PURCHASE AGREEMENT
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PURCHASE AGREEMENT, dated as of August 14, 2000 (this "Agreement"), by and
between GLOBAL SOURCES LIMITED, a Delaware corporation (Bulletin Board Symbol
"GLSL"), with offices located at 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx
Xxxx 00000 (the "Company"), and XXXXX XXXX, having an address at 00 Xxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 (the "Investor").
In consideration of the respective representations warranties, covenants,
agreements and conditions hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. THE PURCHASE AND SALE.
(a) Purchase and Sale. For and in consideration of payment to the
Company of an aggregate sum of $250,000 (the "Purchase Price"), and upon the
terms and conditions set forth in this Agreement, the Company shall issue and
sell to the Investor:
(i) 500,000 shares (the "Shares") of the Company's common stock,
$0.001 par value per share (the "Common Stock"); and
(ii) A warrant, in the form of Exhibit A hereto (the "Warrant"),
exercisable to purchase up to 100,000 shares of the Common Stock at an exercise
price of $1.50 per share (the "Warrant Shares").
(b) Payment of the Purchase Price. Simultaneously with the execution
herewith, the Investor shall deliver to the Company the Purchase Price, as
follows:
(i) $100,000, in cash, payable in the form of a wire transfer
pursuant to the wiring instructions provided by the Company; and
(ii) $150,000, in the form of that promissory note attached as
Exhibit B hereto (the "Note"), payable in three equal monthly installments,
which Note shall provide for the Company to call the Shares upon the occurrence
of an event of default as set forth more particularly in the Note.
(c) Purchase Exempt from Registration under the Securities Laws. The
Company and the Investor are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Regulation D as promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act").
2. COVENANTS.
(a) Keepwell Arrangement.
(i) On August 14, 2001 (the "Keepwell Date"), if the Common Stock
shall have a average Market Price (as defined below) of less than $.75 per share
for the five (5) trading days preceding the Keepwell Date, then the Company will
issue additional shares of the Common Stock (the "Keepwell Shares"), at a price
per share at the Keepwell Date, to the Investor such that the aggregate value of
the Shares and the Keepwell Shares held by the Investor as of the Keepwell Date
equals the value (at a $.75 per share value) of the Shares as of the date of
this Agreement. To the extent that any of the Shares are sold or conveyed prior
to the Keepwell Date, the aggregate value of the Shares as of the date of this
Agreement shall be adjusted accordingly when determining the number of Keepwell
Shares to issue pursuant hereto.
(ii) For purposes hereof, the term "Market Price" shall mean, for
the Common Stock at any date, means on any particular date the average of the
last reported sale price, or, in case no such reported sale takes place on such
day, the average of the last reported sale prices for the ten (10) trading days
preceding such date, in either case as officially reported by the principal
securities exchange on which the Common Shares are listed or admitted to trading
or as reported in the Nasdaq National Market System, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on the National Market System of The Nasdaq Stock Market, Inc. ("Nasdaq"), the
closing bid price as furnished by the National Association of Securities
Dealers, Inc. through Nasdaq or similar organization if Nasdaq is no longer
reporting such information, or if the Common Stock is not quoted on Nasdaq, the
closing bid price for the Common Stock in the over-the-counter market on the
electronic bulletin board as reported by Bloomberg Financial Markets
("Bloomberg") or, if no closing bid price is reported for such security by
Bloomberg, the last closing trade price of such security as reported by
Bloomberg, or, if no last closing trade price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Market Price cannot be calculated for the Common Stock on such date on any of
the foregoing bases, then the price of the Common Stock on such date shall be
the fair market value as determined by the Company's board of directors, acting
in good faith.
(b) Registration Rights.
(i) Piggyback Registration. If the Company proposes to prepare
and file with the Commission a registration statement on Form SB-2 (except if
the Company is not then eligible to register for resale the Shares and Warrant
Shares, as the case may be (the "Registrable Securities"), on such form, on such
other appropriate form in accordance herewith) covering equity or debt
securities of the Company, or any such securities of the Company held by its
shareholders, other than in connection with a merger, acquisition or pursuant to
a
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registration statement on Form S-4 or Form S-8 or any successor form (for
purposes of this Section 3, a "Registration Statement"), the Company will give
written notice of its intention to do so by certified mail ("Notice"), at least
fifteen (15) days prior to the filing of each such Registration Statement, to
the Investor. Upon the written request of the Investor, made within ten (10)
days after receipt of the Notice, that the Company include any of the
Registrable Securities in the proposed Registration Statement, the Company
shall, as to the Investor, use reasonable efforts to effect the registration
under the Securities Act of the Registrable Securities which it has been so
requested to register (the "Piggyback Registration"); provided, however, that
if, the Piggyback Registration is in connection with an underwritten public
offering and in the written opinion of the Company's underwriter or managing
underwriter of the underwriting group, if any, for such offering, the inclusion
of all or a portion of the Registrable Securities requested to be registered,
when added to the securities being registered by the Company or the selling
shareholder(s), if any, will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without otherwise having an adverse effect on the
offering, then the Company may exclude from such offering all or a portion of
the Registrable Securities which it has been requested to register
(ii) Exceptions to Registration. Notwithstanding anything
contained herein to the contrary, the Company shall (i) have the right at any
time after it shall have given written notice pursuant to this Section
(irrespective of whether any written request for inclusion of such securities
shall have already been made) to elect not to file any proposed Registration
Statement, or to withdraw the same after the filing but prior to the effective
date thereof and (ii) have no obligation under this Section to register the
Registrable Securities if the Company receives an opinion of counsel that Rule
144 promulgated under the Securities Act is available to the Investor.
(iii) Investors' Obligations. In connection with the registration
of the Registrable Securities, each Investor shall have the following
obligations:
(A) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant hereto with respect
to the Registrable Securities that the Investor shall furnish to the
Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may
reasonably request. At least five (5) days prior to the first
anticipated filing date of the Registration statement, the Company
shall notify the Investor of the information the Company requires (the
"Requested Information") if such Investor elects to have any of the
Registrable Securities included in the Registration Statement. If at
least two (2) business days prior to the filing date the Company has
not received the Requested Information from the Investor, then the
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Company may file the Registration Statement without including the
Registrable Securities.
(B) The Investor agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement and any supplemented
prospectus and/or amended registration statement, unless the Investor
has notified the Company in writing of its election to exclude all of
the Registrable Securities from the Registration Statement.
(iv) Expenses of Registration. All reasonable expenses, other
than underwriting discounts and commissions and other fees and expenses of
investment bankers and other than brokerage commissions, incurred in connection
with registrations, filings or qualifications pursuant to this Section 3 shall
be borne by the Company, however, if the Investor decides to retain counsel, it
shall do so at its own expense.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Investor as follows:
(a) Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now conducted and as proposed to be conducted.
(b) Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement,
the Warrant and the other agreements and documents contemplated hereby and
thereby (collectively, the "Transaction Documents") and to issue the Shares and
the Warrant in accordance with the terms hereof and the Warrant Shares in
accordance with the terms of the Warrant. The execution and delivery of the
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly and validly authorized by all necessary corporate action.
Each of the Transaction Documents constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
subject to limitations on enforcement by general principles of equity and by
bankruptcy or other laws affecting the enforcement of creditors' rights
generally.
(c) Shares and Warrant Shares. The Shares, when paid for by the
Investor and issued in accordance with the terms hereof, shall be duly
authorized and validly issued and when issued and delivered, will be fully paid
and non-assessable. When the Warrant Shares are issued in accordance with the
terms of the Warrant, such Warrant Shares will be duly authorized by all
necessary corporate action and validly issued and outstanding, fully paid and
non-assessable, and the holders shall be entitled to all rights accorded to a
holder of Common Stock
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4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor represents and warrants to the Company as follows:
(a) Authorization. This Agreement has been duly authorized, validly
executed and delivered by the Investor and constitutes a valid and binding
agreement and obligation of the Investor, enforceable against the Investor in
accordance with its terms, subject to limitations on enforcement by general
principles of equity and bankruptcy or other laws affecting the enforcement of
creditors' rights generally.
(b) Independent Investigation. The Investor has reviewed copies of the
public reports filed by the Company with the Commission. The Investor
understands that (i) no representations or warranties have been made to the
Investor by the Company, the officers or directors or the Company, or any agent,
employee or affiliate of any of them, except as specifically set forth herein or
as set forth in the other documents expressly referred to herein and (ii) no
federal, state, local or foreign governmental body or regulatory authority has
made any finding or determination relating to the fairness of an investment in
the securities being offered and that no federal, state, local or foreign
governmental body or regulatory authority has recommended or endorsed, or will
recommend or endorse, any investment in such securities. The Investor, in making
the decision to purchase the Shares, Warrant and the Warrant Shares issuable
upon exercise of the Warrant (collectively, the "Securities"), has relied solely
upon its independent investigation and due diligence regarding the business of
the Company and an investment in the Securities. Investor is not relying upon
any representations or warranties made by or on behalf of the Company (except as
set forth in this Agreement). Investor acknowledges that it has had an
opportunity to consult with its own attorney regarding legal matters concerning
the Company and an investment in the Securities and to consult with its tax
advisor regarding the tax consequences of purchasing the Securities.
(c) Exemption from the Securities Laws.
(i) The Investor understands that the Shares and the Warrant and
the issuance of the Warrant Shares upon exercise of the Warrant are being
offered and sold to it in reliance on specific provisions of federal and state
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of the Investor set forth herein for purposes of qualifying for exemptions from
registration under the Securities Act and applicable state securities laws.
(ii) The offer and sale of the Securities and the issuance of the
Warrant Shares upon exercise of each of the Warrant is intended to be exempt
from registration under the Securities Act, by virtue of Section 4(2) and
Regulation D promulgated under the Securities Act. The Investor understands that
(A) the Securities have not been registered under the Securities Act; (B) except
as set forth elsewhere in this Agreement, the Company is under no obligation to
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register the Shares or Warrant Shares under the Securities Act or any applicable
state security laws or to take any action to make any exemption form such
registration provisions available; (C) the Shares and Warrant Shares may not be
sold, transferred, assigned, pledged or subjected to any lien or security
interest unless they are first registered under the Securities Act and
applicable state securities laws or an exemption from the registration
provisions of the Securities Act and applicable state securities laws are
available with respect to the proposed sale or transfer; (D) the certificates
evidencing the Securities shall contain a restrictive legend, as set forth in
Section 5 of this Agreement, to the effect that the transfer thereof is
restricted; and (E) stop transfer instructions will be placed with the transfer
agent for the Shares and, upon exercise of the Warrant, the Warrant Shares.
(iii) The Investor acknowledges that it is familiar with Rule 144
of the rules and regulations of the Securities and Exchange Commission (the
"Commission"), as amended, promulgated pursuant to the Securities Act ("Rule
144"), and that the Investor has been advised that Rule 144 permits resales only
under certain circumstances. The Investor understands that to the extent that
Rule 144 is not available, the Investor will be unable to sell any Shares or
Warrant Shares without either registration under the Securities Act or the
existence of another exemption from such registration requirement.
(d) Sophistication of the Investor.
(i) The Investor is an "accredited Investor" as defined under
Rule 501 of Regulation D promulgated under the Securities Act.
(ii) The Investor (A) has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Company; and (B) recognizes that The Investor's
investment in the Company involves a high degree of risk.
(iii) The Investor is capable of evaluating the risks and merits
of an investment in the Securities 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 Securities.
(e) Investment Purposes. The Investor (i) is and will be acquiring the
Securities for the Investor's own account, and not with a view to any resale or
distribution of the Securities, in whole or in part, in violation of the
Securities Act or any applicable securities laws and (ii) has not offered or
sold any of the Securities and has no present intention or agreement to divide
the Securities with others for purposes of selling, offering, distributing or
otherwise disposing of any of the Securities.
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5. RESTRICTIVE LEGEND.
Certificates representing the Shares, the Warrant and the Warrant
Shares shall be stamped or imprinted with a legend in substantially the
following form:
THIS SECURITIES EVIDENCED BY THIS CERTIFICATE OR INSTRUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF UNLESS (i) REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR (ii) GLOBAL
SOURCES LIMITED, A DELAWARE CORPORATION (THE "COMPANY"),
SHALL HAVE RECEIVED AN OPINION, IN FORM, SCOPE AND SUBSTANCE
REASONABLY ACCEPTABLE TO THE COMPANY, FROM COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION OF
SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
The restrictions imposed by this Section 5 shall terminate (i) when
such securities shall have been resold pursuant to being effectively registered
under the Securities Act, (ii) upon the Company's receipt of an opinion of
counsel, in form and substance reasonably satisfactory to the Company, addressed
to the Company to the effect that such restrictions are no longer required to
ensure compliance with the Securities Act and state securities laws or (iii)
upon the Company's receipt of other evidence reasonably satisfactory to the
Company that such registration and qualification under state securities laws is
not required.
6. MISCELLANEOUS PROVISIONS.
(a) Further Assurances. From and after the date of this Agreement,
upon the request of the Investor or the Company, each of the Company and the
Investor shall execute and deliver such instrument, documents and other writings
as may be reasonably necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement and the Transaction
Documents.
(b) Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the party
incurring such costs and expenses.
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(c) Notices. All notices, demands, consents, requests, instructions
and other communications to be given or delivered or permitted under or by
reason of the provisions of this Agreement or in connection with the
transactions contemplated hereby shall be in writing and shall be deemed to be
delivered and received by the intended recipient as follows: (i) if personally
delivered, on the business day of such delivery (as evidenced by the receipt of
the personal delivery service), (ii) if mailed certified or registered mail
return receipt requested, four (4) business days after being mailed, (iii) if
delivered by overnight courier (with all charges having been prepaid), on the
business day of such delivery (as evidenced by the receipt of the overnight
courier service of recognized standing), or (iv) if delivered by facsimile
transmission, on the business day of such delivery if sent by 6:00 p.m. in the
time zone of the recipient, or if sent after that time, on the next succeeding
business day (as evidenced by the printed confirmation of delivery generated by
the sending party's telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with this Section
6(c)), or the refusal to accept same, the notice, demand, consent, request,
instruction or other communication shall be deemed received on the second
business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable:
If to the Investor: Xxxxx Xxxx
00 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention:Xxxxx Xxxx
Facsimile:(000) 000-0000
If to the Company: Global Sources Limited
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention:Xx. Xxxx X. Xxxxxxx, President
Facsimile:(000) 000-0000
with a copy to:
Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
Facsimile:(000) 000-0000
or to such other address as any party may specify by notice given to the other
party in accordance with this Section 6(c).
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(d) Waivers. Any waiver by the Company, on the one hand, and the
Investor, on the other hand, of any breach of or failure to comply with any
provision or condition of this Agreement by the other party shall not be
construed as, or constitute, a continuing waiver of such provision or condition,
or a waiver of any other breach of, or failure to comply with, any other
provision or condition of this Agreement, any such waiver to be limited to the
specific matter and instance for which it is given. No waiver of any such breach
or failure or of any provision or condition of this Agreement shall be effective
unless in a written instrument signed by the party granting the waiver and
delivered to the other party hereto in the manner provided for hereunder in
Section 6(c). No failure or delay by either party to enforce or exercise its
rights hereunder shall be deemed a waiver hereof, nor shall any single or
partial exercise of any such right or any abandonment or discontinuance of steps
to enforce such rights, preclude any other or further exercise thereof or the
exercise of any other right.
(e) Binding Effect; Assignment ; Third Parties. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other party, nor is this Agreement intended to confer upon any other
person except the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, without giving
effect to its conflict of law provisions.
(g) Entire Agreement. This Agreement, the Note, the Warrant and the
other Transaction Documents delivered pursuant to this Agreement contain the
entire understanding and agreement of the parties relating to the subject matter
hereof and supersedes all prior and/or contemporaneous understandings and
agreements of any kind and nature (whether written or oral) among the parties
with respect to such subject matter, all of which are merged herein.
(h) Severability. The parties agree that should any provision of the
Transaction Documents be held to be invalid, illegal or unenforceable in any
jurisdiction, that holding shall be effective only to the extent of such
invalidity, illegally or unenforceability without invalidating or rendering
illegal or unenforceable the remaining provisions hereof, and any such
invalidity, illegally or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. It
is the intent of the parties that the Transactions Documents be fully enforced
to the fullest extent permitted by applicable law.
(i) Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of this
Agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
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(j) Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of the Company and the
Investor.
(k) Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, and all of which, when
taken together, shall constitute one and the same document. This Agreement shall
become effective when one or more counterparts, taken together, shall have been
executed and delivered by all of the parties.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the Company and each the Investor have each caused
this Agreement to be signed by their respective. duly authorized officers
as of the date first above written.
GLOBAL SOURCES LIMITED
By:/s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: President
/s/ Xxxxx Xxxx
_____________________________________
XXXXX XXXX
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EXHIBIT A
FORM OF WARRANT
EXHIBIT B
FORM OF PROMISSORY NOTE
