the "Company"), in connection with the Convertible Debenture Purchase
Agreement, dated as of ______________, among ___________________ (the
"Purchasers") and the Company (the "Purchase Agreement") and the transactions
contemplated therein. Capitalized terms used and not otherwise defined herein
shall have the respective meanings assigned to such terms in the Purchase
Agreement, the Convertible Debenture, the Warrant and the Escrow Agreement.
The Purchase Agreement, the Convertible Debentures, the Warrants and the Escrow
Agreement are hereinafter referred to collectively as the "Operative
Documents."
In addition to the Purchase Agreement, the Convertible Debenture, the Warrant
and the Escrow Agreement, we have examined such other documents, records and
legal matters as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below, including, without limitation, the
Company's Certificate of Incorporation, as amended, as in effect on the date
hereof (the "Certificate of Incorporation"), the Company's By-laws [List Other
Documents Reviewed](the "Other Documents") (the Other Documents and the
Operative Documents collectively referred to as the "Relevant Documents"). We
have also relied on the Officer's Certificates and the Secretary's Certificates
furnished by officers of the Company as of the date hereof We have without any
independent verification relied upon and assumed the accuracy of such
certificates as to factual matters and have not attempted to verify
independently the statements contained therein; however, nothing has come to
our attention that would cause us to question the accuracy of such statements.
We have also relied, without independent verification, on the representations
and warranties as to factual matters of the Company and the Purchasers
contained in the Operative Documents, the schedules thereto and on the
certificates of governmental officials. In all such examinations, we have
assumed: (1) the genuineness of signatures of all persons other than the
signatures of persons
-------------------------------------------------------------------------------
Page 2
signing on behalf of the Company; (ii) the authenticity of all documents
submitted to us as originals; (iii) the validity of all applicable laws,
statutes, ordinances, rules and regulations, and the proper indexing and
accuracy of all records and documents which are public records; and (iv) the
conformity to authentic original documents of all documents submitted to us as
certified, conformed or Photostat copies. We have also assumed, without
verification, the legal capacity of each individual who has executed documents
or instruments in connection with the transaction contemplated hereby.
We have assumed, without verification, (i) that the parties to the Purchase
Agreement and the other instruments and documents executed in connection
therewith, other than the Company, have the power (including, without
limitation, corporate power where applicable) and authority to enter into and
perform the Purchase Agreement and such other instruments and documents,
(ii) the due authorization, execution and delivery by such other parties of the
Purchase Agreement and such other instruments and documents, and (iii) that the
Purchase Agreement and such other instruments and documents constitute legal,
binding obligations of each such other party, enforceable against such other
parties in accordance with their respective terms.
Whenever our opinion is stated to be "to our knowledge," or "known to us," that
phrase shall mean that, in the course of our representation of the Company, no
facts have come to our attention of the attorneys in our firm performing such
services, which should give us actual knowledge of the existence or absence of
such facts. We have not conducted any review or inquiry or investigation of
any type concerning the Company or its affairs in connection with this
transaction or in the preparation of this letter other than as set forth
specifically herein. No references of knowledge or inquiry or investigation
may be drawn from the fact of our representation of the Company.
Our opinion with respect to binding effect and enforceability is subject to the
effect of bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance and other similar laws relating to or affecting the
rights of creditors generally, to the effect of generally applicable principles
of equity (regardless of whether enforcement is considered in a proceeding at
law or in equity), and to the enforceability of provisions which may be found
by a court to be violations of public policy.
Our opinions are limited to laws, which, in our experience, are normally
applicable to general business corporations that are not engaged in regulated
business activities and to transactions of type contemplated by the Purchase
Agreement (and we have not made any special investigation of any other laws),
and we express no opinion as to any laws to which you or the Company may be
subject as a result of its or your legal regulatory status.
Our opinions are limited to those expressly stated herein, and no other
additional opinions shall be inferred.
-------------------------------------------------------------------------------
Page 3
Based upon and subject to the foregoing, we are of the opinion that:
(1) Each of the Company and its Subsidiaries is a corporation, duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. To our knowledge, the Company has no subsidiaries
other than the Subsidiaries. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation 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, would not individually or
in the aggregate have a material adverse effect.
(2) The Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by each of the Operative
Documents and to otherwise to carry out its obligations thereunder. The
execution and delivery of each of the Operative 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. Each of the
Operative Documents has been duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
(3) Immediately prior to the closing of the transactions contemplated by
the Operative Documents, there are____________shares of the Company's common
stock issued and outstanding. The total authorized capital of the Company
is________________ shares of common stock, $______par value, and_______________
shares of stock, $_______ par value.
(4) Each of the Warrants and the Convertible Debentures have been duly
authorized and, when paid for in accordance with the terms of the Purchase
Agreement and the other Operative Documents, shall have been validly issued,
fully paid and nonassessable.
(5) The shares of Common Stock which are issuable upon conversion of the
Convertible Debentures (the "Underlying Shares") and upon exercise of the
Warrants (the "Warrant Shares") are duly authorized and, when paid for in
accordance with the terms of the Debentures or Warrants, as the case may be,
shall have been validly issued, fully paid, and nonassessable.
(6) No shares of the common stock, par value $. ___ per share (the "Common
Stock"), of the Company are entitled to preemptive or similar rights. Except
as specifically disclosed in Schedule 3. I (c) to the Purchase Agreement, there
are no outstanding options, warrants, script rights to subscribe to,
-------------------------------------------------------------------------------
Page 4
registration rights, calls or commitments of any character whatsoever relating
to, or, except as a result of the purchase and sale of the Convertible
Debentures, and the Warrants, 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.
(7) Other than the Required Approvals, neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order
of, or make any filing or registration with, any court of other federal, state,
local or other governmental authority or other person in connection with the
execution, delivery and performance by the Company of the Operative Documents
other than filing a Form D with the Securities and Exchange Commission and
making the applicable Blue Sky filings under state securities laws, each as
contemplated by the Purchasers.
(8) The execution, delivery and performance of and compliance with the
terms of the Operative Documents and the issuance of the Debentures, and the
Warrants, do not violate any provision of the Certificate of Incorporation or
Bylaws or, to our knowledge, any provision of any applicable federal or state
law, rule or regulation. To our knowledge, except as disclosed in
Schedule 3. I (e) of the Purchase Agreement, the execution, delivery and
performance of and compliance with the Operative Documents and the issuance of
the Debentures, and the Warrants have not resulted and will not result in any
violation of, or constitute a default under (or an event which with the passage
of time or the giving of notice or both would constitute a default under), any
contract, agreement, instrument, judgment or decree binding upon the Company
and known to us which, individually or in the aggregate, would have a material
adverse effect on the business or financial condition of the Company. To the
best of our knowledge the business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental authority the
result of which would have a material adverse effect on the business of the
Company.
(9) The issuance of the common stock of the Company upon conversion of the
Debentures and exercise of the Warrants will be made in reliance upon Rule 504
of Regulation D as promulgated under Securities Act of 1933 (the "33 Act"), and
thus will be unrestricted, free trading shares under the federal securities
laws, assuming that the Purchaser owns no other shares of the Company's common
stock that would cause it to be deemed an "affiliate" as that term is defined
in the '33 Act. There have been no changes to applicable SEC rules and
regulations which would affect the free transferability of securities issued
pursuant to Rule 504, and the Company satisfies all of the terms and conditions
required to be met for offers and sales of freely transferable securities
pursuant to Rule 504. The Company has not made any sales of its securities
within the 12 months prior to the consummation of the transaction contemplated
by the Purchase Agreement under Rule 504, in reliance on any exemption from
registration under Section 3(b) of the '33 Act, or in violation of Section 5(a)
of the '33 Act, except as disclosed in Schedule 3. I (]) of the Purchase
-------------------------------------------------------------------------------
Page 5
Agreement. The offer and sale of the Debentures and Warrants are in compliance
with the terms and conditions of Rule 504.
These opinions are limited to the matters expressly stated herein and are
rendered solely for your benefit and may not be quoted or relied upon for any
other purpose or by any other person.
The opinions expressed herein are subject to the following assumptions,
limitations, qualifications and exceptions:
(a) We have assumed that each of the Purchasers subscribing to the
Operative Documents has the legal right, capacity and power to enter into and
perform all of its obligations under the Operatives Documents. Furthermore, we
have assumed the due authorization by each of the Purchasers of all requisite
action and the due execution and delivery of the Operative Documents by each of
the Purchasers, and that the Operative Documents are valid, binding and
enforceable upon each of the Purchasers.
(b) Our opinions on the binding effect and enforceability of any obligation
are subject to limitations resulting from the effects of (i) bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance,
arrangement and assignment for the benefit of creditors laws and similar laws
or judicially developed doctrines, and (ii) general principles of equity,
whether applied by a court of law or equity.
(c) We disclaim any opinion as to (i) any provisions in any documents,
which purport to waive any procedural due process rights, and (ii) any
provisions relating to choice of governing law, which choice may depend upon
factual circumstances and the laws of other jurisdictions.
(d) Whenever our opinion with respect to the existence or absence of facts
is indicated to be based on our knowledge, we are referring to the actual
current knowledge of partners and associates of who have had substantive
involvement in the representation of the Company in connection with this
transaction. We have not undertaken any independent investigation to determine
the existence or absence of such facts (and have not caused to be made any
review of any court files or indices) and no inferences as to our knowledge
concerning such facts should be drawn from the fact that such representation
has been undertaken by us.
(e) Our opinions are limited to the matters expressly set forth herein and
to laws and facts existing on the date hereof an no opinion is to be implied or
inferred beyond the matters expressly so stated.
(f) Our examination of law relevant to the matters covered by this opinion
is limited to the General Corporation Law of the States of ________________ and
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Page 6
the federal law of the United States, and we express no opinion as to the
effect on the matters covered by this opinion of the laws of any other
jurisdiction. To the extent that the governing law with respect to any matters
covered by this opinion is the law of any jurisdiction other than the States
of______________ or federal law of the United States, we have assumed that the
law of such other jurisdiction is identical to_____________ law. We express no
opinion as to the effect on the transactions described herein, and in the
Operative Documents and the other agreements and materials referred to herein,
of the laws of any jurisdiction other than the States of______________ and the
federal law of the United States. As members of the bar of the State
of______________, we do not purport to be experts on the law of any other State
of the United States or the jurisdiction of any foreign country.
This opinion is given as of the date hereof and we assume no obligation, to
update or supplement this opinion to reflect any facts or circumstances, which
may hereafter come to our attention, or any changes in laws, which may
hereafter occur.
Sincerely yours,
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FORM D
U.S. SECURITIES AND EXCHANGE COMMISION
Washington D.C. 20549
NOTICE OF SALE OF SECURITIES
PURSUANT TO REGULATION D.
SECTION 4(6) AND/OR
UNIFORM LIMITIED OFFERING EXEMTION
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Federal: Name of Offering [] check if this is an amendment and some has
changed, and indicate change.
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Filing Under (check all that apply)
[]Rule 504 []Rule 505 []Rule 506 []Section 4161 []ULOE
Type of Filing: []New []Amendment
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BASIC IDENTIFICAITON DATA
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Enter the information requested about the issuer.
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Name of Issuer [] check if this is an amendment and name has changed and
Indicate change.
CRYS-TEL TELECOMMUNICATIONS INC.
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Address of Executive Offices (Number and street, City, State, Zip Code)
Telephone Number (including area code)
820-1140 X. XXXXXX XXXXXX, XXXXXXXXX XX X0X000, XXXXXX
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Address of Principal Business Operations (Number, Street, City, State, Zip
Code) Telephone Number (including area code)
820-1140 X. Xxxxxx Xxxxxx, Xxxxxxxxx XX X0X000, Xxxxxx (000) 000-0000
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Brief Description of Business
INTERNET TELEPHONY SERVICE PROVIDER.
SELLING LONG DISTANCE SERVICES AND EQUIPMENT AROUND THE WORLD.
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Type of Business Organization
[] corporation [] limited partnership, already formed
[] other please specify [] business trust
[] limited partnership, to be formed
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Actual or Estimated Date of Incorporation or Organization Month Year
[] Actual [] Estimated
Jurisdiction of Incorporation or Organization: (Enter two-letter U.S. Postal
Service Abbreviation for State [ ] CN for Canada: FN for foreign jurisdiction.
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General Instructions
Federal:
Who must File: All issuers making an offering of securities in reliance on an
exemption under Regulation D or Section 4(6). 17 CFR 230.501 or Seq. Or 15
U.S.C. 77
(6).
When to file: A notice must be filed no later than 15 days after the first
sale of securities in the offering. A notice is deemed filed with the U.S.
Securities and Exchange Commission (SEC) on the earlier of the date it is
received by the SEC at the address given below or, if receive at that address
after the date on which it is due, on the date it was mailed by United states
registered or certified mail to that address.
Where to File: U.S. Securities and Exchange Commission. 000 Xxxxx Xxxxxx X.X.,
Xxxxxxxxxx X.X. 00000
Copies Required: Five (5) copies of this notice must be filed with the SEC.
One of which must be manually signed. Any copies not manually signed must be
photocopies of the manually signed copy or bear typed or printed signatures.
Information required: A new filing must contain all information requested.
Amendments need only report the name of the issuer and offering, any changes
thereto, the information requested in part C and any material changes from the
information previously supplied in parts A and B, Part E and the Appendix need
not be filed with the SEC.
Filing Fees; There is no federal filing fee
State:
This notice shall be used to indicate reliance on the Uniform Limited
Offering Exemption (ULOE) for sales of securities in those states that have
adopted ULOE and that have adopted this form. Issuers relying on ULOE must
file a separate notice with the Securities Administrator in each state where
sales are to be, or have been made. If a state requires the payment of a fee
as a precondition to the claim for exemption a fee in the proper amount shall
accompany this form. This notice shall be filed in the appropriate state in
accordance with state law. The Appendix to the notice constitutes a part of
this notice and must be completed.
-ATTENTION-Failure to file notice in the appropriate states will not result in
a loss of the federal exemption. Conversely, failure to file the appropriate
federal notice will not result in a loss of an available state exemption unless
such exemption is predicted on the filing of federal notice.
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FORM D
BASIC IDENTIFICATION DATA
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Enter the information requested for the following.
-Each promoter of the issuer, if the issuer has been organized within the past
five years.
-Each beneficial owner having the power to vote or dispose, or direct the rent
or disposition of 107 or more of a class of equity securities of the issuer.
-Each executive officer and director of corporate issuers and of corporate
general and managing partners of partnership issuers: and
-Each general and managing partner of partnership issuers.
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Check Boxes that apply: [] Promoter [] Beneficial owner [] Executive officer
[] Director [] General and/or Managing partner
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Full Name (Last name first, if individual)
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Business of Residence Address (Number and Street, City, State, Zip Code)
--
Check Boxes that apply: [] Promoter [] Beneficial owner [] Executive officer
[] Director [] General and/or Managing partner
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Full Name (Last name first, if individual)
--
Business of Residence Address (Number and Street, City, State, Zip Code)
--
Check Boxes that apply: [] Promoter [] Beneficial owner [] Executive officer
[] Director [] General and/or Managing partner
--
Full Name (Last name first, if individual)
--
Business of Residence Address (Number and Street, City, State, Zip Code)
--
Check Boxes that apply: [] Promoter [] Beneficial owner [] Executive officer
[] Director [] General and/or Managing partner
--
Full Name (Last name first, if individual)
--
Business of Residence Address (Number and Street, City, State, Zip Code)
--
Check Boxes that apply: [] Promoter [] Beneficial owner [] Executive officer
[] Director [] General and/or Managing partner
--
Full Name (Last name first, if individual)
--
Business of Residence Address (Number and Street, City, State, Zip Code)
--
Check Boxes that apply: [] Promoter [] Beneficial owner [] Executive officer
[] Director [] General and/or Managing partner
--
Full Name (Last name first, if individual)
--
Business of Residence Address (Number and Street, City, State, Zip Code)
--
Check Boxes that apply: [] Promoter [] Beneficial owner [] Executive officer
[] Director [] General and/or Managing partner
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Full Name (Last name first, if individual)
--
Business of Residence Address (Number and Street, City, State, Zip Code)
--
(Use blank sheet or copy and use additional copies of this sheet, as necessary)
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FORM D
INFORMATION ABOUT OFFERING
Has the issuer sold, or does the issuer intend to sell, to non-accredited
investors in this offering....................................... [] yes [] no
Answer also in Appendix in Column 2 if filing under ULOE.
What is the minimum investment that will be accepted from any
individual?...................................................... $____________
Does the offering permit joint ownership of a single unit?....... [] yes [] no
Enter the information requested for each person who has been or will be paid or
given directly or indirectly any
any commission or similar remuneration for solicitation of purchasers in
connection with sales of securities in the offering. If a person to be listed
is an associated person or agent of a broker or dealer registered with SEC
and/or with a state or states, list the names of the broker or dealer. If more
than five (5) persons to be listed are associated persons of such a broker or
dealer, you may set forth the information for the broker or dealer only.
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Full Name (Last Name first, if individual)
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Business or Residence Address (Number and Street, City, State, Zip Code)
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State in Which Person Listed has solicited or intends to solicit purchases
(check all states or check individual states)
(AL) (AK) (AZ) (AR) (CA) (CT) (CO) (DE) (DC) (FL) (GA) (HI) (ID)
(IL) (IN) (IA) (KS) (KY) (LA) (ME) (MD) (MA) (MI) (MN) (MA) (MO)
(MS) (NE) (NV) (NH) (NJ) (NM) (NY) (NC) (ND) (OH) (OK) (OR) (PA)
(RI) (SC) (SD) (TN) (TX) (UT) (VT) (VA) (WA) (WV) (WS) (WY) (PR)
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Full Name (Last Name first, if individual)
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Business or Residence Address (Number and Street, City, State, Zip Code)
--
State in Which Person Listed has solicited or intends to solicit purchases
(check all states or check individual states)
(AL) (AK) (AZ) (AR) (CA) (CT) (CO) (DE) (DC) (FL) (GA) (HI) (ID)
(IL) (IN) (IA) (KS) (KY) (LA) (ME) (MD) (MA) (MI) (MN) (MA) (MO)
(MS) (NE) (NV) (NH) (NJ) (NM) (NY) (NC) (ND) (OH) (OK) (OR) (PA)
(RI) (SC) (SD) (TN) (TX) (UT) (VT) (VA) (WA) (WV) (WS) (WY) (PR)
Full Name (Last Name first, if individual)
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Business or Residence Address (Number and Street, City, State, Zip Code)
--
State in Which Person Listed has solicited or intends to solicit purchases
(check all states or check individual states)
--
(Use blank sheet, or copy and use additional copies of this sheet as
necessary.)
(AL) (AK) (AZ) (AR) (CA) (CT) (CO) (DE) (DC) (FL) (GA) (HI) (ID)
(IL) (IN) (IA) (KS) (KY) (LA) (ME) (MD) (MA) (MI) (MN) (MA) (MO)
(MS) (NE) (NV) (NH) (NJ) (NM) (NY) (NC) (ND) (OH) (OK) (OR) (PA)
(RI) (SC) (SD) (TN) (TX) (UT) (VT) (VA) (WA) (WV) (WS) (WY) (PR)
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Crys*Tel
000-0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, XX X0X 0X0
(000) 000-0000, Fax (000) 000-0000
April 6th, 1999
Attention: Ms. Lorraine Brightnon-Xxxxx
Interwest Transfer Company
(000) 000-0000
(000) 000-0000
Dear Xxxxxxxx:
We will need the following certificates to be issued and due to the 504
deadlines we will need them put on a 24 Hour Rush.
Please create the following share certificates with no restrictions:
1,200,00 common shares @ 10,000 shares/certificates = 120 certificates
Issued to:
Xxxxxxx, Inc.
X.X. Xxx 00000
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Phone: 000-000-0000
These certificates must be overnighted to: Ms. Xxxxx Xxxxx
Kaplan, Gottbetter, & Xxxxxxxx, Ltd.
000- 0xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
We appreciate your assistance and understanding with regards to our deadlines.
Sincerely
Xxxx Xxxxxx
COO
Cry-Tel Telecommunications
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FORM D
OFFERING PRICE. NUMBER OF INVESTORS. EXPENSES AND USE OF PROCEEDS.
1. Enter the aggregate-offering price of securities included in this
offering and the total amount already sold. Enter "0" if answer is none or
zero if the transaction is an exchange offering, check this box ? and indicate
in the columns below the amounts of the securities offered for exchange and
already exchanged.
Aggregate Already
Type of Security Amount Offering Price
Sold ...................................... $__________ $_____________
Equity..................................... $__________ $_____________
[] Common [] Preferred
Convertible Securities (including warrants) $__________ $_____________
Partnership Interests...................... $__________ $_____________
Other (Specify_______________)............. $__________ $_____________
Total...................................... $__________ $_____________
Answer also in Appendix, column 3, if filing under ULOE.
2. Enter the number of accredited and non-accredited investors who have
purchased securities in this offering and the aggregate dollar amounts of their
purchases. For offerings under Rule 504 indicate the number of persons who
have purchased securities and the aggregate dollar amount of their purchases on
the total lines.
Number Aggregate
Investors Dollar Amount
of Purchases
Accredited Investors....................... ___________ $_____________
Non-accredited Investors................... ___________ $_____________
Total (for filings under Rule 504 only).... ___________ $_____________
Answer also in Appendix. Column 4 if filing under ULEO.
3. If this filing is for an offering under Rule 5.3 or 505. Enter the
information requested for all securities sold by the issuer to date in
offerings of the types indicated in the twelve (12) months prior to the first
sale of securities in this offering. Classify securities by type listed in
Part C - Question 1.
Type of Dollar amount
Type of offering Security Sold
Rule 505................................... ___________ $_____________
Regulation A............................... ___________ $_____________
Rule 504................................... ___________ $_____________
Total...................................... ___________ $_____________
4. a. Furnish a statement of all expenses in connection with the finance
and distribution of the securities in this offering. Exclude amounts relating
solely to organization expenses of the issuer. The information may be given as
subject to future contingencies. If the amount of an expenditure is not known
furnish an estimate and check the box to the left of the estimate.
Transfer Agent's Fees................................... [] $_____________
Printing and Engraving ................................. [] $_____________
Legal Fees.............................................. [] $_____________
Accounting Fees......................................... [] $_____________
Engineering Fees........................................ [] $_____________
Sales and Commission (specify finders' fees separately). [] $_____________
Other Expenses (identify)............................... [] $_____________
Total................................................... [] $_____________
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FORM D
OFFERING PRICE. NUMBER OF INVESTORS. EXPENSES AND USE OF PROCEEDS
b. enter the differences between the aggregate offering price given in
response to Part C - Question 1 and total expenses furnished in response to
Part C. Question 4a. This difference is the adjusted gross proceeds to the
issuer.................................................. $_____________
5. Indicate below the amount of the adjusted gross proceeds to the issuer
used or proposed to be used for each of the purposes shown. If the amount for
any purpose is not known, furnish an estimate and check the box to the left of
the estimate. The total of the payments listed must equal the adjusted gross
proceeds to the issuer set forth in response to Part C.- 4b. above.
Payments to
Officers Directors & Payments to
Affiliates Others
Salaries and fees................... [] $___________ [] $___________
Purchase of real estate............. [] $___________ [] $___________
Purchase, rental or leasing and installation of machinery and equipment
.................................... [] $___________ [] $___________
Construction or leasing of plant buildings and facilities
................... [] $___________ [] $___________
Acquisition of other businesses (including the value of securities involved in
this offer that may be used in exchange for the assets or securities of another
pursuant to a merger) .............. [] $___________ [] $___________
Repayment of Indebtedness........... [] $___________ [] $___________
Working capital..................... [] $___________ [] $___________
Other (specify) _________________________________________________________
.................................... [] $___________ [] $___________
.................................... [] $___________ [] $___________
Column Totals....................... [] $___________ [] $___________
Total Payments Listed (column totals added)
.................................... [] $___________ [] $___________
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FEDERAL SIGNATURE
The issuer has duly caused this notice to be signed by the undersigned duly
authorized person. If this notice is filed under Rule 505, the following
signature constitutes an undertaking by the issuer to furnish to the U.S.
Securities and Exchange Commission, upon written request of his staff the
information furnished by the issuer to any no-accredited investor pursuant to
paragraph (bx2) of Rule 502.
Issuer (print or type) Signature Date
_______________________ _______________________ _______________________
Name of Signer Title of Signer
(print or type) (print or type)
_______________________ _______________________ _______________________
-ATTENTION-
Intentional misstatements or omissions of fact constitute federal criminal
violations. (See18 U.S.C. 1001.)
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ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of April 6, 1999, by and among
CRYS-TEL Xxxxxxxxxxxxxxxxxx.xxx, Inc., a Florida corporation (the "Company"),
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP (the "Escrow Agent") and the parties who have
executed this Agreement as the Purchaser on the last page hereof (individually,
the "Purchaser" and collectively, the "Purchasers") and X.X. Xxxxx, Inc.
("Xxxxx").
Recitals
A. Simultaneously with the execution of this Agreement, the Purchasers
have entered into a Convertible Debenture and Warrant Purchase Agreement, dated
as of the date hereof (the "Purchase Agreement") incorporated herein by
reference, pursuant to which the Purchasers have agreed to purchase certain
debentures (the "Debentures") of the Company.
B. The Escrow Agent is willing to act as escrow agent pursuant to the
terms of this Agreement with respect to the Purchase Price (as defined in the
Purchase Agreement) to be paid for the Debentures and the delivery of one or
more debentures representing the Debentures registered in the names of the
Purchasers as set forth in the Purchase Agreement (the "Debentures" and,
together with the Ancillary Closing Documents (as defined below), of one or
more warrants representing the Warrants registered in the name of the
Purchasers and Xxxxx or their assigns as set forth in the Purchase Agreement
(the "Warrants") and with respect to shares to be issued by the Company in
respect of conversion of the Debentures or the exercise of the Warrants, (the
Purchase Agreement, Debenture, Ancillary Closing Documents and Warrants
collectively, referred to as the "Consideration").
C. Upon the closing of the transaction contemplated by the Purchase
Agreement (the "Closing") and the occurrence of an event described in Section 2
below, the Escrow Agent shall cause the distribution of the Purchase Price,
Ancillary Closing Documents, the Debentures and the Warrants in accordance with
the terms of this Agreement.
D. All capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Purchase Agreement.
NOW, THEREFORE, IT IS AGREED:
1. Deposit of Consideration.
(a) Upon execution of this Agreement the Purchasers shall deposit with the
Escrow Agent a copy of the Purchase Agreement, and this Escrow Agreement or a
counterpart thereof, each executed by the Purchasers, and the Purchase Price.
Upon execution of this Agreement
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The Company shall deliver to the Escrow Agent (i) the Purchase Agreement or a
counterpart thereof signed by the Company, (ii) this Escrow Agreement or a
counterpart thereof signed by the Company, (iii) certificates (in denominate s
previously given to the Company's transfer agent and free of any restrictive
legends) registered in the names of the Purchasers, as set forth in Schedule I
to the Purchase Agreement, representing a number of common shares of the
Company equal to One Million Two Hundred Thousand (1,200,000), held for the
purpose of honoring conversions by the Purchasers of the Debentures (the
"Debenture Escrow Shares"), rounded up to the nearest Ten Thousand (10,000)
shares, (iv) the Debentures, registered in the names of the Purchasers,
(v) Common Stock Purchase Warrants, for the purchase of Two Hundred Thousand
(200,000) shares at an exercise price of $.001 per share, registered in the
name of the Purchaser or its assigns, (vi) Common Stock Purchase Warrants for
the purchase of One Hundred Thousand (I 00,000) shares, at an exercise price of
$.001 per share, registered in the name of Xxxxx or its assigns, (vii) two (2)
Common Stock Purchase Warrants for the purchase of One Hundred Thousand
(100,000) shares each, at an exercise price of $1.00 per share and $2.50 per
share, respectively, registered in the name of the Purchaser or its assigns;
(viii) Common Stock Purchase Warrants for the purchase of One Hundred Thousand
(100,000) shares, at an exercise price of $1.45 per share registered in the
name of Xxxxx or its assigns; (ix) stock certificates (in denominations of
10,000 shares each, free of any restrictive legends) registered in the
respective names of the Purchaser, Xxxxx or their assigns representing a number
of common shares of the Company equal to Three Hundred Thousand (300,000) held
for the purpose of honoring the exercise of the Common Stock Purchase Warrants
at an exercise price of $.001 per share (the "Warrant Escrow Shares"),
(x) stock certificates (in denominations of 10,000 shares each with restrictive
legends), registered in the respective names of the Purchaser, Xxxxx or their
assigns representing a number of common shares of the Company equal to Three
Hundred Thousand (300,000) shares held for the purpose of honoring the exercise
of the Common Stock Purchase Warrants in Sections I (a)(vii) and (viii) hereof
(the "Restricted Warrants Shares") (the Debenture Escrow Shares, the Warrant
Escrow Shares and the Restricted War-rant Escrow Shares collectively, the
"Escrow Shares"), and (xi) bank wiring instructions for transfer of the
Purchase Price by the Escrow Agent into an account specified by the Company for
such purpose. In addition, upon the execution of this Agreement the Company
shall deposit or cause to be deposited with the Escrow Agent an opinion of the
Company's counsel addressed to the Purchasers in the form of Exhibit D attached
to the Purchase Agreement, the executed power of attorney in the form of
Exhibit F attached to the Purchase Agreement and the schedules to the Purchase
Agreement (such opinion and schedules being hereinafter referred to as the
"Ancillary Closing Documents").
(i) The Purchase Price shall be delivered by the Purchasers to the Escrow
Agent by wire transfer to the following account:
Bank of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
ABA# 000000000
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP
Acct# 0000000000
Reference: CRSS
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(ii) The Debentures, Warrants and Escrow Shares and Ancillary Closing
Documents shall be delivered by the Company to the Escrow Agent at its address
for notice indicated in Section 6(a)(ii).
(b) Until termination of this Agreement as set forth 'n Section 2, all
additional amounts of the Purchase Price paid by or which becomes payable
between the Company and the Purchasers shall be deposited with the Escrow
Agent.
(c) The Escrow Agent agrees to hold the Consideration and the Purchase
Price received by it in accordance with the terms and conditions set forth
herein until it has received all of the consideration;
(d) The Purchasers and the Company understand that the Purchase Price
delivered to the Escrow Agent pursuant to Section I (a) shall be held in escrow
in a non-interest bearing XXXX account until the Closing. The Purchase Price
will be returned promptly to the Purchasers if all of the Consideration is not
received on or before April 6, 1999. After all of the Consideration has been
received by the Escrow Agent, the parties hereto hereby authorize, direct and
instruct the Escrow Agent to promptly effect the Closing in accordance with the
terms set forth below.
2. Terms of Escrow.
(a) The Escrow Agent shall hold the Consideration in escrow until the
earlier to occur of (i) the receipt by the Escrow Agent of the total amount of
the Purchase Price from the Purchaser or (ii) the receipt by the Escrow Agent
of a notice, executed by each of the Company and the Purchaser, stating that
the Purchase Agreement has been terminated or otherwise directing the
disposition of the Consideration.
(b) If the Escrow Agent receives the items referenced in clause (i) of
Section 2(a) prior to its receipt of the notice referenced in clause (ii) of
Section 2(a), then, the Escrow Agent shall deliver as soon as practicable, but
in no event later than three (3) business days, the Debentures, Warrants and
the Ancillary Closing Documents executed by the Company to the Purchasers or
the holders of the Warrants (the "Warrant Holders") or pursuant to their
respective written instructions and shall deliver immediately to the Company
the Purchase Price,
(c) If the Escrow Agent receives the notice referenced in clause (ii) of
Section 2(a) prior to its receipt of the items referenced in clause (i) of
Section 2(a), then the Escrow Agent shall promptly deliver the Purchase Price,
Debentures, Warrants and Ancillary Closing Documents as specified in such
notice. The parties agree that if such notice is silent as to the delivery of
such items, the Escrow Agent shall promptly upon receipt of such notice return
(i) the Purchase Price to the Purchasers, (ii) the Debentures and Warrants to
the Company and (iii) the Ancillary Closing Documents to the party that
delivered the same.
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(d) If the Escrow Agent, prior to releasing the Escrow Shares to the
Purchaser, receives a notice of objection pursuant to Section 2(e) of this
Agreement, then and only then, the Escrow Agent shall continue to hold the
Escrow Shares until such time as the Escrow Agent shall receive (1) written
instructions jointly executed by the Purchasers and the Company, directing the
release of the number of Escrow Shares to the Purchaser, or (ii) a certified
copy of a judgment, order or decree of a court of competent jurisdiction
directing the Escrow Agent to release the Escrow Shares to any party hereto or
as such judgment, order or decree shall otherwise specify (including any such
order directing the Escrow Agent to deposit the Escrow Shares into the court
rendering such order, pending determination of any dispute between any of the
parties). In addition, the Escrow Agent shall have the right to deposit any of
the Consideration with a court of competent jurisdiction without liability to
any party if said dispute is not resolved within thirty (30) days of receipt of
any such notice of objection, dispute or otherwise.
(e) At any time, and from time to time during the term of this Agreement,
the Purchasers and/or the Warrant Holders may deliver to the Escrow Agent
written notice (a "Notice of Conversion" or the "Notice of Exercise") that it
has elected to convert the Debentures registered in the names of such
Purchasers, in whole or in part, in accordance with the terms of the Debentures
(including, without limitation; giving the required notice to the Company and
tendering to the Company the Debenture(s) to be converted), or that it has
elected to exercise the Warrants registered in the names of such Warrant
Holder, in whole or in part, in accordance with the terms of the Warrants
(including, without limitation, giving the required notice to the Company and
tendering to the Company the Warrant(s) to be exercised), and the Notice of
Conversion to be in the form annexed as Exhibit A hereto and the Notice of
Exercise to be in the form annexed as Exhibit B hereto. A fee of $350 shall
accompany every Notice of Conversion or Notice of Exercise delivered to the
Escrow Agent. The Notice of Conversion or Notice of Exercise shall be delivered
by the Purchasers or the Warrant Holders, so that they are received by the
Escrow Agent by 4:00 p.m. New York Time on the date of Conversion or Exercise.
The Escrow Agent shall send the Notice of Conversion or Notice of Exercise to
the Company upon receipt via fax by the end of the Business Day. The Notice of
Conversion or Notice of Exercise shall specify the number of Escrow Shares to
be released by the Escrow Agent. The Company shall have one (1) Business Day
from the transmission of the Conversion or Notice of Exercise by the Escrow
Agent to object only to the calculation of the number of Escrow Shares to be
released. If the Company falls to object to the calculation of the number of
Escrow Shares to be released within said time, then the Company shall be deemed
to have waived any objections to the calculation of the number of Escrow Shares
set forth in the Purchasers' or Warrant Holders' Notice and directed Escrow
Agent to release same. It being agreed that the Company's only basis for any
objection hereunder shall be to the calculation of the number of Escrowed
Shares to be released. In the event of such an objection, the Parties shall
have one (1) Business Day to agree on the number of Escrow Shares to be
released pursuant to said Conversion or Exercise. In the event that the Parties
cannot agree on the number of Escrow Shares to be released in said time, then
the Company shall commence a legal action in the appropriate state or federal
court in the State and County of New York, within five (5) Business Days of the
transmittal of the Notice of Conversion or Notice of Exercise by the Escrow
Agent to the Company. If the Company does not commence such legal action within
said five (5) Business Days, the Escrow Agent shall release the number of
shares stated in the Notice of Conversion or Notice of Exercise to the
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Purchaser and the Company's objection shall be deemed withdrawn and waived with
prejudice. If the Escrow Agent does not receive said objection notice within
the time period set forth above from the Company, the Escrow Agent shall
release from escrow and deliver to the Purchasers unlegended certificates or
instruments representing the number of Escrow Shares issuable to the Purchasers
or the Warrant Holders in accordance with such conversion or exercise on the
second Business Days from the transmittal to the Company of the Notice of
Conversion or the Notice of Exercise. In the event that the certificates
evidencing the Escrow Shares held by the Escrow Agent are not in denominations
appropriate for such delivery to the Purchasers or the Warrant Holders, the
Escrow Agent shall request the Company to cause its transfer agent and
registrar to reissue certificates in smaller denominations. The Escrow Agent
shall, however, immediately release to the Purchasers or the Warrant Holders
certificates representing such lesser number of shares as the denominations in
its possession will allow that is closest to but no more than the actual number
to be released to the Purchasers or the Warrant Holders. Upon receipt of the
reissued shares in lesser denominations from the Company's transfer agent, the
Escrow Agent shall release to the Purchasers or the War-rant Holders, the
balance of the shares due to the Purchasers or the Warrant Holders.
(f) The Escrow Agent agrees to notify in writing by facsimile the Company
each time it releases Escrow Shares to the Purchasers or the Warrant Holders.
Until any such release and notification to the Company, the Escrow Shares shall
not be deemed to be validly issued and outstanding shares of capital stock of
the Company.
(g) The Company agrees that, at any time the conversion price of the
Debentures is such that the number of Debenture Escrow Shares is less than 200%
of the number of shares of Common Stock that would be needed to satisfy full
conversion of all of the Debentures given the then current conversion price
(the 'Full Conversion Shares"), upon five (5) days written notice of such
circumstance to the Company by the Purchasers and/or Escrow Agent, it will
issue additional share certificates, without legend and in the names of each of
the Purchasers, and deliver same to the Escrow Agent, such that the new number
of Debenture Escrow Shares is equal to 200% of the Full Conversion Shares.
3. Duties and Obligations of the Escrow Agent.
(a) The parties hereto agree that the duties and obligations of the Escrow
Agent are only such as are herein specifically provided and no other. The
Escrow Agents duties are as a depositary only, and the Escrow Agent shall incur
no liability whatsoever, except as a direct result of its willful misconduct or
gross negligence.
(b) The Escrow Agent may consult with counsel of its choice, and shall not
be liable for any action taken, suffered or omitted by it in accordance with
the advice of such counsel.
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(c) The Escrow Agent shall not be bound in any way by the terms of any
other agreement to which the Purchasers and the Company are parties, whether or
not it has knowledge thereof, and the Escrow Agent shall not in any way be
required to determine whether or not any other agreement has been complied with
by the Purchasers and the Company, or any other party thereto. The Escrow Agent
shall not be bound by any modification, amendment, termination, cancellation,
rescission or suppression of this Agreement unless the same shall be in writing
and signed jointly by each of the Purchasers and the Company, and agreed to in
writing by the Escrow Agent.
(d) If the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands which, in its
opinion, are in conflict with any of the provisions of this Agreement, it shall
be entitled to refrain from taking any action, other than to keep safely all
property held in escrow or to take certain action, until it shall jointly be
directed otherwise in writing by the Purchasers and the Company or by a final
judgment of a court of competent jurisdiction.
(e) The Escrow Agent shall be fully protected in relying upon any written
notice, demand, certificate or document which it, in good faith, believes to be
genuine. The Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form, execution, validity or genuineness of documents or
securities now or hereafter deposited hereunder, or of any endorsement thereon,
or for any lack of endorsement thereon, or for any description therein; nor
shall the Escrow Agent be responsible or liable in any respect on account of
the identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any such document, security or endorsement.
(f) The Escrow Agent shall not be required to institute legal proceedings
of any kind and shall not be required to defend any legal proceedings, which
may be instituted against it or in respect of the Consideration.
(g) If the Escrow Agent at any time, in its sole discretion, deems it
necessary or advisable to relinquish custody of the Consideration, it may do so
by delivering the same to any other escrow agent mutually agreeable to the
Purchasers and the Company and, if no such escrow agent shall be selected
within three days of the Escrow Agent's notification to the Purchasers and the
Company of its desire to so relinquish custody of the Consideration, then the
Escrow Agent may do so by delivering the Consideration to the clerk or other
proper officer of a court of competent jurisdiction as may be permitted by law.
The fee of any court officer shall be borne by the Company. Upon such delivery,
the Escrow Agent shall be discharged from any and all responsibility or
liability with respect to the Consideration and this Agreement and the Company
and the Purchasers shall promptly pay to the Escrow Agent all monies which may
be owed it for its services hereunder, including, but not limited to,
reimbursement of its out-of-pocket expenses pursuant to paragraph (i) below.
(h) This Agreement shall not create any fiduciary duty on the Escrow
Agent's part to the Purchasers or the Company, nor disqualify the Escrow Agent
from representing either party hereto in any dispute with the other, including
any dispute with respect to the Consideration.
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(i) The Escrow Agent represents that it is counsel to at least one of the
Purchasers. The parties agree that the Escrow Agent's engagement as provided
for herein is not and shall not be objectionable for any reason.
(j) Upon the performance of this Agreement, the Escrow Agent shall be
deemed released and discharged of any further obligations hereunder.
4. Fees, Expenses and Commissions.
(a) The Escrow Agent fee of $5,000, and all reasonable out-of-pocket
expenses paid or incurred by the Escrow Agent in the administration of its
duties hereunder, including, but not limited to, postage, all outside counsel
to the Escrow Agent and advisors' and agents' fees and all taxes or other
governmental charges, if any, shall be paid from the gross proceeds from the
sale of the Debentures held in escrow. The Escrow Agent shall retain the sum of
$500 from the gross proceeds from the sale of the Debentures for out-of-pocket
expenses, and the Company agrees to pay the Escrow Agent any out-of-pocket
expenses in excess of the $500, upon receipt of an invoice from the Escrow
Agent for such excess amount. The Escrow Agent is directed to pay itself such
Escrow Agent fee and out-of pocket expenses in the amount of $500 from the
escrow, at Closing.
(b) The document production fee of $5,000 pursuant to the terms of the
retainer agreement dated April 6, 1999 among Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP
("KGL"), the Company and Xxxxxxx, Inc., will be paid to KGL from the funds held
in escrow at Closing.
(c) The consulting fee of ten percent (10%) of the Purchase Price pursuant
to the terms of the Term Sheet by and between Xxxxx and the Company dated
April 2, 1999, will be paid to Xxxxx from the funds in escrow at Closing.
5. Indemnification.
(a) The Purchasers hereby indemnify and hold free and harmless Escrow Agent
from any and all losses, expenses, liabilities and damages (including but not
limited to reasonable attorney's fees, and amounts paid in settlement)
resulting from claims asserted by the Company against Escrow Agent with respect
to the performance of any of the provisions of this Agreement.
(b) The Company hereby indemnifies and holds free and harmless Escrow Agent
from any and all losses, expenses, liabilities and damages (including but not
limited to reasonable attorney's fees, and amount paid in settlement) resulting
from claims asserted by the Purchasers against Escrow Agent with respect to the
performance of any of the provisions of this Agreement.
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(c) The Purchasers and the Company, jointly and severally, hereby indemnify
and hold the Escrow Agent harmless from and against any and all losses,
damages, taxes, liabilities and expenses that may be incurred by the Escrow
Agent, arising out of or in connection with its acceptance of appointment as
the Escrow Agent hereunder and/or the performance of its duties pursuant to
this Agreement, the Purchase Agreement, the Debentures and the Warrants,
including, but not limited to, all legal costs and expenses of the Escrow Agent
incurred defending itself against any claim or liability in connection with its
performance hereunder, provided that the Escrow Agent shall not be entitled to
any indemnity for any losses, damages, taxes, liabilities or expenses that
directly result from its willful misconduct or gross negligence.
(d) In the Event of any legal action between the Parties to
this Agreement to enforce any of its terms, the legal fees of the prevailing
Party shall be paid by the Party(ies) who did not prevail.
6. Miscellaneous.
(a) All Notice of Conversions, Notice of Exercises, Objections, notices,
requests, demands and other communications hereunder shall be in writing, sent
by telecopier, upon proof of sending thereof to the following addresses:
(i) If to the Company:
Xxxxxx Xxx
CRYS-TEL Xxxxxxxxxxxxxxxxxx.xxx, Inc.
000-0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX
Xxxxxx X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to:
Xxxxxx X. Xxxxx, Esq.
_____________________
_____________________
Tel: (000) 000-0000
Fax: (000) 000-0000
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(ii) If to the Purchasers:
At the fax number set forth in the Purchase Agreement
(iii) If to the Escrow Agent:
Xxxxxx Gottbetter & Xxxxxxxx, LLP
Attn: Xxxx X. Xxxxxxxxxx, Esq.
000 Xxxxx Xxxxxx, 0' Xxxxx
Xxx Xxxx, XX 100 1 7
Tel: 000-000-0000
Fax: 000-000-0000
or at such other address as any of the parties to this Agreement may hereafter
designate in the manner set forth above to the others.
(b) This Agreement shall be construed and enforced in accordance with the
law of the State of New York applicable to contracts entered into and performed
entirely within New York.
(c) 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.
7. Termination of Escrow.
This Escrow Agreement shall be in upon the date hereof and shall terminate 91
either pursuant to Section 2(a) or (d) or upon the earlier of (i) the
conversion of the full amount of the Debentures and the exercise of the total
number of Warrants; or (ii) the Maturity Date of the Debentures. Upon the
termination of the Escrow Agreement, the Escrow Agent shall return any
unconverted Debenture Escrow Shares or unexercised Warrant Escrow Shares to the
Company.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the day and year first above written.
Escrow Agent: The Company:
XXXXXX XXXXXXXXXX & XXXXXXXX, LLP. CRYS-TEL TELECOMMUNICATIONS, INC.
__________________________________ By: ____________________________
Name: Xxxxxx Xxx
Title: President
Purchasers:
X.X. Xxxxx, Inc. XXXXXXX, INC.
By: ____________________________ By: ____________________________
Name: Name:
Title: Title:
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EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be executed by the Registered Holder in order to convert the Debenture)
Except as provided by Section 4(b) of the Debenture, the undersigned hereby
irrevocably elects to convert the above Debenture No. into shares of Common
Stock, $.001 par value per share (the "Common Stock"), of CRYS-TEL
Xxxxxxxxxxxxxxxxxx.xxx, Inc. (the "Company") according to the conditions
hereof, as of the date written below. If shares are to be issued in the name
of a person other than undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith. A fee
of $350 will be charged to the Holder for any conversion by the Escrow Agent.
No other fees will be charged to the Holder, except for such transfer taxes, if
any.
Conversion calculations:
________________________________________
Date to Effect Conversion
________________________________________
Principal Amount of Debentures
to be Converted
________________________________________
Interest to be Converted
________________________________________
Applicable Conversion Price (to the
nearest Hundredth
________________________________________
Number of Shares to be issued upon
Conversion
________________________________________
Signature
________________________________________
Name
________________________________________
Address
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ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of April 6, 1999, by and among
CRYS-TEL Xxxxxxxxxxxxxxxxxx.xxx, Inc., a Florida corporation (the "Company"),
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP (the "Escrow Agent") and the parties who have
executed this Agreement as the Purchaser on the last page hereof (individually,
the "Purchaser" and collectively, the "Purchasers") and X.X. Xxxxx, Inc.
("Xxxxx").
Recitals
A. Simultaneously with the execution of this Agreement, the Purchasers
have entered into a Convertible Debenture and Warrant Purchase Agreement, dated
as of the date hereof (the "Purchase Agreement") incorporated herein by
reference, pursuant to which the Purchasers have agreed to purchase certain
debentures (the "Debentures") of the Company.
B. The Escrow Agent is willing to act as escrow agent pursuant to the
terms of this Agreement with respect to the Purchase Price (as defined in the
Purchase Agreement) to be paid for the Debentures and the delivery of one or
more debentures representing the Debentures registered in the names of the
Purchasers as set forth in the Purchase Agreement (the "Debentures" and,
together with the Ancillary Closing Documents (as defined below), of one or
more warrants representing the Warrants registered in the name of the
Purchasers and Xxxxx or their assigns as set forth in the Purchase Agreement
(the "Warrants") and with respect to shares to be issued by the Company in
respect of conversion of the Debentures or the exercise of the Warrants, (the
Purchase Agreement, Debenture, Ancillary Closing Documents and Warrants
collectively, referred to as the "Consideration").
C. Upon the closing of the transaction contemplated by the Purchase
Agreement (the "Closing") and the occurrence of an event described in Section 2
below, the Escrow Agent shall cause the distribution of the Purchase Price,
Ancillary Closing Documents, the Debentures and the Warrants in accordance with
the terms of this Agreement.
D. All capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Purchase Agreement.
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EXHIBIT B
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase _____ shares of the Common
Stock $.001 par value per share of CRYS-TEL Xxxxxxxxxxxxxxxxxx.xxx, Inc. at
$.____ per share for a total of $_____and pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified.
The undersigned represents it is acquiring the shares solely for its own
account and not with a view toward the resale or distribution thereof except in
compliance with applicable securities laws.
________________________________________
(Signature)
________________________________________
(Date)
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