SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below, is entered into by and between ALCOHOL SENSORS INTERNATIONAL, LTD.,
a New York corporation, with headquarters located at 00 Xxxx Xxxxx, Xxxxxxxx,
Xxx Xxxx 00000 (the "Company"), and the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon exemptions from securities registration afforded
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act") and/or Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to the
conditions of this Agreement, Series B 8% Convertible Preferred Stock, $.001 par
value per share, of the Company which will be convertible into shares of Common
Stock, $.001 par value per share (the "Common Stock"), of the Company upon the
terms and subject to the conditions of such Preferred Stock, together with the
Warrants (as defined below) exercisable for the purchase of shares of Common
Stock (the "Warrant Shares"), and subject to acceptance of this Agreement by the
Company;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase; Certain Definitions. (i) The undersigned hereby agrees to
purchase from the Company Series B 8% Convertible Preferred Stock of the
Company, in the amount set forth on the signature page of this Agreement (the
"Initial Preferred Stock"), out of a total offering of $3,000,000.00 of such
Preferred Stock, and having the terms and conditions set forth in the
Certificate of Amendment to the Certificate of Incorporation of the Company
attached hereto as Annex I (the "Certificate of Designations"). The purchase
price for the Initial Preferred Stock shall be as set forth on the signature
page hereto and shall be payable in United States Dollars.
(ii) As used herein, the term "Preferred Stock" means the Initial Preferred
Stock, together with all shares, if any, of Series B 8% Convertible Preferred
Stock issued as dividends thereon, unless the context otherwise requires.
(iii) As used herein, the term "Securities" means the Preferred Stock, the
Warrants and the Common Stock issuable upon conversion of the Preferred Stock or
the exercise of the Warrants.
b. Form of Payment. The Buyer shall pay the purchase price for the Initial
Preferred Stock by delivering immediately available good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in the Joint Escrow
Instructions attached hereto as Annex II (the "Joint Escrow Instructions").
Promptly following payment by the Buyer to the Escrow Agent of the purchase
price for the Initial Preferred Stock, the Company shall deliver a Certificate
representing the Initial Preferred Stock duly executed on behalf of the Company,
to the Escrow Agent. By signing this Agreement, the Buyer and the Company, and
subject to acceptance by the Escrow Agent, each agrees to all of the terms and
conditions of, and becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as if set forth in
full.
c. Method of Payment. Payment into escrow of the purchase price for the
Preferred Stock shall be made by wire transfer of funds to:
Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 000000000
For credit to the account of Xxxxxxx & Xxxxxx, Esqs.
Account No. 637-0000000
Not later than 1:00 p.m., New York time, on the date which is two (2) New York
Stock Exchange trading days after the Company shall have accepted this Agreement
and returned a signed counterpart of this Agreement to the Escrow Agent by
facsimile, the Buyer shall deposit with the Escrow Agent the aggregate purchase
price for the Initial Preferred Stock, in immediately available funds. Time is
of the essence with respect to such payment, and failure by the Buyer to make
such payment shall allow the Company to cancel this Agreement.
d. Escrow Property. The purchase price and the certificate(s) representing
the Initial Preferred Stock delivered to the Escrow Agent as contemplated by
Sections 1(b) and (c) hereof are referred to as the "Escrow Property."
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with, the
Company as follows:
a. Without limiting the Buyer's right to sell the Common Stock pursuant to
the Registration Statement (as that term is defined in the Registration Rights
Agreement defined below), the Buyer is purchasing the Preferred Stock and the
Warrants and will be acquiring the shares of Common Stock issuable upon
conversion of the Preferred Stock (the "Converted Shares") and the Warrant
Shares for its own account for investment only and not with a view towards the
resale, public sale or distribution thereof and not with a view to or for sale
in connection with any distribution thereof.
b. The Buyer is (i) an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its investment in the
Securities.
c. All subsequent offers and sales of the Preferred Stock and Common Stock
representing the Converted Shares and Warrant Shares (such Common Stock
sometimes referred to as the "Shares") by the Buyer shall be made pursuant to
registration of the Shares under the 1933 Act and applicable state law or
pursuant to an exemption from registration available to the Buyer with respect
to each such subsequent offer and sale under the 1933 Act and applicable state
law.
d. The Buyer understands that the Preferred Stock is being offered and sold
to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Preferred Stock.
e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Preferred Stock and the offer of
the Shares which have been requested by the Buyer, including Annex V hereto. The
Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory answers to
any such inquiries. Without limiting the generality of the foregoing, the Buyer
has also had the opportunity to obtain and to review the Company's (1) Annual
Report on Form 10-K SB/A for the fiscal year ended December 31, 1996, and (2)
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 1997 and
June 30, 1997 (the "Company's SEC Documents").
f. The Buyer understands that its investment in the Securities involves a
high degree of risk.
g. The Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
h. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
i. Neither the Buyer, nor any affiliate of the Buyer nor any party
controlled by the Buyer, has entered into or has any intention of entering into
any put option, short position, hedging, or other similar position with respect
to the Preferred Stock or any shares of the Common Stock.
j. Notwithstanding the provisions hereof or of the Preferred Stock, in no
event (except with respect to the automatic conversion of the Preferred Stock as
provided in the Certificate of Designations) shall the holder be entitled to
convert any Preferred Stock to the extent that after such conversion, the sum of
(1) the number of shares of Common Stock beneficially owned by the Buyer and its
affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the Preferred Stock),
and (2) the number of shares of Common Stock issuable upon the conversion of the
Preferred Stock with respect to which the determination of this proviso is being
made, would result in beneficial ownership by the Buyer and its affiliates of
more than 4.99% of the outstanding shares of Common Stock. For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such proviso.
k. Except for such brokers or agents for whom the Buyer is solely
responsible for the payment of any fees or other compensation, the Buyer has not
retained any brokers or other agents entitled to a fee or other compensation in
connection the transactions contemplated hereby.
l. The Buyer specifically acknowledges that the Preferred Stock is junior
to the rights of the Series A Cumulative Non-redeemable Convertible Preferred
Stock of the Company (the "Series A Preferred Stock") as provided in paragraph
3(c) and Sections 4 and 8 of the Certificate of Amendment to the Certificate of
Incorporation of the Company filed with the Secretary of State of the State of
New York on December 20, 1996.
3. COMPANY REPRESENTATIONS, ETC.
Except as disclosed in Annex V, delivered in writing to the Buyer, or in
the Company's SEC Documents, the Company represents and warrants to the Buyer
that:
a. Concerning the Preferred Stock. The Preferred Stock has been duly
authorized and, when issued, will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability by
reason of being such holder. There are no preemptive rights of any stockholder
of the Company, as such, to acquire the Preferred Stock and/or the Warrants,
except for such rights which have been waived in writing by the holder thereof.
b. Reporting Company Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary other than those jurisdictions in which the failure to
so qualify would not have a material and adverse effect on the business,
operations, properties, prospects or condition (financial or otherwise) of the
Company. The Company has registered its Common Stock pursuant to Section 12 of
the 1934 Act, and the Common Stock is listed and traded on The NASDAQ/SmallCap
Market. The Company has received no notice, either oral or written, with respect
to the continued eligibility of the Common Stock for such listing, and the
Company has maintained all requirements for the continuation of such listing.
c. Authorized Shares. The Company has sufficient authorized and unissued
shares of Common Stock as may be reasonably necessary to effect the conversion
of the Preferred Stock or to issue the Warrant Shares. The Converted Shares and
the Warrant Shares have been duly authorized and, when issued upon conversion
of, or as interest on, the Preferred Stock or upon exercise of the Warrants,
each in accordance with its respective terms, will be duly and validly issued,
fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder.
d. Securities Purchase Agreement; Registration Rights Agreement and Stock.
This Agreement and the Registration Rights Agreement, the form of which is
attached hereto as Annex IV (the "Registration Rights Agreement"), and the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Company, this Agreement has been duly executed and delivered
by the Company and this Agreement is, and the Registration Rights Agreement,
when executed and delivered by the Company, will be, valid and binding
agreements of the Company enforceable in accordance with their respective terms,
subject as to enforceability to general principles of equity, and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally.
e. Non-contravention. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company, the issuance of the Securities,
and the consummation by the Company of the other transactions contemplated by
this Agreement and the Registration Rights Agreement do not and will not
conflict with or result in a breach by the Company of any of the terms or
provisions of, or constitute a default under, the (i) certificate of
incorporation or by-laws of the Company, each as currently in effect, (ii) any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company is a party or by which it or any of its properties or assets
are bound, (iii) any existing applicable law, rule, or regulation or any
applicable decree, judgment, or order of any court, United States federal or
state regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets, or (iv) the
Company's listing agreement for its Common Stock, except such conflict, breach
or default which would not have a material adverse effect on the transactions
contemplated herein.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the Stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
g. SEC Filings. None of the Company's SEC Documents contained, at the time
they were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. Except as set forth on Annex V hereto, the Company has since August
1, 1996 timely filed all requisite forms, reports and exhibits thereto with the
Securities and Exchange Commission.
h. Absence of Certain Changes. Since January 1, 1997, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, or results of operations of the
Company, except as disclosed in Annex V or in the Company's SEC Documents.
i. Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally, and other than facts
disclosed in the documents referred to in Section 2(e) hereof), that has not
been disclosed in writing to the Buyer that (i) would reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs, properties or assets of the Company or (ii) would
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement or any of the
documents and agreements contemplated hereby (collectively, including this
Agreement, the "Transaction Agreements").
j. Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company or any of its subsidiaries, wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
properties, business, condition (financial or otherwise), results of operations
or prospects of the Company and its subsidiaries taken as a whole or the
transactions contemplated by any of the Transaction Agreements or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, any of the Transaction
Agreements.
k. Absence of Events of Default. Except as set forth in Section 3(e)
hereof, no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such agreement), has occurred
and is continuing, which would have a material adverse effect on the Company's
financial condition or results of operations.
l. No Default. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it or its property is bound.
m. Prior Issues. Except as set forth in Annex V, during the twelve (12)
months preceding the date hereof, the Company has not issued any securities. The
presently outstanding unconverted shares of each such issuance as at September
18, 1997 are set forth in Annex V.
n. No Brokers. The Company acknowledges that fees and compensation due to
Settondown Capital International, Ltd. and Corporate Capital Management, LLC.
(the "Identified Brokers") in connection with the transactions contemplated
hereby are the obligation solely of the Company and not of the Buyer. Except for
the Identified Brokers and such other brokers or agents for whom the Company is
solely responsible for the payment of any fees or other compensation, the
Company has not retained any brokers or other agents entitled to a fee or other
compensation in connection the transactions contemplated hereby.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1) the Preferred
Stock has not been and is not being registered under the provisions of the 1933
Act and, except as provided in the Registration Rights Agreement, the Shares
have not been and are not being registered under the 1933 Act, and may not be
transferred unless (A) subsequently registered thereunder or (B) the Buyer shall
have delivered to the Company an opinion of counsel, reasonably satisfactory in
form, scope and substance to the Company, to the effect that the Securities to
be sold or transferred may be sold or transferred pursuant to an exemption from
such registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of the
Securities under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.
b. Restrictive Legend. The Buyer acknowledges and agrees that the Preferred
Stock and the Warrants have not been registered under the 1933 Act, and, until
such time as the Shares have been registered under the 1933 Act as contemplated
by the Registration Rights Agreement and sold in accordance with such
Registration Statement, certificates and other instruments representing any of
the Securities shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of any of the
Securities):
THE SECURITIES REPRESENTED HEREBY (THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
c. Registration Rights Agreement. The parties hereto agree to enter into
the Registration Rights Agreement, in substantially the form attached hereto as
Annex IV, on or before the Closing Date (as defined in Section 7 hereof).
d. Filings. The Company undertakes and agrees to make all necessary filings
in connection with the sale of the Preferred Stock to the Buyer under any United
States federal, state and local laws and regulations, or by any domestic
securities exchange or trading market, and to provide a copy thereof to the
Buyer promptly after such filing.
e. Reporting Status. So long as the Buyer beneficially owns any of the
Preferred Stock, the Company shall file all reports required to be filed with
the SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the Company shall
not terminate its status as an issuer required to file reports under the 1934
Act even if the 1934 Act or the rules and regulations thereunder would permit
such termination. The Company will take all action under its control to continue
the listing and trading of its Common Stock on The NASDAQ Stock Market and will
comply in all respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the National Association of Securities
Dealers, Inc. ("NASD") or The NASDAQ Stock Market.
f. Use of Proceeds. Except for loans to Alcohol Sensors (Europe), Plc,
which is an 80%-owned subsidiary of the Company, the Company will use the
proceeds from the sale of the Preferred Stock (excluding amounts paid by the
Company for legal fees and finder's fees in connection with the sale of the
Preferred Stock) for internal working capital purposes , and shall not, directly
or indirectly, use such proceeds for any loan to or investment in any other
corporation, partnership enterprise or other person.
g. Certain Agreements. (i) The Company covenants and agrees that it will
not, without the prior written consent of the Buyer, enter into any subsequent
or further offer or sale of Common Stock or securities convertible into Common
Stock with any third party until the expiration of sixty (60) days after the
effective date of the Registration Statement (the "Effective Date").
(ii) Subject, with respect to clauses (x) and (y) hereof, to the conditions
of subparagraph (g)(iii), the provisions of subparagraph (g)(i) will not apply
to (x) the issuance of securities (other than for cash) in connection with a
merger, consolidation, sale of assets, disposition or acquisition of a business,
product or license by the Company, strategic alliance, bank loan or other credit
facility agreement, or the exercise of options, (y) the exchange of the capital
stock for assets, stock or other joint venture interests, or (z) the issuance of
shares of Common Stock upon the exercise or conversion of the outstanding
warrants or convertible securities outstanding on the date of this Agreement and
specified on Annex VII to this Agreement, which Annex VII summarizes the terms
of the warrant exercise, conversion, registration and other rights, if any, held
by the holder thereof.
(iii) Any action contemplated under either clause (x) or clause (y) of
subparagraph (g)(ii) is subject to the condition that registration rights, if
any, in connection with such action shall not require the filing of a
Registration Statement in respect of such stock prior to thirty (30) days after
the Effective Date.
h. Right of First Refusal. (i) During the period commencing on the sixtieth
(60th) day after the Effective Date and continuing through and including
December 20, 1998 (the "Restricted Period"), the Company hereby grants to the
Buyer, subject to the Existing Right (as defined below), the right of first
refusal (the "Right of First Refusal") to purchase up to $2,000,000 of New
Securities (as defined below) that the Company may, from time to time and in one
or more transactions, propose to sell and issue. This Right of First Refusal
shall be subject to the provisions of this Section 4(h).
(ii) The term "New Securities" means any offering by the Company of any
capital stock or debentures (provided such stock or debentures is or is
convertible into Common Stock), whether now authorized or not; provided,
however, that the term "New Securities" does not include, subject to the
conditions set forth in Section 4(g)(iii) hereof, the issuance of any capital
stock or debenture contemplated by clauses (x), (y) and (z) of Section 4(g)(ii)
hereof.
(iii) In the event that the Company proposes to undertake an issuance of
New Securities during the Restricted Period, the Company shall give written
notice thereof (an "Offering Notice"). The Offering Notice shall specify, in
detail, the type of New Securities, the price and the general terms and
conditions upon which the Company proposes to issue the same.
(iv) The Buyer shall have the right, for a period (the "Exercise Period")
expiring at 11:59 PM (Eastern Time) on the twentieth (20th) business day after
the giving of the Offering Notice, to purchase up to $2,000,000 of the New
Securities for the price and on the general terms and conditions specified in
the Offering Notice. Such exercise shall be effected by the Buyer's giving
written notice of such exercise (the "Exercise Notice") to the Company as
hereinafter provided. If less than all of the New Securities are to be
purchased, the Exercise Notice shall state the quantity of the New Securities
available to be purchased.
(v) The term "Existing Right" means the right granted by the Company to
American International Insurance Company ("AIIC") under Section 3.4 of that
certain Shareholders Agreement, dated as of December 20, 1996, to which, among
others, AIIC and the Company are parties. Anything herein to the contrary, the
Right of First Refusal shall only be effective with respect to New Securities
which (A) AIIC specifically declines to purchase by exercise of the Existing
Right or (B) AIIC does not affirmatively purchase by exercise of the Existing
Right prior to the expiration of Existing Right with respect to such New
Securities. The Company will provide written notice to the Buyer promptly when
either condition (A) or condition (B) of the immediately preceding sentence is
effective with respect to any New Securities (an "Non-exercise Notice") and the
Buyer shall thereupon have the right to exercise the Right of First Refusal
until the later of (1) the last day of the Exercise Period or (2) five (5)
business days after the Buyer's receipt of the Non-exercise Notice (the
"Extended Exercise Period").
(vi) In the event the Buyer fails to exercise in full the Right of First
Refusal before the expiration of the Exercise Period or, if applicable, the
Extended Exercise Period, the Company shall have the right, for a period of
sixty (60) days thereafter (the "Third Party Sale Period"), to sell the New
Securities as to which the Buyer did not exercise the Right of First Refusal to
one or more third parties at a price and upon terms and conditions no more
favorable to the purchasers thereof than specified in the Offering Notice. In
the event the Company has not sold the New Securities before the expiration of
the Third Party Sale Period, the Company shall not sell any New Securities
(whether the New Securities described in the Offering Notice or other New
Securities) without affording the Buyer the right, subject to the Existing
Right, if any, to exercise the Right of First Refusal as provided herein.
(vii) Anything herein to the contrary notwithstanding, the Buyer may
exercise the Right of First Refusal with respect to any proposed offering of New
Securities as to which the Company has given or should have given an Offering
Notice during the Restricted Period, even if the Exercise Period or Extended
Exercise Period expires after the Restricted Period.
(viii) This Section 4(h) shall not limit in any respects any other
obligations of the Company under the Transaction Agreements.
i. Available Shares. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield the number of shares of Common Stock issuable (i) at
conversion as may be required to satisfy the conversion rights of the Buyer
pursuant to the terms and conditions of the Preferred Stock and (ii) upon
exercise as may be required to satisfy the exercise rights of the Buyer pursuant
to the terms and conditions of the Warrants.
j. Warrants. The Company agrees to issue to the Buyer on the Closing Date
transferable, divisible warrants with cashless exercise rights for the purchase
of 50,000 shares of Common Stock (the "Warrants"). The Warrants shall bear an
exercise price per share of Common Stock equal to 105% of the closing bid price
of the Common Stock on the Closing Date, shall be immediately exercisable and
for a period of five (5) years thereafter, and shall be in the form annexed
hereto as Annex VI, together with registration rights as provided in the
Registration Rights Agreement.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of the aggregate purchase
price for the Preferred Stock in accordance with Section 1(c) hereof, the
Company will irrevocably instruct its transfer agent to issue Common Stock from
time to time upon conversion of the Preferred Stock in such amounts as specified
from time to time by the Company to the transfer agent, bearing the restrictive
legend specified in Section 4(b) of this Agreement prior to registration of the
Shares under the 1933 Act, registered in the name of the Buyer or its nominee
and in such denominations to be specified by the Buyer in connection with each
conversion of the Preferred Stock. The Company covenants and agrees that no
instruction other than such instructions referred to in this Section 5 and stop
transfer instructions to give effect to Section 4(a) hereof prior to
registration and sale of the Shares under the 1933 Act will be given by the
Company to the transfer agent and that the Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement, and applicable
law. Nothing in this Section shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws with respect to the
offer or sale of any of the Securities. If the Buyer provides the Company with
an opinion of counsel reasonably satisfactory to the Company that registration
of a resale by the Buyer of any of the Securities in accordance with clause
(1)(B) of Section 4(a) of this Agreement is not required under the 1933 Act, the
Company shall (except as provided in clause (2) of Section 4(a) of this
Agreement and to the extent of any applicable law) permit the transfer of the
Securities and, in the case of the Converted Shares or Warrant Shares, as the
case may be, promptly instruct the Company's transfer agent to issue one or more
certificates for Common Stock without legend in such name and in such
denominations as specified by the Buyer.
b. Subject to the completeness and accuracy of the Buyer's representations
and warranties herein, upon the conversion of any Preferred Stock by a person
who is a non-U.S. Person, and following the expiration of any applicable
Restricted Period (as those terms are defined in Regulation S), the Company,
shall, at its expense, take all necessary action (including the issuance of an
opinion of counsel) to assure that the Company's transfer agent shall issue
stock certificates without restrictive legend or stop orders in the name of
Buyer (or its nominee (being a non-U.S. Person) or such non-U.S. Persons as may
be designated by Buyer) and in such denominations to be specified at conversion
representing the number of shares of Common Stock issuable upon such conversion,
as applicable. Nothing in this Section 5, however, shall affect in any way
Buyer's or such nominee's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
c. The Company will permit the Buyer to exercise its right to convert the
Preferred Stock by telecopying an executed and completed Notice of Conversion to
the Company and delivering within three (3) business days thereafter, the
original Notice of Conversion and the certificates representing the Preferred
Stock being converted to the Company by express courier, with a copy to the
transfer agent. Each date on which a Notice of Conversion is telecopied to and
received by the Company in accordance with the provisions hereof shall be deemed
a Conversion Date. The Company will transmit the certificates representing the
Converted Shares (together with the certificates representing the Preferred
Stock not being so converted) to the Buyer via express courier, by electronic
transfer or otherwise, within three business days after receipt by the Company
of the original Notice of Conversion and the certificate representing the
Preferred Stock being converted (the "Delivery Date").
d. The Company understands that a delay in the issuance of the Shares of
Common Stock beyond the Delivery Date could result in economic loss to the
Buyer. As compensation to the Buyer for such loss, the Company agrees to pay
late payments to the Buyer for late issuance of Shares upon Conversion in
accordance with the following schedule (where "No. Business Days Late" is
defined as the number of business days beyond five (5) business days from
Delivery Date:
Late Payment For Each
$10,000 of Debenture
No. Business Days Late Principal Amount Being Converted
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each Business
Day Late beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Buyer's right to
pursue actual damages for the Company's failure to issue and deliver the Common
Stock to the Buyer. Furthermore, in addition to any other remedies which may be
available to the Buyer, in the event that the Company fails for any reason to
effect delivery of such shares of Common Stock within five (5) business days
after the Delivery Date, the Buyer will be entitled to revoke the relevant
Notice of Conversion by delivering a notice to such effect to the Company
whereupon the Company and the Buyer shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion.
e. In lieu of delivering physical certificates representing the Common
Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of the Buyer, so long as the certificates
therefor do not bear a legend and the Buyer thereof is not obligated to return
such certificate for the placement of a legend thereon, the Company shall use
its best efforts to cause its transfer agent to electronically transmit the
Common Stock issuable upon conversion to the Buyer by crediting the account of
Buyer's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system.
6. DELIVERY INSTRUCTIONS.
The Preferred Stock shall be delivered by the Company to the Escrow Agent
pursuant to Section 1(b) hereof, on a delivery against payment basis, on the
Closing Date.
7. CLOSING DATE.
a. The date and time of the issuance and sale of the Preferred Stock (the
"Closing Date") shall occur no later than 12:00 Noon, New York time on the first
NYSE trading day after the fulfillment or waiver of all closing conditions
pursuant to Sections 8 and 9 hereof, or such other mutually agreed to time. The
closing shall occur on such date at the offices of the Escrow Agent.
Notwithstanding anything to the contrary contained herein, the Escrow Agent will
be authorized to release the Escrow Property only upon satisfaction of the
conditions set forth in Sections 8 and 9 hereof.
b. Each of the parties agrees to use its best efforts to effectuate the
closing of the transactions contemplated by this Agreement.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the Initial
Preferred Stock to the Buyer pursuant to this Agreement on the Closing Date is
conditioned upon:
a. The receipt and acceptance by the Company of this Agreement (such
acceptance to be evidenced by the Company's execution and delivery of this
Agreement) for the sale of at least Three Million ($3,000,000.00) Dollars in
liquidation value of Preferred Stock (or such lesser amount as the Company, in
its sole discretion, shall determine);
b. Delivery by the Buyer to the Escrow Agent of good funds as payment in
full of an amount equal to the purchase price for the Initial Preferred Stock in
accordance with Section 1(c) hereof;
c. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Buyer contained in this Agreement, each as
if made on such Closing Date, and the performance by the Buyer on or before such
Closing Date of all covenants and agreements of the Buyer required to be
performed on or before such Closing Date;
d. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained; and
e. On the Closing Date, the Company shall have received the Registration
Rights Agreement annexed hereto as Annex IV (the "Registration Rights
Agreement") duly executed and delivered by the Buyer.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the Initial
Preferred Stock on the Closing Date is conditioned upon:
a. The receipt and acceptance by the Buyer of this Agreement (to be
evidenced by the Buyer's execution and delivery of this Agreement) for the
purchase of the Initial Preferred Stock;
b. Delivery by the Company to the Escrow Agent of certificate(s)
representing the Initial Preferred Stock in accordance with this Agreement;
c. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such Closing Date, and the performance by the Company on or before
such Closing Date of all covenants and agreements of the Company required to be
performed on or before such Closing Date; and
d. On the Closing Date, the Buyer shall have received (i) an opinion of
counsel for the Company, dated the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, to the effect set forth in Annex III
attached hereto, and (ii) the Registration Rights Agreement duly executed and
delivered by the Company.
10. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the City of New York or the state courts
of the State of New York sitting in the City of New York in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions.
b. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.
c. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original.
d. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
e. If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
f. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
g. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
11. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of
(i) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(ii) the seventh business day after deposit, postage prepaid, in the United
States Postal Service by registered or certified mail, or
(iii) the third business day after mailing by international express
courier, with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
COMPANY: ALCOHOL SENSORS INTERNATIONAL, LTD.
00 Xxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
ATTN: President
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Moritt, Xxxx & Hamroff, LLP
000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
BUYER: At the address set forth on the signature page of this Agreement.
ESCROW AGENT: Xxxxxxx & Xxxxxx, Esqs.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
representations and warranties herein shall survive the execution and delivery
of this Agreement and the delivery of the Preferred Stock and the Purchase
Price, and shall inure to the benefit of the Buyer and its successors and
assigns.
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer or
one of its officers thereunto duly authorized as of the date set forth below.
NUMBER OF SHARES OF PREFERRED STOCK TO BE PURCHASED: 300
AGGREGATE PURCHASE PRICE OF SUCH PREFERRED STOCK: $3,000,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 24h day of September, 1997.
-------------------------------- ---------------------------------
Address Printed Name of Subscriber
--------------------------------
By: _____________________________
Telecopier No. _________________ (Signature of Authorized Person)
---------------------------------
Printed Name and Title
--------------------------------
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
ALCOHOL SENSORS INTERNATIONAL, LTD.
By: ________________________
Title: ________________________
Date: ________________________
