SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of September
30, 1997, by and among Smart Choice Automotive Group, Inc., a Florida
corporation, with headquarters located at 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxx 00000 (the "Company"), and the investors listed on the Schedule of
Buyers attached hereto (individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of 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");
B. The Company has authorized the following new series of its Preferred
Stock, par value $.01 per share (the "Preferred Stock"): the Company's Series A
Redeemable Convertible Preferred Stock (the "Preferred Shares"), which shall be
convertible into shares of the Company's Common Stock, par value $.01 per share
(the "Common Stock") (as converted, the "Conversion Shares"), in accordance with
the terms of the Company's Second Articles of Amendment to Articles of
Incorporation setting forth the designations, preferences and rights of the
Preferred Shares, substantially in the form attached hereto as Exhibit A (the
"Articles of Amendment");
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, initially an aggregate of 300 of the Preferred Shares (the
"Initial Preferred Shares") in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers and one warrant, in substantially the
form attached hereto as Exhibit E (the "Warrants"), to acquire 300 shares of
Common Stock for each Preferred Share purchased, which Warrants shall expire
five years after the date of issuance;
D. Subject to the terms and conditions set forth in this Agreement,
each Buyer shall purchase a number of additional Preferred Shares, along with
the related Warrant, equal to up to an aggregate of 100 Preferred Shares (the
"Additional Preferred Shares"), pro rata based on the number of Initial
Preferred Shares each Buyer purchased in relation to the total number of Initial
Preferred Shares; and
E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. Purchase of Preferred Shares. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 6(a) and 7(a) below, the
Company shall issue and sell to the Buyers and the Buyers shall purchase from
the Company an aggregate of 300 Initial Preferred Shares, in the respective
amounts set forth opposite each Buyer's name on the Schedule of Buyers along
with one Warrant for each Preferred Share purchased (the "Initial Closing").
Subject to the satisfaction (or waiver) of the conditions set forth in Sections
1(c), 6(b) and 7(b) below, at the option of each Buyer, the Company shall issue
and sell to each such Buyer and each such Buyer shall purchase from the Company,
an aggregate of up to 100 Additional Preferred Shares, along with the related
Warrants, pro rata based on the number of Initial Preferred Shares each Buyer
purchased in relation to the total number of Initial Preferred Shares (the
"Additional Closing"). The Initial Closing and the Additional Closing
collectively are referred to in this Agreement as the "Closings." The purchase
price (the "Purchase Price") of each Preferred Share and the related Warrant at
each of the Closings shall be $10,000.
b. The Initial Closing Date. The date and time of the Initial
Closing (the "Initial Closing Date") shall be 10:00 a.m. Central Time, within
three (3) business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6(a) and 7(a) below (or such later date as is mutually agreed to by the Company
and the Buyers). The Initial Closing shall occur on the Initial Closing Date at
the offices of Xxxxxx Xxxxxx & Zavis, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000-0000.
c. The Additional Closing Date. The date and time of the
Additional Closing (the "Additional Closing Date") shall be 10:00 a.m. Central
Time, on the date specified in the Company's Additional Share Notice (as defined
below), subject to satisfaction (or waiver) of the conditions to the Additional
Closing set forth in Sections 6(b) and 7(b) and the conditions set forth in this
paragraph (or such later date as is mutually agreed to by the Company and the
Buyers). Within one business day of the date that the Registration Statement is
declared effective by the SEC, the Company shall deliver written notice to each
of the Buyers (a "Additional Share Notice") setting forth (i) each Buyer's pro
rata portion (based on the number of Initial Preferred Shares each Buyer
purchased in relation to the total number of Initial Preferred Shares purchased
by the Buyers) of the aggregate number of Additional Preferred Shares, which
aggregate number shall equal 100 Preferred Shares, along with the related
Warrants, which each Buyer is required, subject to the satisfaction of the
conditions set forth in Sections 1(d), 6(b) and 7(b), to purchase at the
Additional Closing, (ii) the aggregate Purchase Price for each such Buyer's
Additional Preferred Shares and the related Warrants and (iii) the date selected
by the Company for the Additional Closing Date, which Additional Closing Date
shall be not less than 20 nor more than 30 days after the Buyer's receipt of the
Company's Additional Share Notice. The Initial Closing Date and the Additional
Closing Date collectively are referred to in this Agreement as the "Closings
Dates."
d. The Additional Notice Conditions. Notwithstanding anything
in this agreement to the contrary, the Company shall not be entitled to deliver
an Additional Share Notice and the Buyers shall not be required to purchase the
Additional Preferred Shares along with the related Warrants unless, in addition
to the satisfaction of the requirements of Sections 6(b) and 7(b), all of the
following conditions are satisfied: (i) if stockholder approval of the issuance
of the Securities (as defined below) would be required (absent Section 13 of the
Articles of Amendment) by the rules and regulations of The Nasdaq Stock Market,
Inc. in order for the Company to issue all of the Securities, then the Company's
stockholders shall have approved the issuance of the Securities on or prior to
the date the Company delivers its Additional Share Notice (the "Additional Share
Notice Date"); (ii) as of the Additional Share Notice Date and the Additional
Closing Date, the Company's $35,000,000 revolving credit facility with FINOVA
has not (A) been reduced to less than $31,500,000 and (B) been terminated unless
it also has been replaced with a credit facility of at least $35,000,000, an
interest rate not higher than under the current FINOVA credit facility and with
a financial institution with at least $1,000,000,000 in assets; (iii) during the
period beginning on the Additional Share Notice Date and ending on and including
the Additional Closing Date, the Registration Statement shall be effective and
available for the sale of no less than 125% of the sum of (A) the number of
Conversion Shares then issuable upon the conversion of all outstanding Preferred
Shares and the Additional Preferred Shares to be issued by the Company, (B) the
number of Warrant Shares (as defined in Section 2(a) below) then issuable upon
exercise of all outstanding Warrants and the Warrants to be issued in connection
with the Additional Preferred Shares and (C) the number of Conversion Shares and
Warrant Shares that are then held by the Buyers, (iv) during the period
beginning on the Additional Share Notice Date and ending on and including the
Additional Closing Date, the Common Stock is designated for quotation on The
Nasdaq SmallCap Market or a national securities exchange and is not suspended
from trading; (v) no event constituting a Major Business Event (as defined
below), including an agreement to consummate a Major Business Event, or a
Triggering Event set forth in Section 3(d)(iv) of the Articles of Amendment
shall have occurred from the period beginning on the Initial Closing Date and
ending on and including the Additional Closing Date; (vi) during the period
beginning on the Initial Closing Date and ending on and including the Additional
Closing Date, the Company shall have delivered Conversion Shares upon conversion
of the Preferred Shares and Warrant Shares upon exercise of the Warrants to the
Buyers on a timely basis as set forth in Section 2(f)(ii) of the Articles of
Amendment and Sections 2(a) and 2(b) of the Warrants, respectively; and (vii)
the Company otherwise has satisfied its obligations under, is in compliance with
and is not in default under or breach of this Agreement, the Registration Rights
Agreement, the Articles of Amendment and the Warrants. For purposes of this
Section 1(d) "Major Business Event" means (x) consolidation, merger or other
business combination of the Company with another entity (other than pursuant to
a migratory merger effected solely for the purpose of changing the Company's
jurisdiction of incorporation), (y) the sale or transfer of all or substantially
all of the Company's assets or (z) a purchase, tender or exchange offer made to
and accepted by the holders of more than 25% of the outstanding shares of Common
Stock.
e. Form of Payment. On each of the Closing Dates, (i) each
Buyer shall pay the Purchase Price to the Company for the Preferred Shares and
the Warrants to be issued and sold to such Buyer at the respective Closing, by
wire transfer of immediately available funds in accordance with the Company's
written wire instructions, and (ii) the Company shall deliver to each Buyer,
stock certificates (in the denominations as such Buyer shall request) (the
"Stock Certificates") representing such number of the Preferred Shares which
such Buyer is then purchasing (as indicated opposite such Buyer's name on the
Schedule of Buyers) along with a Warrant exercisable for 300 shares of Common
Stock for each Preferred Share purchased, duly executed on behalf of the Company
and registered in the name of such Buyer or its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer (i) is acquiring the
Preferred Shares and the Warrants, (ii) upon conversion of the Preferred Shares,
will acquire the Conversion Shares then issuable and (iii) upon exercise of the
Warrants, will acquire the shares of Common Stock issuable upon exercise thereof
(the "Warrant Shares") (the Preferred Shares, the Conversion Shares, the
Warrants and the Warrant Shares collectively are referred to herein as the
"Securities"), for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of Preferred Shares at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. Such Buyer understands that the
Securities are 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 in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.
d. Information. Such 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 Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. Such Buyer understands that its investment in the Securities
involves a high degree of risk. Such Buyer has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.
e. No Governmental Review. Such 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
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a form reasonably acceptable to the Company,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such Buyer provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated
under the 1933 Act (or a successor rule thereto)("Rule 144"); (ii) any sale of
the Securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 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
defined in the 0000 Xxx) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Preferred Shares and the Warrants and, until
such time as the sale of the Conversion Shares and the Warrant Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act, (ii) in connection with a
sale transaction, such holder provides the Company with an opinion of counsel,
in a form reasonably acceptable to the Company, to the effect that a public
sale, assignment or transfer of such Securities may be made without registration
under the 1933 Act, or (iii) such holder provides the Company with reasonable
assurances that such Securities can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a particular date that
can then be immediately sold. Each Buyer acknowledges, covenants and agrees to
sell the Securities represented by a certificate(s) from which the legend has
been removed, only pursuant to (i) a registration statement effective under the
1933 Act, or (ii) advice of counsel that such sale is exempt from registration
required by Section 5 of the 1933 Act.
h. Authorization; Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that country
specified in its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company and its
subsidiaries (a complete list of which is set forth in Schedule 3(a)) are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means any material adverse effect on the
business, properties, assets, operations, results of operations, financial
condition or prospects of the Company and its subsidiaries, if any, taken as a
whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith.
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement and
each of the other agreements entered into by the parties hereto in connection
with the transactions contemplated by this Agreement (collectively, the
"Transaction Documents"), and to issue the Securities in accordance with the
terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents, the Articles of Amendment and the Warrants by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Preferred Shares and the
Warrants and the reservation for issuance and the issuance of the Conversion
Shares and the Warrant Shares issuable upon conversion or exercise thereof, have
been duly authorized by the Company's Board of Directors and no further consent
or authorization is required by the Company, its Board of Directors or its
stockholders, (iii) the Transaction Documents and the Warrants have been duly
executed and delivered by the Company, (iv) the Transaction Documents and the
Warrants constitute the valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies, and (v) prior to the Closing Date, the Articles of Amendment has been
filed with the Secretary of State of the State of Florida and will be in full
force and effect, enforceable against the Company in accordance with its terms.
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 100,000,000 shares of Common Stock,
of which as of September 29, 1997, 9,278,385 shares were issued and outstanding,
175,000 shares are reserved for issuance pursuant to the Company's stock option
and purchase plans and 5,595,639 shares are reserved for issuance pursuant to
securities (other than the Preferred Shares and the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000,000
shares of preferred stock, none of which as of the date were issued and
outstanding. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c), no shares of Common Stock or Preferred Stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as disclosed in Schedule 3(c), as
of the effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement).
Except as disclosed in Schedule 3(c), there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement. The Company has
furnished to the Buyers true and correct copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the "Articles of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Preferred Shares and the
Warrants are duly authorized and, upon issuance in accordance with the terms
hereof, shall be (i) validly issued, fully paid and non-assessable, (ii) free
from all taxes, liens and charges with respect to the issue thereof and (iii)
entitled to the rights and preferences set forth in the Articles of Amendment.
1,300,000 shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(f) below) initially have been duly
authorized and reserved for issuance upon conversion of the Preferred Shares and
upon exercise of the Warrants. Upon conversion or exercise in accordance with
the Articles of Amendment or the Warrants, as the case may be, the Conversion
Shares and the Warrant Shares will be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. The issuance by the Company of the Securities is exempt
from registration under the 1933 Act.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not (i)
result in a violation of the Articles of Incorporation, any Articles of
Amendment, Preferences and Rights of any outstanding series of Preferred Stock
of the Company or the By-laws or (ii) 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 material agreement, indenture or instrument to which the
Company or any of its subsidiaries is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the principal
market or exchange on which the Common Stock is traded or listed) applicable to
the Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected. Except as disclosed in
Schedule 3(e), neither the Company nor its subsidiaries is in violation of any
term of or in default under the Articles of Incorporation, any Articles of
Amendment, Preferences and Rights of any outstanding series of Preferred Stock
or the By-laws or their organizational charter or by-laws, respectively, or
(except for possible defaults which would not individually or in the aggregate
have a Material Adverse Effect) any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, ordinance, regulation of any governmental entity,
except for involuntary violations which would not individually or in the
aggregate have a Material Adverse Effect. Except as specifically contemplated by
this Agreement and as required under the 1933 Act, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance with the terms
hereof or thereof. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
f. SEC Documents; Financial Statements. Since September 30,
1995, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). The Company has delivered to the Buyers or their respective
representatives true and complete copies of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 2(d) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstance under which they are or
were made, not misleading. Neither the Company nor any of its subsidiaries or
any of their officers, directors, employees or agents have provided the Buyers
with any material, nonpublic information.
g. Absence of Certain Changes. Except as disclosed in Schedule
3(g), since September 30, 1996, there has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
the Company or its subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings.
h. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's subsidiaries,
wherein an unfavorable decision, ruling or finding would (i) adversely affect
the validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein or (ii), except as expressly set forth in the SEC Documents
or in Schedule 3(h), have a Material Adverse Effect.
i. Acknowledgment Regarding Buyers' Purchase of Preferred
Shares. The Company acknowledges and agrees that each of the Buyers is acting
solely in the capacity of arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated thereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
of the Buyers or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to such Buyer's purchase of the Securities. The Company
further represents to each Buyer that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or its
subsidiaries or their respective business, properties, prospects, operations or
financial condition, which has not been publicly announced or disclosed in
writing to the Buyers.
k. No General Solicitation. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
l. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of The Nasdaq Stock Market, Inc., nor will the
Company or any of its subsidiaries take any action or steps that would require
registration of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings.
m. Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. Neither the
Company nor any of its subsidiaries is a party to a collective bargaining
agreement, and the Company and its subsidiaries believe that relations with
their employees are good.
n. Intellectual Property Rights. The Company and its
subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(n), none of the
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate within two years from the date of this Agreement. The Company and its
subsidiaries do not have any knowledge of any infringement by the Company or its
subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on Schedule 3(n), there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company and its subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties.
o. Environmental Laws. The Company and its subsidiaries (i)
are in compliance with any and all applicable material foreign, federal, state
and local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have received all material permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval where the failure
to so comply would have, individually or in the aggregate, a Material Adverse
Effect.
p. Title. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(p) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company or any of
its subsidiaries. Any real property and facilities held under lease by the
Company or any of its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries.
q. Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.
r. Regulatory Permits. The Company and its subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
s. Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
t. No Materially Adverse Contracts, Etc. Neither the Company
nor any of its subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
u. Tax Status. Except as set forth on Schedule 3(u), the
Company and each of its subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
v. Certain Transactions. Except as set forth on Schedule 3(v)
and in the SEC Documents and except for arm's length transactions pursuant to
which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and other
than the grant of stock options disclosed on Schedule 3(c), none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company or any of its subsidiaries (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
w. Dilutive Effect. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the Preferred
Shares and the Warrant Shares issuable upon exercise of the Warrants will
increase in certain circumstances. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Preferred Shares in
accordance with this Agreement and the Articles of Amendment and its obligation
to issue the Warrant Shares upon exercise of the Warrants in accordance with
this Agreement and the Warrants, is, in each case, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to
each Buyer promptly after such filing. The Company shall, on or before each of
the Closing Dates, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the Securities
for, sale to the Buyers at each of the Closings pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or prior to
the Closing Date.
c. Reporting Status. Until the earlier of (i) the date as of
which the Investors (as that term is defined in the Registration Rights
Agreement) may sell all of the Conversion Shares and the Warrant Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which (A) the Investors shall have sold all the
Conversion Shares and the Warrant Shares and (B) none of the Preferred Shares or
Warrants is outstanding (the "Registration Period"), the Company shall file all
reports required to be filed with the SEC pursuant to 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 otherwise permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the
sale of the Preferred Shares for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following to each Investor (as that term is defined in the Registration Rights
Agreement) during the Registration Period: (i) within two (2) days after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
registration statements or amendments filed pursuant to the 1933 Act; (ii) on
the same day as the release thereof, facsimile copies of all press releases
issued by the Company or any of its subsidiaries and (iii) copies of any notices
and other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.
f. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 125% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and the Warrant Shares.
g. Additional Issuances; Right of First Refusal. Subject to
the exceptions described below, the Company agrees that during the period
beginning on the date hereof and ending 180 days following the Initial Closing
Date (the "Lock-Up Period"), neither the Company nor its subsidiaries will,
without the prior written consent of the holders of the Preferred Shares
representing at least two-thirds (2/3) of the Preferred Shares then outstanding,
negotiate or contract with any party for any equity financing (including any
debt financing with a significant equity component) or issue any equity
securities of the Company or any subsidiary or securities convertible or
exchangeable into or for equity securities of the Company or any subsidiary
(including debt securities with a significant equity component) in any form. In
addition, subject to the exceptions described below, the Company and its
subsidiaries shall not negotiate or contract with any party for any equity
financing (including any debt financing with a significant equity component) or
issue any equity securities of the Company or any subsidiary or securities
convertible or exchangeable into or for equity securities of the Company or any
subsidiary (including debt securities with a significant equity component) in
any form ("Future Offerings") during the period beginning on the last day of the
Lock-Up Period and ending on the last day that any Preferred Shares are
outstanding, unless it shall have first delivered to each Buyer or a designee
appointed by such Buyer written notice (the "Future Offering Notice") describing
the proposed Future Offering, including the terms and conditions thereof, and
providing each Buyer an option to purchase up to its Aggregate Percentage (as
defined below), as of the date of delivery of the Future Offering Notice, in the
Future Offering (the limitations referred to in this and the preceding sentence
are collectively referred to as the "Capital Raising Limitation"). For purposes
of this Section 4(g), "Aggregate Percentage" at any time with respect to any
Buyer shall mean the percentage obtained by dividing (i) the aggregate number of
Conversion Shares issued or issuable, as if a conversion occurred on such date,
upon conversion of the Initial Preferred Shares held by such Buyer by (ii) the
aggregate number of Conversion Shares issued or issuable, as if a conversion
occurred on such date, upon conversion of the Initial Preferred Shares held by
the Buyers. A Buyer can exercise its option to participate in a Future Offering
by delivering written notice thereof to participate to the Company within ten
(10) business days of receipt of a Future Offering Notice, which notice shall
state the quantity of securities being offered in the Future Offering that such
Buyer will purchase, up to its Aggregate Percentage, and that number of
securities it is willing to purchase in excess of its Aggregate Percentage. In
the event the Buyers fail to elect to fully participate in the Future Offering
within the periods described in this Section 4(g), the Company shall have 30
days thereafter to sell the securities of the Future Offering respecting which
such Buyer's rights were not exercised, upon terms and conditions, no more
favorable to the purchasers thereof than specified in the Future Offering
Notice. In the event the Company has not sold such securities of the Future
Offering within such 30 day period, the Company shall not thereafter issue or
sell such securities without first offering such securities to the Buyers in the
manner provided in this Section 4(g). The Capital Raising Limitation shall not
apply to (i) a loan from a commercial bank, (ii) any transaction involving the
Company's issuances of securities in connection with (A) a merger or
consolidation, (B) any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or (C) the disposition or
acquisition of a business, product or license by the Company, (iii) the issuance
of Common Stock in a firm commitment, underwritten public offering, (iv) the
issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof, or
(v) the grant of additional options or warrants, or the issuance of additional
securities, under any Company stock option or restricted stock plan for the
benefit of the Company's employees, directors or consultants. The Buyers shall
not be required to participate or exercise their right of first refusal with
respect to a particular Future Offering in order to exercise their right of
first refusal with respect to later Future Offerings. Notwithstanding the
foregoing, if during the Lock-Up Period the Company requests the consent of the
holders of Preferred Shares to issue equity securities (including any debt
financing with a significant equity component) and the Company does not receive
the necessary consents from the holders to conduct the equity offering, then the
Company shall be entitled, at its option, to redeem all, but not less than all,
of the outstanding Preferred Shares in the manner and at the redemption price
set forth in Section 4 of the Articles of Amendment. If a holder of Preferred
Shares fails to respond in writing to the Company within 10 days of such holders
receipt of the Company's written request for consent to issue equity securities
during the Lock-Up Period, then such holder shall be deemed to have refused to
consent to such issuance.
h. Listing. The Company shall promptly secure the listing of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation system
(including The Nasdaq SmallCap Market and the Nasdaq National Market), if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents. The Company shall
maintain the Common Stock's authorization for quotation on The Nasdaq SmallCap
Market, the Nasdaq National Market, The New York Stock Exchange, Inc. ("NYSE")
or The American Stock Exchange, Inc. ("AMEX"). Neither the Company nor any of
its subsidiaries shall take any action which may result in the delisting or
suspension of the Common Stock on The Nasdaq SmallCap Market, the Nasdaq
National Market, NYSE or AMEX. The Company shall promptly provide to each Buyer
copies of any notices it receives from The Nasdaq SmallCap Market, the Nasdaq
National Market, NYSE or AMEX regarding the continued eligibility of the Common
Stock for listing on such automated quotation system or securities exchange. The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(h).
i. Expenses. Subject to Section 9(l) below, following the
Initial Closing, the Company shall reimburse the Buyers for the Buyers' expenses
(including attorneys fees and expenses) in connection with negotiating and
preparing the Transaction Documents and consummating the transactions
contemplated thereby up to an aggregate of $25,000.
j. Proxy Statement. If stockholder approval of the issuance of
the Securities would be required (absent Section 13 of the Articles of
Amendment) by the rules and regulations of The Nasdaq Stock Market, Inc. in
order for the Company to issue all of the Securities, then as soon as
practicable, and in no event later then the next annual meeting of the Company's
stockholders, the Company shall hold a meeting of stockholders. The Company
shall provide each stockholder entitled to vote at such meeting of stockholders
of the Company, a proxy statement, which has been previously reviewed by the
Buyers and a counsel of their choice, soliciting each such stockholder's
affirmative vote at such annual stockholder meeting for approval of the
Company's issuance of the Securities as described in this Agreement and the
Company shall use its best efforts to solicit its stockholders' approval of such
issuance of the Securities and cause the Board of Directors of the Company to
recommend to the stockholders that they approve such proposal.
k. Filing of Form 8-K. On or before the tenth (10th) day
following each of the Closing Dates, the Company shall file a Form 8-K with the
SEC describing the terms of the transaction contemplated by the Transaction
Documents and consummated at such Closing, in each case in the form required by
the 1934 Act.
l. Underwriting Lock-Up Agreements. At any time during the
period beginning on the Initial Closing Date and ending on the date that is 365
days after the Initial Closing Date the Company may request that all, but not
less than all, of the holders of the Preferred Shares agree to sign a "lock-up"
agreement with the underwriters of a public offering of the Common Stock. The
Company shall make such request by delivering written notice (the "Lock-Up
Request Notice") of such request to all of the holders of the Preferred Shares
then outstanding at least 30 days prior to the date on which the "lock-up"
agreement would take effect, but in no event prior to the filing of the
registration statement for such proposed offering. The Lock-up Request Notice
shall state (i) that the underwriters of such offering have requested that the
holders of the Preferred Shares enter into "lock-up" agreements, (ii) the date
on which the holders' agreement to not sell shares of Common Stock pursuant to
the Registration Statement would begin and (iii) the name of the managing
underwriters of the proposed offering. The holders of the Preferred Shares shall
have 10 days from the date of receipt of the Lock-Up Request Notice to respond
in writing to the Company. If any holder fails to respond within such period to
the Lock-Up Request Notice, then such holder shall be deemed to have rejected
such request. The Company shall have the right to redeem the Preferred Shares
held by any holder which rejects or is deemed to have rejected the Company's
request to enter into a "lock-up" agreement in accordance with the terms of
Section 4 of the Articles of Amendment provided that the request is made in
accordance with this Section 4(l). Notwithstanding the foregoing, this Section
4(l) shall not apply to any request by the Company for the holders of the
Preferred Shares to enter into a "lock-up" agreement unless (x) the lock-up
period being requested is not more than 90 days, (y) the lock-up agreement would
not begin until the date of the final prospectus for such proposed offering and
(z) the managing underwriters for such proposed offering are included on the
Schedule of Underwriters attached to this Agreement.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares and the Warrant Shares in such amounts as specified from time
to time by each Buyer to the Company upon conversion of the Preferred Shares or
exercise of the Warrants (the "Irrevocable Transfer Agent Instructions"). Prior
to registration of the Conversion Shares and the Warrant Shares under the 1933
Act, all such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5,
and stop transfer instructions to give effect to Section 2(f) hereof (in the
case of the Conversion Shares and the Warrant Shares, prior to registration of
the Conversion Shares and the Warrant Shares under the 0000 Xxx) will be given
by the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section 5 shall affect in any way each Buyer's obligations and agreements
set forth in Section 2(g) to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Securities. If a Buyer provides the
Company with an opinion of counsel, reasonably satisfactory in form, and
substance to the Company, that registration of a resale by such Buyer of any of
such Securities is not required under the 1933 Act, the Company shall permit the
transfer, and, in the case of the Conversion Shares and the Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by such Buyer and without any
restrictive legends. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyers by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5, that the
Buyers shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. Initial Closing Date. The obligation of the Company
hereunder to issue and sell the Initial Preferred Shares and the related
Warrants to each Buyer at the Initial Closing is subject to the satisfaction, at
or before the Initial Closing Date, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing each Buyer
with prior written notice thereof:
(i) Such Buyer shall have executed each of the Transaction
Documents and delivered the same to the Company.
(ii) The Articles of Amendment shall have been filed with the
Secretary of State of the State of Florida.
(iii) Such Buyer shall have delivered to the Company the
Purchase Price for the Preferred Shares and the related Warrants being
purchased by such Buyer at the Initial Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided
by the Company.
(iv) The representations and warranties of such Buyer shall be
true and correct in all material respects as of the date when made and
as of the Initial Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by
such Buyer at or prior to the Initial Closing Date.
b. Additional Closing Date. The obligation of the Company
hereunder to issue and sell the Additional Preferred Shares and the related
Warrants to each Buyer at the Additional Closing is subject to the satisfaction,
at or before the Additional Closing Date, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing each Buyer
with prior written notice thereof:
(i) Such Buyer shall have complied with the requirements of
Section 1(c).
(ii) Such Buyer shall have delivered to the Company the
Purchase Price for the Additional Preferred Shares and the related
Warrants being purchased by such Buyer at the Additional Closing by
wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
(iii) The representations and warranties of such Buyer shall
be true and correct in all material respects as of the date when made
and as of the Additional Closing Date as though made at that time
(except for representations and warranties that speak as of a specific
date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by such Buyer at or prior to the Additional Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. Initial Closing Date. The obligation of each Buyer
hereunder to purchase the Initial Preferred Shares at the Initial Closing is
subject to the satisfaction, at or before the Initial Closing Date, of each of
the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion:
(i) The Company shall have executed each of the Transaction
Documents, and delivered the same to such Buyer.
(ii) The Articles of Amendment shall have been filed with the
Secretary of State of the State of Florida, and a copy thereof
certified by such Secretary of State shall have been delivered to such
Buyer.
(iii) The Common Stock shall be authorized for quotation on
The Nasdaq SmallCap Market, the Nasdaq National Market, NYSE or AMEX,
trading in the Common Stock issuable upon conversion of the Initial
Preferred Shares and the exercise of the related Warrants to be traded
on The Nasdaq SmallCap Market, the Nasdaq National Market, NYSE or AMEX
shall not have been suspended by the SEC, The Nasdaq Stock Market,
Inc., NYSE or AMEX and all of the Conversion Shares and Warrant Shares
issuable upon conversion of the Initial Preferred Shares and exercise
of the related Warrants to be sold at the Initial Closing shall be
listed upon The Nasdaq SmallCap Market, the Nasdaq National Market,
NYSE or AMEX.
(iv) The representations and warranties of the Company shall
be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as
of the date when made and as of the Initial Closing Date as though made
at that time (except for representations and warranties that speak as
of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Initial
Closing Date. Such Buyer shall have received a certificate, executed by
the Chief Executive Officer of the Company, dated as of the Initial
Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by such Buyer including, without
limitation, an update as of the Initial Closing Date regarding the
representation contained in Section 3(c) above.
(v) Such Buyer shall have received the opinion of the
Company's counsel dated as of the Initial Closing Date, in form, scope
and substance reasonably satisfactory to such Buyer and in
substantially the form of Exhibit C attached hereto.
(vi) The Company shall have executed and delivered to such
Buyer the Warrants and the Stock Certificates (in such denominations as
such Buyer shall request) for the Initial Preferred Shares being
purchased by such Buyer at the Initial Closing.
(vii) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form
reasonably acceptable to such Buyer (the "Resolutions").
(viii) As of the Initial Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Preferred Shares and the
exercise of the Warrants, at least 1,300,000 shares of Common Stock.
(ix) The Irrevocable Transfer Agent Instructions, in the form
of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each subsidiary in such corporation's state of
incorporation issued by the Secretary of State of such state of
incorporation as of a date within 10 days of the Initial Closing.
(xi) The Company shall have delivered to such Buyer certified
copies of its Articles of Incorporation and Bylaws, each as in effect
at the Initial Closing.
(xii) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.
b. Additional Closing Date. The obligation of each Buyer
hereunder to purchase the Additional Preferred Shares and the related Warrants
at the Additional Closing is subject to the satisfaction, at or before the
Additional Closing Date, of each of the following conditions, provided that
these conditions are for each Buyer's sole benefit and may be waived by such
Buyer at any time in its sole discretion:
(i) The Articles of Amendment shall be in full force and
effect and shall not have been amended since the Initial Closing Date,
and a copy thereof certified by the Secretary of State of the State of
Florida shall have been delivered to such Buyer.
(ii) The Common Stock shall be authorized for quotation on The
Nasdaq SmallCap Market, the Nasdaq National Market, NYSE or AMEX,
trading in the Common Stock issuable upon conversion of the Additional
Preferred Shares and the exercise of the related Warrants to be traded
on The Nasdaq SmallCap Market, the Nasdaq National Market, NYSE or AMEX
shall not have been suspended by the SEC, The Nasdaq Stock Market,
Inc., NYSE or AMEX and all of the Conversion Shares and Warrant Shares
issuable upon conversion of the Additional Preferred Shares and the
related Warrants to be sold at such Additional Closing shall be listed
upon The Nasdaq SmallCap Market, the Nasdaq National Market, NYSE or
AMEX.
(iii) The representations and warranties of the Company shall
be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as
of the date when made and as of the respective Additional Closing Date
as though made at that time (except for representations and warranties
that speak as of a specific date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the
respective Additional Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company,
dated as of such Additional Closing Date, to the foregoing effect and
as to such other matters as may be reasonably requested by such Buyer
including, without limitation, an update as of such Additional Closing
Date regarding the representation contained in Section 3(c) above.
(iv) Such Buyer shall have received the opinion of the
Company's counsel dated as of such Additional Closing Date, in form,
scope and substance reasonably satisfactory to such Buyer and in
substantially the form of Exhibit C attached hereto.
(v) The Company shall have executed and delivered to such
Buyer the Warrants and the Stock Certificates (in such denominations as
such Buyer shall request) for the Additional Preferred Shares being
purchased by such Buyer at such Additional Closing.
(vi) The Board of Directors of the Company shall have adopted,
and shall not have amended, the Resolutions in a form reasonably
acceptable to such Buyer.
(vii) As of such Additional Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares and
the exercise of the Warrants, a number of shares of Common Stock equal
to at least 150% of the number of shares of Common Stock which would be
issuable upon conversion and exercise in full, as the case may be, of
the then outstanding Preferred Shares and Warrants, including for such
purposes any Preferred Shares and Warrants to be issued at such
Additional Closing.
(viii) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(ix) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each subsidiary in such corporation's state of
incorporation issued by the Secretary of State of such state of
incorporation as of a date within 10 days of such Additional Closing.
(x) The Company shall have delivered to such Buyer certified
copies of its Articles of Incorporation and Bylaws, each as in effect
at such Additional Closing.
(xi) During the period beginning on the Additional Share
Notice Date and ending on and including the Additional Closing Date,
the Company shall have delivered Conversion Shares upon conversion of
the Preferred Shares and Warrant Shares upon exercise of the Warrants
to the Buyers on a timely basis as set forth in Section 2(f)(ii) of the
Articles of Amendment and Sections 2(a) and 2(b) of the Warrants,
respectively.
(xii) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.
8. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their officers,
directors, employees and agents (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents, the
Articles of Amendment or the Warrants or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents,
the Articles of Amendment or the Warrants or any other certificate, instrument
or document contemplated hereby or thereby, or (c) any cause of action, suit or
claim brought or made against such Indemnitee and arising out of or resulting
from the execution, delivery, performance or enforcement of this Agreement or
any other instrument, document or agreement executed pursuant hereto by any of
the Indemnitees, any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities or
the status of such Buyer or holder of the Securities as an investor in the
Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting the City
of New York, borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
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 in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which 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. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. 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 in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding, and no provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought. No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Preferred Shares then outstanding.
f. Notices. Any notices consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically generated and kept on
file by the sending party); (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
Smart Choice Automotive Group, Inc.
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: 00-000-0000
Facsimile: 000-000-0000
Attention: President, Xxxx X. Xxxxx
With a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx
000 X. Xxxxxx, Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 407-420-5909
Attention: Xxxxxxxx X. Xxxxxx, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx, 0xx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xx. Xxxxx Xxxxxx
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers.
Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. Except as in
compliance with Section 3 of the Articles of Amendment, the Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of two-thirds (2/3) of the Preferred Shares then
outstanding including by merger or consolidation. A Buyer may assign some or all
of its rights hereunder to affiliates or associates of such Buyer, without the
consent of the Company, and to others, with the consent of the Company;
provided, however, that any such assignment shall not release such Buyer from
its obligations hereunder unless such obligations are assumed by such assignee
and the Company has consented to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto 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.
i. Survival. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and
9, and the indemnification provisions set forth in Section 8, shall survive each
of the Closings. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
j. Publicity. The Company and each Buyer shall have the right
to approve before issuance any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of any Buyer, to make
any press release or other public disclosure with respect to such transactions
as is required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Initial Closing shall
not have occurred with respect to a Buyer on or before three (3) business days
from the date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party; provided, however, that if this Agreement is terminated pursuant to
this Section 9(l), the Company shall remain obligated to reimburse the
non-breaching Buyers for the expenses described in Section 4(i) above.
m. Placement Agent. Each of the Company and the Buyers, on
their own behalf, acknowledges that it has not engaged a placement agent in
connection with the sale of the Preferred Shares.
n. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
SMART CHOICE AUTOMOTIVE
GROUP, INC. THEMIS PARTNERS L.P.
By: Promethean Investment Group L.L.C.
By: /s/ Xxxxx Xxxx Xxxxxxxxxx, Jr. Its: General Partner
Name: Xxxxx Xxxx Xxxxxxxxxx, Jr.
Its: Assistant Vice President
By: /s/ E. Xxxx Xxx
Name: E. Xxxx Xxx
Its: Duly Authorized Signatory
HERACLES FUND
By: Promethean Investment Group L.L.C.
Its: Investment Advisor
By: /s/E. Xxxx Xxx
Name: E. Xxxx Xxx
Its: Duly Authorized Signatory
XXXXXXXX, L.P.
By: Xxxxxx, Xxxxxx & Co., L.P.
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
GAM ARBITRAGE INVESTMENTS, INC.
By: Xxxxxx, Xxxxxx & Co., L.P.
Its: Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
AG SUPER FUND INTERNATIONAL
PARTNERS, L.P.
By: Xxxxxx, Xxxxxx & Co., L.P.
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
RAPHAEL, L.P.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: Managing Officer
HICK INVESTMENTS, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: Managing Officer
HALIFAX FUND, L.P.
By: The Palladin Group
Its: Investment Manager
By: Palladin Capital Management LLC
Its: General Partner
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Its: Authorized Representative
SCHEDULE OF BUYERS
Investor Name Investor Address Number of Investor's Representatives' Address
and Facsimile Number Initial/Additional and Facsimile Number
Preferred
Shares
---------------------- ------------------------------------- ---------------- -------------------------------------
Themis Partners L.P. Promethean Investment Group, L.L.C. 56.25 / 18.75 Promethean Investment Group, L.L.C.
00 Xxxx 00xx Xxxxxx, Xxxxx 0000 00 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 10019 Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. X'Xxxxx, Xx. Attn: Xxxxx X. X'Xxxxx, Xx.
Facsimile: 000-000-0000 E. Xxxx Xxx
Facsimile: 000-000-0000
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 312-902-1061
Heracles Fund Bank of Bermuda (Cayman) Limited 37.5 / 12.5 Promethean Investment Group, L.L.C.
X.X. Xxx 000 40 West 57th Street, Suite 1520
3rd Floor British Xxxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
Xx. Xxx'x Drive Attn: Xxxxx X. X'Xxxxx, Xx.
Georgetown, Grand Cayman E. Xxxx Xxx
Cayman Island, BWI Facsimile: 000-000-0000
Attn: Xxxxx X. Xxxxxxxx
Facsimile: 000-000-0000 Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 312-902-1061
Xxxxxxxx, L.P. Trident Trust Company 71.25 / 23.75 Xxxxxx, Xxxxxx & Co., X.X.
Xxxxxxx Road 245 Park Avenue - 00xx Xxxxx
Xxxxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
X.X. Xxx 000 Attn: Xxxx Xxxx
Georgetown, Grand Cayman Islands Facsimile: 000-000-0000
GAM Arbitrage Craigmuir Xxxxxxxx 5.625 / 1.875 Xxxxxx, Xxxxxx & Co., L.P.
Investments, X.X. Xxx 00 000 Xxxx Xxxxxx - 00xx Xxxxx
Inc. Road Town, Tortola, British Virgin Xxx Xxxx, Xxx Xxxx 00000
Islands Attn: Xxxx Xxxx
Facsimile: 000-000-0000
AG Super Fund c/o Xxxxxx, Xxxxxx & Co., L.P. 5.625 / 1.875
International 000 Xxxx Xxxxxx - 26th Floor
Partners, L.P. Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx
Facsimile: 000-000-0000
Raphael, L.P. c/o Xxxxxx Capital Management, Ltd. 22.5 / 7.5 Xxxxxx, Xxxxxx & Co., X.X.
Xxxxxx Xxxxxxxx 000 Xxxx Xxxxxx - 00xx Xxxxx
X.X. Xxx 0000x Xxx Xxxx, Xxx Xxxx 00000
Road Town, Tortola, British Virgin Attn: Xxxx Xxxx
Islands Facsimile: 000-000-0000
Ramius Fund, Ltd. x/x Xxxx xx Xxxxxxx Xxxxxxxx 00 / 10 Xxxxxx, Xxxxxx & Co., L.P.
0 Xxxxx Xxxxxx 000 Xxxx Xxxxxx - 00xx Xxxxx
X.X. Xxx XX0000 Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxxx, Xxxxxxx HMDX Attn: Xxxx Xxxx
Facsimile: 000-000-0000
Hick Investments, x/x X.X.X.X.X. Xxxxxxxx Xxxxxxxx 00 / 5 Xxxxxx, Xxxxxx & Co., L.P.
Ltd. Xxx Xxxxxxxxx 0 000 Xxxx Xxxxxx - 00xx Xxxxx
6828 Manno, Switzerland Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx
Facsimile: 000-000-0000
Halifax Fund, L.P. c/o CITCO Fund Services, Ltd. 56.25 / 18.75 The Palladin Group
Corporate Center, Xxxx Xxx Xxxx 00 Xxxx 00xx Xxxxxx
P.O. Box 31106 Suite 1500
SMB New York, New York 10019
Grand Cayman, Cayman Islands Attn: Xxxxxx Xxxxxx
Facsimile: 000-000-0000
SCHEDULE OF UNDERWRITERS
Xxxxxxx Sachs & Co.
Xxxxxxx Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers Inc.
Xxxxx Xxxxxx Inc.
Salomon Brothers Inc.
X.X. Xxxxxx & Co.
PaineWebber Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx
Bear Xxxxxxx & Co., Inc.
First Boston
Lazard Freres
Xxxxxxxxx Xxxxxxxx & Company
Xxxxxxxx, Inc.
Xxxxxxxx Xxxxxxxx, Xxxxxx & Co. Inc.
ABN Amro Chicago Corp.
Xxxx Xxxxx & Sons, Incorporated
X.X. Xxxxxxxx
Xxxxxxx Xxxxx
Xxxxxxxxxx Securities
Crutten Den Xxxx, Inc.
Equitable Securities
or any successor to or affiliate of any of the above
SCHEDULE 3(a)
Subsidiaries
SCHEDULE 3(c)
Capitalization
SCHEDULE 3(e)
Conflicts
SCHEDULE 3(g)
Material Changes
SCHEDULE 3(h)
Litigation
SCHEDULE 3(n)
Intellectual Property
SCHEDULE 3(p)
Liens
SCHEDULE 3(u)
Tax Status
SCHEDULE 3(v)
Certain Transactions
SCHEDULE 4(d)
Use of Proceeds
EXHIBIT A
Form of Second Articles of Amendment
to Articles of Incorporation
Attached hereto.
EXHIBIT B
Form of Registration Rights Agreement
Attached hereto.
EXHIBIT C
Form of Company Counsel Opinion
Attached hereto.
EXHIBIT D
Form of Irrevocable Transfer Agent Instructions
Attached hereto.
EXHIBIT E
Form of Warrant
Attached hereto.
