STOCK PURCHASE AGREEMENT
BETWEEN
ENUCLEUS, INC.
AND
XXXXXX PARTNERS LP
DATED
AUGUST 13, 2004
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made
and entered into as of 13th day of August, 2004 by and among
eNucleus, Inc., a corporation organized and existing under
the laws of the State of Delaware ("eNucleus" or the
"Company"), and Xxxxxx Partners LP ("Investor" ).
PRELIMINARY STATEMENT:
WHEREAS, the Investor wishes to purchase, upon the
terms and subject to the conditions of this Agreement, at
the purchase price of One Million Dollars ($1,000,000),
2,500,000 shares of the Common Stock of the Company with
the right, upon the purchase of such shares of Common
Stock, to receive two (2) common stock purchase warrants
(such warrants granting the right to purchase an aggregate
of 3,500,000 shares of Common Stock) (each share of Common
Stock and corresponding stock purchase warrants are
referred to herein as a "Unit"); and
WHEREAS, the parties intend to memorialize the purchase
and sale of such Units.
NOW, THEREFORE, in consideration of the mutual
covenants and premises contained herein, and for other good
and valuable consideration, the receipt and adequacy of
which are hereby conclusively acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
INCORPORATION BY REFERENCE, SUPERSEDER AND DEFINITIONS
1.1 Incorporation by Reference. The foregoing recitals,
Schedule A and the Exhibits attached hereto and referred to
herein, are hereby acknowledged to be true and accurate,
and are incorporated herein by this reference.
1.2 Superseder. This Agreement, to the extent that it is
inconsistent with any other instrument or understanding
among the parties governing the affairs of the Company,
shall supersede such instrument or understanding to the
fullest extent permitted by law. A copy of this Agreement
shall be filed at the Company's principal office.
1.3 Certain Definitions. For purposes of this Agreement,
the following capitalized terms shall have the following
meanings (all capitalized terms used in this Agreement that
are not defined in this Article 1 shall have the meanings
set forth elsewhere in this Agreement):
1.3.1 "1933 Act" means the Securities Act of
1933, as amended.
1.3.2 "1934 Act" means the Securities Exchange
Act of 1934, as amended.
1.3.3 "Affiliate" means a Person or Persons
directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with the
Person(s) in question. The term "control," as used in the
immediately preceding sentence, means, with respect to a
Person that is a corporation, the right to the exercise,
directly or indirectly, of more than 50 percent of the
voting rights attributable to the shares of such controlled
corporation and, with respect to a Person that is not a
corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or
policies of such controlled Person.
1.3.4 "Certificate" means the Certificate of
Incorporation of the Company, as the same may be amended
from time to time.
1.3.5 "Closing Date" means August 13, 2004.
1.3.6 "Common Stock" means the shares of common
stock of eNucleus, par value $0.001 per share.
1.3.7 "Delaware Act" means the Delaware revised
Statutes, as amended.
1.3.8 "Effective Date" shall mean the date the
Registration Statement of the Company covering the Shares
being purchased hereunder is declared effective.
1.3.9 "Insiders" shall mean the officers and
directors of the Company.
1.3.10 "Material Adverse Effect" shall mean any
adverse effect on the business, operations, properties or
financial condition of the Company that is material and
adverse to the Company and its subsidiaries and affiliates,
taken as a whole and/or any condition, circumstance, or
situation that would prohibit or otherwise materially
interfere with the ability of the Company to perform any of
its material obligations under this Agreement or the
Registration Rights Agreement or to perform its
obligations under any other material agreement.
1.3.11 "Person" means an individual,
partnership, firm, limited liability company, trust, joint
venture, association, corporation, or any other legal
entity.
1.3.12 "Purchase Price" means the purchase price
for the Units as defined in Section 2.2.
1.3.13 Registration Rights Agreement" shall mean
the registration rights agreement between the Investor and
the Company attached hereto as Exhibit B.
1.3.14 "Registration Statement" shall mean the
registration statement under the 1933 Act to be filed with
the Securities and Exchange Commission for the registration
of the Shares pursuant to the Registration Rights
Agreement.
1.3.15 "SEC" means the Securities and Exchange
Commission.
1.3.16 "SEC Documents" shall mean the Company's
latest Form 10-K or 10-KSB as of the time in question, all
Forms 10-Q or 10-QSB and 8-K filed thereafter, and the
Proxy Statement for its latest fiscal year as of the time
in question until such time as the Company no longer has an
obligation to maintain the effectiveness of a Registration
Statement as set forth in the Registration Rights
Agreement.
1.3.17 "Shares" shall mean, collectively, the
shares of Common Stock of the Company being purchased
hereunder and those shares of Common Stock issuable to the
Investor upon exercise of the Warrants.
1.3.18 "Units" shall mean the Common Stock and
the Warrants collectively.
1.3.19 "Warrants" shall mean the Common Stock
purchase warrants in the form attached hereto as Exhibit A
and described in Section 2.1.2.
ARTICLE II
SALE AND PURCHASE OF ENUCLEUS UNITS
AND PURCHASE PRICE
2.1 Sale of eNucleus Units Upon the terms and subject to
the conditions set forth herein, and in accordance with
applicable law, the Company agrees to sell, and the
Investor agrees to purchase, Units in accordance with
Schedule A , at the Purchase Price on the Closing Date,
each Unit consisting of:
2.1.1 Common Stock Upon execution and delivery
of this Agreement and the Company's receipt of the Purchase
Price, the Investor shall receive shares of Common Stock of
the Company in accordance with Schedule A attached hereto.
The Company shall register those shares of Common Stock
pursuant to the terms and conditions of the Registration
Rights Agreement. The Registration Rights Agreement shall
include, but not be limited to, such terms and conditions
as the immediate registration of the shares of Common Stock
sold hereunder, one demand right if all the shares of
Common Stock sold hereunder are not registered or the
Registration Statement is subsequently not effective,
unlimited "piggy back" registration rights, and liquidated
damages to the Investor of fifteen percent (15%) of the
Purchase Price per annum payable on a monthly basis if the
shares of Common Stock are not registered pursuant to an
effective Registration Statement by April 1, 2005 or if the
shares of Common Stock are registered pursuant to an
effective Registration Statement and such Registration
Statement or other Registration Statement including the
shares of Common Stock is not effective in the period from
April 1, 2005 through two years following the Closing Date,
except that the obligation of the Company terminates when
the holder(s) of shares of Common Stock no longer holds
more than twenty percent (20%) of the shares of Common
Stock as acquired herein.
2.1.2 Warrants Upon execution and delivery of
this Agreement and the Company's receipt of the Purchase
Price, the Investor shall receive the Warrants in
accordance with Schedule A. The Warrants, a form of which
is attached hereto as Exhibit A, shall include, but not be
limited to, such terms and conditions as an exercise price
of $.60 per share for one such Warrant to purchase
2,500,000 shares of Common Stock, with a call right on
behalf of the Company of $1.20 per share (the "$.60
Warrant"), and an exercise price of $1.00 per share for the
other such Warrant to purchase 1,000,000 shares of Common
Stock (the "$1.00 Warrant") (as adjusted from time to time
as provided in the Warrants), an expiration date of five
(5) years from the date of issuance or eighteen (18) months
of effectiveness of a Registration Statement, whichever is
longer, and a cashless exercise provision.
2.2 Purchase Price. The purchase
price ("Purchase Price") to be paid by the Investor on the
Closing Date for the Units shall be One Million Dollars
($1,000,000) and shall be payable in United States Dollars.
Payment to the Company of the Purchase Price shall be made
at the Closing Date by check made payable to the Company.
The Purchase Price shall be delivered to the Company,
together with the closing deliveries, in accordance with
Section 3.1.
ARTICLE III
CLOSING DATE AND DELIVERIES AT CLOSING
3.1 Closing Date The closing of the transactions
contemplated by this Agreement (the "Closing"), unless
expressly determined herein, shall be held at the offices
of the Company, at 5:00 P.M. local time, on the Closing
Date or on such other date and at such other place as may
be mutually agreed by the parties, including closing by
facsimile with originals to follow. On the Closing Date,
all closing deliveries and the Purchase Price shall be
delivered via priority overnight courier service to 0000
Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Xxxx Xxxxx.
3.2 Deliveries by the Company. In addition to and without
limiting any other
provision of this Agreement, the Company agrees to deliver,
or cause to be delivered, to the Investor, the following:
(a) Within seven (7) business days of the Closing,
certificates representing shares of Common
Stock of the Company, which certificates shall
be duly endorsed to the Investor;
(b) At or prior to Closing, an executed Agreement;
(c) At or prior to Closing, executed Warrants in
the name of the Investor;
(d) At or prior to Closing, an executed
Registration Rights Agreement between the
Investor and the Company;
(e) At or prior to Closing, confirmation that the
provisions of Paragraphs 6.6, 6.7, and 6.8
herein have been satisfied or commenced, as
appropriate; and
(f) Such other documents or certificates as shall
be reasonably requested by the Investor or its
counsel.
3.3 Deliveries by Investor. In
addition to and without limiting any other provision of
this Agreement, the Investor agrees to deliver, or cause to
be delivered, to the Company, as appropriate, the
following:
(a) At or prior to Closing, the Purchase
Price;
(b) At or prior to Closing, an executed
Agreement;
(c) At or prior to Closing, an executed
Registration Rights Agreement
between the Investor and the
Company; and
(d) Such other documents or certificates
as shall be reasonably requested by
the Company or its counsel.
In the event any document provided to the other party in
Paragraphs 3.2 and 3.3 herein is provided by facsimile, the
party shall forward an original document to the other party
within seven (7) business days.
3.4 Further Assurances. The
Company and the Investor shall, upon request, on or after
the Closing Date, cooperate with each other by furnishing
any additional information, executing and delivering any
additional documents and/or other instruments and doing any
and all such things as may be reasonably required by the
parties or their counsel to consummate or otherwise
implement the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ENUCLEUS
The Company represents and warrants to the Investor
(which warranties and representations shall survive the
Closing for a period of one year regardless of any
examinations, inspections, audits or other investigations
the Investor has heretofore made or may hereinafter make
with respect to such warranties and representations) as
follows:
4.1 Organization and Qualification. The Company is a
corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, and has the requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being
conducted and is duly qualified to do business in any other
jurisdiction by virtue of the nature of the businesses
conducted by it or the ownership or leasing of its
properties, except where the failure to be so qualified
will not, when taken together with all other such failures,
have a Material Adverse Effect on the business, operations,
properties, assets, financial condition or results of
operation of the Company and its subsidiaries taken as a
whole.
4.2 Articles of Incorporation and By-Laws The Company's
Certificate
of Incorporation and By-Laws, as amended or restated to
date, which have been filed with the SEC, are complete and
correct copies of such documents as in effect on the date
hereof and as of the Closing Date.
4.3 Capitalization
4.3.1 The authorized and outstanding
capital stock of the Company is set forth in the Company's
Form 10-Q, filed for the period ending June 30, 2004 with
the SEC and updated on all subsequent SEC Documents. All
shares of capital stock have been duly authorized and are
validly issued, and are fully paid and no assessable, and
free of preemptive rights.
4.3.2 Except pursuant to this Agreement,
and as set forth in the Company's Form 10-Q, filed for the
period ending June 30, 2004 with the SEC, as of the date
hereof and as of the Closing Date, there are not now
outstanding options, warrants, rights to subscribe for,
calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or
exchangeable for, shares of any class of capital stock of
the Company, or agreements, understandings or arrangements
to which the Company is a party, or by which the Company is
or may be bound, to issue additional shares of its capital
stock or options, warrants, scrip or rights to subscribe
for, calls or commitment of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, any shares of any class of its capital
stock. The Company agrees to inform the Investor in
writing of any additional warrants granted prior to the
Closing Date.
4.3.3 The Company on the Closing Date
(i) will have full right, power, and authority to sell,
assign, transfer, and deliver, by reason of record and
beneficial ownership, to the Investor, the Shares of Common
Stock hereunder, free and clear of all liens, charges,
claims, options, pledges, restrictions, and encumbrances
whatsoever; and (ii) upon delivery of and payment by the
Investor of the Purchase Price to the Company, the Investor
will acquire good and marketable title to such Common
Stock, free and clear of all liens, charges, claims,
options, pledges, restrictions, and encumbrances
whatsoever.
4.4 Authority. The Company has all
requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by
the Company and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate
proceedings on the part of the Company is necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby except as disclosed in this Agreement.
This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company
in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, or
other similar laws affecting the enforcement of creditors'
rights generally and general principles of equity.
4.5 No Conflict; Required Filings and Consents.
The execution and
delivery of this Agreement by the Company does not and the
performance by the Company of its obligations hereunder
will not: (i) conflict with or violate the Certificate or
By-Laws of the Company; (ii) conflict with, breach or
violate any federal, state, foreign or local law, statute,
ordinance, rule, regulation, order, judgment or decree
(collectively, "Laws") in effect as of the date of this
Agreement and applicable to the Company; or (iii) result in
any breach of, constitute a default (or an event that with
notice or lapse of time or both would become a default)
under, give to any other entity any right of termination,
amendment, acceleration or cancellation of, require payment
under, or result in the creation of a lien or encumbrance
on any of the properties or assets of the Company pursuant
to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or
by the Company or any of its properties or assets is bound.
Excluding from the foregoing are such violations,
conflicts, breaches, defaults, terminations, accelerations,
creations of liens, or incumbency that would not, in the
aggregate, have a Material Adverse Effect.
4.6 Report and Financial Statements
The Company's Annual Report on
Form 10-KSB, filed on April 14, 2004 with the SEC, contains
the audited financial statements of the Company as of
December 31, 2003 (the "Financial Statements"). Each of the
balance sheets contained in or incorporated by reference
into any such Financial Statements (including the related
notes and schedules thereto) fairly presented the financial
position of the Company as of its date, and each of the
statements of income and changes in stockholders' equity
and cash flows or equivalent statements in such Financial
Statements (including any related notes and schedules
thereto) fairly presents and will fairly present the
results of operations, changes in stockholders' equity and
changes in cash flows, as the case may be, of the Company
for the periods to which they relate, in each case in
accordance with United States generally accepted accounting
principles ("U.S. GAAP") consistently applied during the
periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments in
the case of unaudited statements. The books and records of
the Company have been, and are being, maintained in all
material respects in accordance with U.S. GAAP and any
other applicable legal and accounting requirements and
reflect only actual transaction.
4.7 Compliance with Applicable Laws. The Company is
not in violation of, or,
to the knowledge of the Company, is not under investigation
with respect to or has not been given notice or has not
been charged with the violation of any Law of a
governmental agency, except for violations which
individually or in the aggregate do not have a Material
Adverse Effect.
4.8 Brokers. Except for Wood Capital
Associates, to whom a cash finders fee in the amount of
$50,000 will be paid by the Company for its introduction of
the Investor, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on
behalf of the Company.
4.9 SEC Documents. The Company
acknowledges that the Company is a publicly held company
and has made available to the Investor after demand true
and complete copies of any requested SEC Documents. 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 OTC Bulletin Board Market of the National
Association of Securities Dealers, Inc. 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. The Company has not
provided to the Investor any information that, according to
applicable law, rule or regulation, should have been
disclosed publicly prior to the date hereof by the Company,
but which has not been so disclosed. As of their respective
dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act, and rules and
regulations of the SEC promulgated thereunder, and the SEC
Documents did not contain any untrue statement of a
material fact or omit 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 that the Investor has
received from the Company reports with the SEC and with the
NASD.
4.10 Litigation. To the knowledge of the Company, no
litigation, claim, or other proceeding before any court or
governmental agency is pending or threatened against the
Company.
4.11 Exemption from Registration. Subject to the accuracy
of the Investor's representations in Article V, except as
required pursuant to the Registration Rights Agreement, the
sale of the Units hereunder will not require registration
under the 1933 Act and/or any applicable state securities
law. When validly converted in accordance with the terms of
the Warrants, the Shares underlying the Warrants will be
duly and validly issued, fully paid, and non-assessable.
The Company is issuing the Units in accordance with and in
reliance upon the exemption from securities registration
afforded, inter alia, by Rule 506 under Regulation D as
promulgated by the SEC under the 1933, and/or Section 4(2)
of the 1933 Act.
4.12 No General Solicitation or Advertising in Regard to
this Transaction. Neither the Company nor any of its
Affiliates nor, to the knowledge of the Company, any Person
acting on its or their behalf (i) has conducted or will
conduct any general solicitation (as that term is used in
Rule 502(c) of Regulation D as promulgated by the SEC under
the 0000 Xxx) or general advertising with respect to the
sale of the Units, or (ii) made any offers or sales of any
security or solicited any offers to buy any security under
any circumstances that would require registration of the
Units, under the 1933 Act, except as required herein.
4.13 No Material Adverse Change. Since December 31, 2003,
no Material Adverse Effect has occurred or exists with
respect to the Company that has not been disclosed in the
SEC Documents. No material supplier has given notice, oral
or written, that it intends to cease or reduce the volume
of its business with the Company from historical levels.
Since December 31, 2003, no event or circumstance has
occurred or exists with respect to the Company or its
businesses, properties, prospects, operations or financial
condition, that, under any applicable law, rule or
regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not
been so publicly announced or disclosed in writing to the
Investor.
4.14 Material Non-Public Information. [Intentionally
Deleted].
4.15 Internal Controls And Procedures. The Company
maintains books and records and internal accounting
controls which provide reasonable assurance that (i) all
transactions to which the Company or any subsidiary is a
party or by which its properties are bound are executed
with management's authorization; (ii) the recorded
accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to
the Company's consolidated assets is permitted only in
accordance with management's authorization; and (iv) all
transactions to which the Company or any subsidiary is a
party or by which its properties are bound are recorded as
necessary to permit preparation of the financial statements
of the Company in accordance with U.S. GAAP.
4.16 Full Disclosure. No representation or warranty made by
the Company in this Agreement and no certificate or
document furnished or to be furnished to the Investor
pursuant to this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company as
follows:
5.1 Organization and Standing of the Investor. Where the
Investor is a corporation, such Investor is duly
incorporated, validly existing and in good standing under
the laws of the state in which it was formed. The state in
which any offer to purchase Shares hereunder was made or
accepted by the Investor is the state shown as the
Investor's address. If an entity, the Investor was not
formed for the purpose of investing solely in the Units.
5.2 Authorization and Power. The Investor has the
requisite power and authority to enter into and perform
this Agreement and to purchase the Units being sold to it
hereunder. The execution, delivery and performance of this
Agreement by the Investor and the consummation by the
Investor of the transactions contemplated hereby have been
duly authorized by all necessary corporate or other action
where appropriate. This Agreement and the Registration
Rights Agreement have been duly executed and delivered by
the Investor and at the Closing shall constitute valid and
binding obligations of the Investor enforceable against the
Investor in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to,
or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of
general application.
5.3 No Conflicts. The execution, delivery and performance
of this Agreement and the consummation by the Investor of
the transactions contemplated hereby or relating hereto do
not and will not (i) result in a violation of the
Investor's charter documents or bylaws where appropriate 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
agreement, indenture or instrument to which the Investor is
a party, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court
or governmental agency applicable to the Investor or its
properties (except for such conflicts, defaults and
violations as would not, individually or in the aggregate,
have a Material Adverse Effect on the Investor). The
Investor 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 the
Investor's obligations under this Agreement or to purchase
the Units in accordance with the terms hereof, provided
that for purposes of the representation made in this
sentence, the Investor is assuming and relying
upon the accuracy of the relevant representations and
agreements of the Company herein.
5.4 Financial Risks. The Investor acknowledges that the
Investor is able to bear the financial risks associated
with an investment in the Units and that it has been given
full access to such records of the Company and the
subsidiaries and to the officers of the Company and the
subsidiaries as it has deemed necessary or appropriate to
conduct its due diligence investigation. The Investor is
capable of evaluating the risks and merits of an investment
in the Units by virtue of its experience as an investor and
its knowledge, experience, and sophistication in financial
and business matters and the Investor is capable of bearing
the entire loss of its investment in the Units.
5.5 Accredited Investor. The Investor is (i) an "accredited
investor" as that term is defined in Rule 501 of Regulation
D promulgated under the 1933 Act by reason of Rule
501(a)(3) and (6), (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 Units.
5.6 Brokers . Except for Wood Capital
Associates, to whom a cash finders fee in the amount of
$50,000 will be paid by the Company for its introduction of
the Investor, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or
Commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on
behalf of the Investors.
5.7 Knowledge of Company. The Investor and the Investor's
advisors, if any, have been, upon request, furnished with
all materials relating to the business, finances and
operations of the Company and materials relating to the
offer and sale of the Units. The Investor and the
Investor's 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.
5.8 Risk Factors The Investor understands that the
Investor's investment in the Units involves a high degree
of risk. The Investor 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 Units. The Investor
warrants that the Investor is able to bear the complete
loss of the Investor's investment in the Units.
5.9 Full Disclosure. No representation or warranty made by
the Investor in this Agreement and no certificate or
document furnished or to be furnished to eNucleus pursuant
to this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements
contained herein or therein not misleading. Except as set
forth or referred to in this Agreement, the Investor does
not have any
agreement or understanding with any person relating to
acquiring, holding,
voting or disposing of any equity securities of the
Company.
5.10 Reimbursement of Due Diligence Expenses. Upon Closing,
the Company shall reimburse the Investor for expenses
incurred in conducting due diligence up to an aggregate
maximum of $10,000. If the transaction is not closed, there
shall be no reimbursement of any due diligence expenses.
ARTICLE VI
COVENANTS OF THE COMPANY
6.1. Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and
effect and the Company shall comply in all material
respects with the terms thereof.
6.2. Reservation Of Common Stock. As of the date hereof,
the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive
rights, shares of Common Stock for the purpose of enabling
the Company to issue the shares of Common Stock underlying
the Warrants.
6.3. Listing Of Common Stock. The Company hereby agrees to
maintain the listing of the Common Stock on a publicly
trading market. The Company will take all action to
continue the listing and trading of its Common Stock on a
publicly traded market and will comply in all respects with
the Company's reporting, filing and other obligations under
the bylaws or rules of the a publicly traded market.
6.4. Exchange Act Registration. The Company will cause its
Common Stock to continue to be registered under Section
12(b) or (g) of the 1934 Act, will use its best efforts to
comply in all respects with its reporting and filing
obligations under the 1934 Act, and will not take any
action or file any document (whether or not permitted by
the 1934 Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its
reporting and filing obligations under the 1934 until the
Investor has disposed of all its Shares or the shares of
Common Stock underlying the Warrants.
6.5. Corporate Existence; Conflicting Agreements. The
Company will take all steps necessary to preserve and
continue the corporate existence of the Company. The
Company shall not enter into any agreement, the terms of
which agreement would restrict or impair the right or
ability of the Company to perform any of its obligations
under this Agreement or any of the other agreements
attached as exhibits hereto.
6.6 Preferred Stock. On or prior to the Closing Date, the
Company will cause to be cancelled all authorized shares of
Preferred Stock of the Company. For a period of two (2)
years from the Closing Date, the Company will not issue any
preferred stock.
6.7 Convertible Debt. On or prior to the Closing Date, the
Company will cause to be cancelled all convertible debt in
the Company. For a period of two (2) years from the Closing
Date, the Company will not issue any convertible debt.
6.8 Reset Equity Deals. On or prior to the Closing Date,
the Company will cause to be cancelled any and all reset
features related to any shares outstanding that could
result in additional shares being issued. For a period of
two (2) years from the Closing Date, the Company will not
enter into any transactions that have any reset features
that could result in additional shares being issued.
6.9 Independent Directors. The Company will cause the
appointment of at least two independent directors within
one hundred twenty (120) days of the Closing Date. If no
such Directors are appointed, the Company shall pay to the
Investor, as liquidated damages and not as a penalty, an
amount equal to fifteen percent (15%) of the Purchase Price
per annum, payable monthly. The parties agree that the only
damages payable for a violation of the terms of this
Agreement with respect to which liquidated damages are
expressly provided shall be such liquidated damages.
Nothing shall preclude the Investor from pursuing or
obtaining specific performance or other equitable relief
with respect to this Agreement. The parties hereto agree
that the liquidated damages provided for in this Section
6.9 constitute a reasonable estimate of the damages that
may be incurred by the Investor by reason of the failure of
the Company to appoint at least two independent directors
in accordance with the provision hereof.
6.10 Independent Directors Become Majority of Audit and
Compensation Committees. The Company will cause the
appointment of a majority of outside directors to the audit
and compensation committees of the board of directors
within one hundred twenty (120) days of the Closing Date.
If no such Directors are appointed, the Company shall pay
to the Investor, as liquidated damages and not as a
penalty, an amount equal to fifteen percent (15%) of the
Purchase Price per annum, payable monthly. The parties
agree that the only damages payable for a violation of the
terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated
damages. Nothing shall preclude the Investor from pursuing
or obtaining specific performance or other equitable relief
with respect to this Agreement. The parties hereto agree
that the liquidated damages provided for in this Section
6.10 constitute a reasonable estimate of the damages that
may be incurred by the Investor by reason of the failure of
the Company to appoint at least two independent directors
in accordance with the provision hereof.
6.11 Use of Proceeds. The Company will use the proceeds from
the sale of the Units (excluding amounts paid by the
Company for legal and administrative fees in connection
with the sale of the Units) for working capital.
6.12 Right of First Refusal. The Investor shall have the
right to participate in any financing by the Company
following the Closing Date on a pro rata basis at ninety
percent (90%) of the applicable offering price; provided
that such right shall terminate on the earlier of (x) the
three year anniversary of the date of this Agreement and
(y) such time as the holder(s) of shares of Common Stock no
longer hold more than twenty percent (20%) of the shares of
Common Stock as acquired herein.
6.13 Insider Selling. The earliest any "Insiders" can start
selling their shares shall be one (1) year from the Closing
Date. The Investor shall not be considered an Insider.
6.14 Employment and Consulting Contracts. Employment and
consulting contracts with officers and directors of the
Company shall at time of Closing and for three (3) years
thereafter not contain (i) any bonuses not related directly
to increases in earnings per share; (ii) any car
allowances; (iii) any anti-dilution or reverse split
protection provisions for shares, options or warrants; (iv)
any deferred compensation; (v) any unreasonable
compensation or benefit clauses or (vi) any termination
clauses of over one year of salary.
ARTICLE VII
COVENANTS OF THE INVESTOR
7.1 Compliance with Law. The Investor's trading activities
with respect to shares of the Company's Common Stock will
be in compliance with all applicable state and federal
securities laws, rules and regulations and rules and
regulations of any public market on which the Company's
Common Stock is listed.
7.2 Transfer Restrictions. The Investor acknowledges that
(1) the Shares, the Warrants and the shares underlying the
Warrants have not been registered under the provisions of
the 1933 Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) the Investor
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 Shares, the Warrants and
the shares underlying the Warrants to be sold or
transferred may be sold or transferred pursuant to an
exemption from such registration; and (2) any sale of the
Shares, the Warrants and the shares underlying the Warrants
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
such 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.
7.3 Restrictive Legend. The Investor acknowledges and
agrees that the Shares, and, until such time as the Shares
have been registered under the 1933 Act and sold in
accordance with an effective Registration Statement,
certificates and other instruments representing any of the
Shares, shall bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed
against transfer of any such securities):
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE
PROVISIONS OF REGULATIONS, OR (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT."
ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to consummate the
transactions contemplated hereby shall be subject to the
fulfillment, on or prior to Closing Date, of the following
conditions:
8.1 No Termination. This
Agreement shall not have been terminated pursuant to
Article X hereof.
8.2 Representations True and Correct. The representations
and warranties of the Investor contained in this Agreement shall be true
and correct in all material respects on and as of the
Closing Date with the same force and effect as if made on
as of the Closing Date.
8.3 Compliance with Covenants. The Investor shall have
performed and complied in all material respects with all covenants,
agreements, and conditions required by this Agreement to be performed
or complied by it prior to or at the Closing Date.
8.4 No Adverse Proceedings. On the Closing Date, no action
or proceeding shall be pending by any public authority or
individual or entity before any court or administrative
body to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the transactions
contemplated hereby or to recover any damages or obtain
other relief as a result of the transactions proposed
hereby.
ARTICLE IX
CONDITIONS PRECEDENT TO INVESTOR'S OBLIGATIONS
The obligation of the Investor to consummate the
transactions contemplated hereby shall be subject to the
fulfillment, on or prior to Closing Date unless specified
otherwise, of the following conditions:
9.1 No Termination. This
Agreement shall not have been terminated pursuant to
Article X hereof.
9.2 Representations True and Correct. The representations and warranties
of eNucleus contained in this Agreement shall be true and
correct in all material respects on and as of the Closing
Date with the same force and effect as if made on as of the
Closing Date.
9.3 Compliance with Covenants.
eNucleus shall have performed and complied in
all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or
complied by it prior to or at the Closing Date.
9.4 No Adverse Proceedings. On the Closing Date, no action
or proceeding shall be pending by any public authority or
individual or entity before any court or administrative
body to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the transactions
contemplated hereby or to recover any damages or obtain
other relief as a result of the transactions proposed
hereby.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may
be terminated at any time prior to the Closing Date:
10.1.1 by mutual written consent of the Investor
and the Company;
10.1.2 by the Company upon a material breach of
any representation, warranty, covenant or agreement on the
part of the Investor set forth in this Agreement, or the
Investor upon a material breach of any representation,
warranty, covenant or agreement on the part of eNucleus set
forth in this Agreement, or if any representation or
warranty of eNucleus or the Investor, respectively, shall
have become untrue, in either case, such that any of the
conditions set forth in Article VIII or Article IX hereof
would not be satisfied (a "Terminating Breach"), and such
breach shall, if capable of cure, not have been cured
within five (5) days after receipt by the party in breach
of a notice from the non-breaching party setting forth in
detail the nature of such breach;
10.1.3 by either party, if the Closing has not
occurred by August 13, 2004.
10.2 Effect of Termination.
In the event of the termination of this Agreement pursuant
to Paragraph 10.1 hereof, there shall be no liability on
the party of eNucleus or the Investors or any of their
respective officers, directors, agents or other
representatives and all rights and obligations of any party
hereto shall cease, except as expressed herein.
10.3 Amendment. This Agreement may
be amended by the parties hereto any time prior to the
Closing Date by an instrument in writing signed by the
parties hereto.
10.3 Waiver. At any time prior to the
Closing Date, eNucleus or the Investor, as appropriate,
may: (a) extend the time for the performance of any of the
obligations or other acts of other party or; (b) waive any
inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant
hereto which have been made to it; or (c) waive compliance
with any of the agreements or conditions contained herein
for its or their benefit. Any such extension or waiver
shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound hereby.
ARTICLE XI
GENERAL PROVISIONS. Nonsurvival of
Representations, Warranties and Agreements . Except as
otherwise provided herein, each of the parties shall pay
all of its costs and expenses (including attorney fees and
other legal costs and expenses and accountants' fees and
other accounting costs and expenses) incurred by that party
in connection with this Agreement.
11.2 Indemnification. The Investor agrees to indemnify,
defend and hold the Company (following the Closing Date)
and its officers and directors harmless against and in
respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities or damages, including
interest, penalties and reasonable attorney's fees, that it
shall incur or suffer, which arise out of or result from
any breach of this Agreement by the Investor or failure by
the Investor to perform with respect to any of its
representations, warranties or covenants contained in this
Agreement or in any exhibit or other instrument furnished
or to be furnished under this Agreement. The Company
agrees to indemnify, defend and hold the Investor harmless
against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties and reasonable
attorney's fees, that it shall incur or suffer, which arise
out of, result from or relate to any breach of this
Agreement by the Company or failure by the Company to
perform with respect to any of its representations,
warranties or covenants contained in this Agreement or in
any exhibit or other instrument furnished or to be
furnished under this Agreement. In no event shall either
party be entitled to recover consequential or punitive
damages resulting from a breach or violation of this
Agreement from the other party nor shall any party have any
liability hereunder in the event of gross negligence or
willful misconduct of the indemnified party. In the event
of a breach of this Agreement by the Company, the Investor
shall be entitled to pursue a remedy of specific
performance upon tender into the Court an amount equal to
the Purchase Price of the Units hereunder. The
indemnification shall be mutually limited to the amount of
the investment made by the Investor as of the Closing Date
above.
11.3 Headings. The table of contents and
headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
11.4 Entire Agreement. This
Agreement (together with the Schedule, Exhibits, Warrants
and documents referred to herein) constitute the entire
agreement of the parties and supersede all prior agreements
and undertakings, both written and oral, between the
parties, or any of them, with respect to the subject matter
hereof.
11.5 Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date
initially received if delivered by facsimile transmission
followed by registered or certified mail confirmation;
(iii) on the date delivered by an overnight courier
service; or (iv) on the third business day after it is
mailed by registered or certified mail, return receipt
requested with postage and other fees prepaid as follows:
If to eNucleus:
eNucleus, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
With a copy to:
Xxxxxxx X. Xxxxxxx
Xxxxxxxx Xxxxxxx & XxXxxxxx LLC
0 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
If to the Investor:
To the address listed on Schedule A herein or
to the address provided to the Company by the
Investor.
11.6 Severability. If any term or
other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such
determination that any such term or other provision is
invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are
fulfilled to the extent possible.
11.7 Binding Effect. All the terms and provisions of this
Agreement whether so expressed or not, shall be binding
upon, inure to the benefit of, and be enforceable by the
parties and their respective administrators, executors,
legal representatives, heirs, successors and assignees.
11.8 Preparation of Agreement.
This Agreement shall not be construed more strongly against
any party regardless of who is responsible for its
preparation. The parties acknowledge each contributed and
is equally responsible for its preparation.
11.9 Governing Law. This Agreement
shall be governed by, and construed in accordance with, the
laws of the State of Delaware, without giving effect to
applicable principles of conflicts of law.
11.10 Jurisdiction. This Agreement shall be exclusively
governed by and construed in accordance with the laws of
the State of Illinois. If any action is brought among the
parties with respect to this Agreement or otherwise, by way
of a claim or counterclaim, the parties agree that in any
such action, and on all issues, the parties irrevocably
waive their right to a trial by jury. Exclusive
jurisdiction and venue for any such action shall be the
State Courts of Illinois. In the event suit or action is
brought by any party under this Agreement to enforce any of
its terms, or in any appeal therefrom, it is agreed that
the prevailing party shall be entitled to reasonable
attorneys fees to be fixed by the arbitrator, trial court,
and/or appellate court.
11.11 Preparation and Filing of Securities and Exchange
Commission filings. The Investor shall reasonably assist
and cooperate with the Company in the preparation of all
filings with the SEC after the Closing Date due after the
Closing Date.
11.12 Further Assurances, Cooperation. Each party
shall, upon reasonable request by the other party, execute
and deliver any additional documents necessary or desirable
to complete the transactions herein pursuant to and in the
manner contemplated by this Agreement. The parties hereto
agree to cooperate and use their respective best efforts to
consummate the transactions contemplated by this Agreement.
11.13 Survival The representations, warranties,
covenants and agreements made herein shall survive the
Closing of the transaction contemplated hereby as provided
herein.
11.14 Third Parties Except as disclosed in this
Agreement, nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than
the parties hereto and their respective administrators,
executors, legal representatives, heirs, successors and
assignees. Nothing in this Agreement is intended to
relieve or discharge the obligation or liability of any
third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation
or action over or against any party to this Agreement.
11.15 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of
any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of,
or acquiescence in, any breach of any representation,
warranty, covenant or agreement herein, nor shall nay
single or partial exercise of any such right preclude other
or further exercise thereof or of any other right. All
rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies
otherwise available.
11.16 Counterparts. This
Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute
one and the same agreement. A facsimile transmission of
this signed Agreement shall be legal and binding on all
parties hereto.
IN WITNESS WHEREOF, the Investor and the Company have
as of the date first written above executed this Agreement.
COMPANY
ENUCLEUS, INC.
By:
Title:
INVESTOR
XXXXXX PARTNERS LP
Xxxxxx Xxxxxx Xxxxxx
President, General Partner of
Xxxxxx Partners LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
Schedule A
NAME AND ADDRESS
Xxxxxx
Partners LP
000 Xxxxx
Xxxxxx, 0xx Xx.
Xxx Xxxx XX
00000
AMOUNT OF INVESTMENT
$1,000,000
NUMBER OF$.60
WARRANTS
2,500,000
NUMBER OF SHARES OF COMMON STOCK
2,500,000
NUMBER OF $1.00 WARRANTS
1,000,000
Exhibit A
Form of Warrants
Exhibit B
Registration Rights Agreement
