EXHIBIT 10(iii)
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT, dated February 20, 2004 (this
"Agreement"), by and between CVF Technologies Corporation, a Nevada corporation
with principal executive offices located at 0000 Xxxx Xxxxxx, Xxxxx 0,
Xxxxxxxxxxxxx, Xxx Xxxx 00000 (the "Company"), and The Shaar Fund, Ltd.
("Shaar").
WHEREAS, Shaar is the record and beneficial owner of 339,000
shares of the Company's Series B 6% Convertible Preferred Stock, par value
$0.001 per share (collectively, the "Series B Preferred Shares");
WHEREAS, pursuant to a Certificate of Designation,
substantially in the form of Exhibit A hereto (the "Series C Certificate of
Designation"), the Company has created its Series C 6% Convertible Preferred
Stock, par value $0.001 per share (collectively, the "Series C Preferred
Shares"); and
WHEREAS, Shaar and the Company have agreed that Shaar will
exchange (hereinafter the "Exchange") all of its right, title and interest in
the Series B Preferred Shares (including all accrued and unpaid dividends
thereon) for (i) 1,000,000 shares of the Company's Common Stock (the
"Replacement Common Shares"), (ii) 100,000 shares of the Company's Series C
Preferred Stock, convertible into 1,000,000 shares of the Company's Common
Stock, subject to adjustment, and redeemable, subject to certain conditions, on
the second anniversary of the date at issuance at its stated value of $10.00 per
share, along with accrued and unpaid dividends and (iii) common stock purchase
warrants in the form attached hereto as Exhibit B (the "Warrants"), to purchase
100,000 shares of the Company's Common Stock at an exercise price of $.35 per
share, subject to adjustment, having a three year term.
Now, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
I. EXCHANGE
Shaar and the Company hereby agrees to exchange, in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Series B
Preferred Shares currently held by Shaar for the Replacement Common Shares, the
Series C Preferred Shares and the Warrants. Simultaneously with the execution of
this Agreement, Shaar shall surrender to the Company certificates representing
350,000 Series B Preferred Shares, duly endorsed for transfer. Simultaneously
with the execution of this Agreement, the Company shall deliver to Shaar one or
more duly authorized, issued and executed certificates (I/N/O Shaar or, if the
Company otherwise has been notified, I/N/O Shaar's nominee) evidencing the
Replacement Common Shares, the Series C Preferred Shares and the Warrants.
II. SHAAR'S REPRESENTATIONS AND WARRANTIES
Shaar represents and warrants to and covenants and agrees with
the Company as follows:
X. Xxxxx is acquiring the Replacement Common Shares, the
Series C Preferred Shares, the Warrants, the Common Stock issuable upon exercise
of the Warrants (the "WARRANT SHARES"), and the Common Stock issuable upon
conversion or redemption of the Preferred Shares (the "CONVERSION SHARES" and,
collectively with the Replacement Common Shares, the Series C Preferred Shares,
the Warrants and the Warrant Shares the "SECURITIES") for its own account, for
investment purposes only and not with a view towards or in connection with the
public sale or distribution thereof in violation of the Securities Act.
X. Xxxxx is (i) an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act, (ii) experienced
in making investments of the kind contemplated by this Agreement, (iii) capable,
by reason of its business and financial experience, of evaluation the relative
merits and risks of an investment in the Securities, and (iv) able to afford the
loss of its investment in the Securities.
X. Xxxxx understands that the Securities are being
offered by the Company in reliance on an exemption from the registration
requirements of the Securities Act and equivalent state securities and "blue
sky" laws, and that the Company is relying upon the accuracy of, and Shaar's
compliance with, Shaar's representations, warranties and covenants set forth in
this Agreement to determine the availability of such exemption and the
eligibility of Shaar to acquire the Securities.
X. Xxxxx understands that the Securities have not been
approved or disapproved by the Securities and Exchange Commission (the
"Commission") or any state securities commission.
E. This Agreement has been duly and validly authorized,
executed and delivered by Shaar and is a valid and binding agreement of Shaar
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and except as
rights to indemnity and contribution may be limited by federal or state
securities laws or the public policy underlying such laws.
F. Prior to the conversion of all the Series C Preferred
Shares into Common Stock, neither Shaar nor its affiliates nor any person acting
on its or their behalf has the intention of entering, or will enter into, any
put option, short position or other similar instrument or position with respect
to the Common Stock and neither Shaar nor any of its affiliates nor any person
acting on its or their behalf will use at any time shares of Common Stock
acquired pursuant to this Agreement to settle any put option, short position or
other similar instrument or position that may have been entered into prior to
the execution of this Agreement; provided, however, that nothing, in this
Section II shall operate to forbid Shaar or any of its affiliates or any Person
acting on its or
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their behalf from selling, or entering into any other transaction with respect
to, the Common Stock contemporaneously with or following such date and time as
the Person or Persons in whose name or names the Common Stock Delivered at
Conversion shall be issuable shall be deemed to have become the holder or
holders of record of the Common Shares represented thereby and all voting and
other rights associated with the beneficial ownership of such Common Shares
shall have vested with such Person or Persons.
III. THE COMPANY'S REPRESENTATIONS
The Company represents and warrants to Shaar that:
A. CAPITALIZATION.
1. The authorized capital stock of the Company
consists solely of: (x) 50,000,000 shares of Common Stock, of which 10,855,549
shares are issued and outstanding and 481,700 shares are issued and held in
treasury on the date hereof; and (y) 500,000 shares of preferred stock, of which
(i) 25,000 shares are designated Redeemable Series A Preferred Stock, par value
$0.001 per share, and 3,477 shares are issued and outstanding, (ii) 350,000
shares are designated Series B 6% Convertible Preferred Stock, par value $0.001
per share, and 339,000 shares are issued and outstanding; and (iii) 100,000
shares are designated Series C 6% Convertible Preferred Stock, par value $0.001
per share, no shares of which are issued and outstanding. As of the date hereof,
the Company has 2,325,000 outstanding stock options to purchase shares of Common
Stock and warrants outstanding to purchase 1,132,784 shares of Common Stock.
2. The Conversion Shares and the Warrant Shares
have been duly and validly authorized and reserved for issuance by the Company,
and when issued by the Company upon conversion of the Series C Preferred Shares
and on exercise of the Warrants will be duly and validly issued, fully paid and
nonassessable and will not subject the holder thereof to personal liability by
reason of being such holder.
3. Except as may exist in favor of Shaar, there
are no preemptive, subscription, "call," right of first refusal or other similar
rights to acquire any capital stock of the Company or other voting securities of
the Company that have been issued or granted to any person or any other
obligations of the Company (other than those options and warrants disclosed in
Section A.(l) above)to issue, grant, extend or enter into any security, option,
warrant, "call," right, commitment, agreement, arrangement or undertaking with
respect to any of its capital stock.
B. REPORTING COMPANY STATUS.
The Company has registered the Common Stock pursuant
to section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Common Stock is listed and traded on the American Stock Exchange (the
"Amex"). The Company has received notices
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regarding the eligibility of the Common Stock for such listing on the Amex. The
Company does not believe any termination or discontinuance of its eligibility is
imminent.
C. AUTHORIZATION. The Company (i) has duly and validly
authorized and reserved for issuance 1,100,000 shares of Common Stock,
sufficient in number for the conversion of the Series C Preferred Shares and the
exercise of the Warrants, and (ii) at all times from and after the date hereof
shall have a sufficient number of shares of Common Stock duly and validly
authorized and reserved for issuance to satisfy the conversion of the Series C
Preferred Shares and the exercise of the Warrants. The Company acknowledges that
its obligation to issue Conversion Shares upon conversion of the Series C
Preferred Shares and Warrant Shares upon exercise of the Warrants in accordance
with this Agreement, the Series C Certificate of Designation and the Warrants is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company and
notwithstanding the commencement of any case under 11 U.S.C. Section 101 et seq.
(the "BANKRUPTCY CODE"). In the event the Company is a debtor under the
Bankruptcy Code, the Company hereby waives to the fullest extent permitted any
rights to relief it may have under 11 U.S.C. Section 362 in respect of the
conversion of the Series C Preferred Shares and the exercise of the Warrants.
The Company agrees, without cost or expense to Shaar, to take or consent to any
and all action necessary to effectuate relief under 11 U.S.C. Section 362.
D. AUTHORITY; VALIDITY AND ENFORCEABILITY. The Company
has the requisite corporate power and authority to perform its obligations under
the Series C Certificate of Designation and to enter into the Documents (as
hereinafter defined), and to perform all of its obligations hereunder and
thereunder (including the issuance, sale and delivery to Shaar of the
Securities). The execution, delivery and performance by the Company of the
Documents, and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation the issuance of the
Replacement Common Shares, the Series C Preferred Shares and the Warrants and
the issuance and reservation for issuance of the Conversion Shares and the
Warrant Shares), have been duly authorized by all necessary corporate action on
the part of the Company. Each of the Documents has been duly and validly
executed and delivered by the Company and the Series C Certificate of
Designation has been duly filed with the Nevada Secretary of State's office by
the Company and each Document constitutes a valid and binding obligation of the
Company enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws. The Securities
have been duly and validly authorized for issuance by the Company and, when
executed and delivered by the Company, will be valid and binding obligations of
the Company enforceable against it in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally.
For purposes of this Agreement, the term "DOCUMENTS" MEANS (i) this Agreement;
(ii) the Series C Certificate of Designation; and (iii) the Warrants.
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E. VALIDITY OF ISSUANCE OF SECURITIES. As of the Closing
Date, the Replacement Common Shares, the Series C Preferred Shares and the
Warrants, and the Conversion Shares and the Warrant Shares upon their issuance,
will be validly issued and outstanding, fully paid and nonassessable, and not
subject to any preemptive rights, rights of first refusal, tag-along rights,
drag-along rights or other similar rights.
F. NON-CONTRAVENTION. Except for such notice filings as
may be required under applicable federal and state securities laws, the
execution and delivery by the Company of the Documents, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated hereby and thereby, do not, and compliance with the provisions of
this Agreement and other Documents will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a material benefit under, or result in the creation of
any lien upon any of the properties or assets of the Company under, or result in
the termination of, or require that any consent be obtained or any notice be
given with respect to, (i) the Certificate of Incorporation or By-Laws of the
Company, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or permit applicable to the
Company or its properties or assets, or (iii) any law applicable to the Company
or its respective properties or assets.
G. APPROVALS. No authorization, approval or consent of
any court or public or governmental authority is required to be obtained by the
Company for the issuance and sale of the Replacement Common Shares, the Series C
Preferred Shares or the Warrants (and the Conversion Shares and Warrant Shares)
to Shaar as contemplated by this Agreement, except such authorizations,
approvals and consents that have been obtained by the Company prior to the date
hereof.
H. COMMISSION FILINGS. Except for its failure to have
timely filed its Form 10-QSB for the quarter ended March 31, 2003, the Company
has properly and timely filed with the Commission all reports, proxy statements,
forms and other documents required to be filed with the Commission under the
Securities Act and the Exchange Act since October 1, 1996 (the "COMMISSION
FILINGS"). As of their respective dates, (i) the Commission Filings complied in
all material respects with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the
Commission promulgated thereunder applicable to such Commission Filings, and
(ii) none of the Commission Filings contained at the time of their filing 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. The
financial statements of the Company included in the Commission Filings, as of
the dates of such documents, were true and complete in all material respects and
complied with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, have been prepared in
accordance with, generally accepted accounting principles in the United States
("GAAP") (except in the case of the unaudited statements, as permitted by Form
10-Q under the Exchange Act) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
the consolidated financial position of the Company and its material subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the
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case of unaudited statements, to normal year-end audit adjustments that in the
aggregate are not material and to any other adjustment described therein).
I. SECURITIES LAW MATTERS. Assuming the accuracy of the
representations and warranties of Shaar set forth in Section II hereof, the
Exchange is exempt from (i) the registration and prospectus delivery
requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification provisions
of all applicable state securities and "blue sky" laws. The Company shall not
directly or indirectly take, and shall not permit any of its directors, officers
or Affiliates directly or indirectly to take, any action (including, without
limitation, any offering or sale to any person or entity of the Series C
Preferred Shares or shares of Common Stock), so as to make unavailable the
exemption from Securities Act registration being relied upon by the Company for
the offer and sale to Shaar of the Replacement Common Shares, the Series C
Preferred Shares and the Warrants (and the Conversion Shares and the Warrant
Shares) as contemplated by this Agreement. No form of general solicitation or
advertising has been used or authorized by the Company or any of its officers,
directors or affiliates in connection with the offer or sale of the Replacement
Common Shares, the Series C Preferred Shares and the Warrants (and the
Conversion Shares and the Warrant Shares) as contemplated by this Agreement or
any other agreement to which the Company is a party.
J. DIVIDENDS. The timely payment of dividends on the
Series C Preferred Shares as specified in the Series C Certificate of
Designation is not prohibited by the Certificate of Incorporation or By-Laws of
the Company or any agreement, contract, documents or other undertaking to which
the Company is a party.
K. NO MISREPRESENTATION. No representation or warranty
of the Company contained in this Agreement, any schedule, annex or exhibit
hereto or any agreement, instrument or certificate furnished by the Company to
Shaar pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading.
L. FINDER'S FEE. There are no finder's fee, brokerage
commission or like payment in connection with the transactions contemplated by
this Agreement for which Shaar is liable or responsible.
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IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS
A. RESTRICTIVE LEGEND. The Company and Shaar acknowledge
that the sale by Shaar of Replacement Common Shares, the Series C Preferred
Shares, and, upon issuance, the Conversion Shares may be effected by Shaar
pursuant to the Rule 144(k) under the Securities Act of 1933. Shaar acknowledges
and agrees that, upon issuance pursuant to this Agreement, the Warrant Shares
shall have endorsed thereon a legend in substantially the following form (and a
stop- transfer order may be placed against transfer of the Warrant Shares until
such legend has been removed):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR SUCH OTHER LAWS."
B. FILINGS. The Company shall make all necessary
Commission Filings and "blue sky" filings required to be made by the Company in
connection with the sale of the Securities to Shaar as required by all
applicable laws, and shall provide a copy thereof to Shaar promptly after such
filing.
C. REPORTING STATUS. So long as Shaar beneficially owns
any of the Securities, the Company shall timely file all reports required to be
filed by it with the Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
D. LISTING. Except to the extent the Company lists its
Common Stock on The New York Stock Exchange or the Nasdaq National Market
System, the Company shall use its best efforts to maintain its listing of the
Common Stock on the Amex. If the Common Stock is delisted from the Amex, the
Company will use its best efforts to list the Common Stock on the most liquid
national securities exchange or quotation system that the Common Stock is
qualified to be listed on.
E. RESERVED CONVERSION SHARES. The Company at all times
from and after the date hereof shall have such number of shares of Common Stock
duly and validly authorized and reserved for issuance as shall be sufficient for
the conversion in full of the Series C Preferred Shares and the exercise in full
of the Warrants.
F. RIGHT OF FIRST REFUSAL. If, during the period
commencing on the date hereof and ending two years after the Closing Date (the
"RIGHT OF FIRST REFUSAL PERIOD"), the Company should propose (the "PROPOSAL") to
issue Common Stock or securities convertible into Common
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Stock (excluding compensatory options or warrants issued to employees, directors
and service providers at exercise prices not less than fair market value at the
time of issuance, which issuances are approved by the Board of Directors of the
Company) or debt at less than par value or having an effective annual interest
rate in excess of 11.9% and which would cause the Company upon issuance to have
aggregate indebtedness in respect of money borrowed in excess of $1,250,000
(each a "RIGHT OF FIRST REFUSAL SECURITY" and collectively, the "RIGHT OF FIRST
REFUSAL SECURITIES"), in each case on the date of issuance the Company shall be
obligated to offer a portion of such Right of First Refusal, Securities to Shaar
on the terms set forth in the Proposal (the "Offer") and Shaar shall have the
right, but not the obligation, to accept such Offer on such terms. The portion
of the Right of First Refusal Securities offered to Shaar will be equal to the
total number (or, if debt securities are being offered, the total principal
amount of such debt securities) of Right of First Refusal Securities being
offered by the Company multiplied by the fully diluted percentage of the
Company's common stock then owned by Shaar; provided, however, that in no event
will such fully diluted percentage exceed Shaar's fully diluted percentage
computed as of the Closing Date. The Company shall provide written notice to
Shaar of any Proposal, setting forth in full the terms and conditions thereof,
and Shaar shall then have 10 business days to accept or reject the Offer in
writing. If Shaar rejects the Offer or fails to respond within such 10-day
period, the Company may proceed with the issuance of the Right of First Refusal
Securities free from any rights of Shaar under this Section.
G. INFORMATION. Each of the parties hereto acknowledges
and agrees that Shaar shall not be provided with, nor be given access to, any
material non-public information relating to the Company and the Material
Subsidiaries.
H. ACCOUNTING AND RESERVES. The Company shall maintain a
standard and uniform system of accounting and shall keep proper books and
records and accounts in which full, true and correct entries shall be made of
its transactions, all in accordance with GAAP applied on a consistent basis
through all periods, and shall set aside on such books for each fiscal year all
such proper reserves for depreciation, obsolescence, amortization, bad debts and
other purposes in connection with its operations as are required by such
principles so applied.
I. ISSUANCES OF ADDITIONAL CONVERTIBLE PREFERRED SHARES
OR CONVERTIBLE DEBENTURES. So long as Shaar beneficially owns any of the Series
C Preferred Shares, the Company shall not issue any additional convertible
preferred stock or convertible debt securities, in each case, convertible into
Common Stock at a floating conversion price without the prior written consent of
Shaar.
J. PRESS RELEASE. Following the consummation of the
transactions contemplated hereto, the parties hereto with jointly issue a press
release substantially in the form of Exhibit C hereto.
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V. TRANSFER AGENT INSTRUCTIONS
A. The Company undertakes and agrees that no instruction
other than the instructions referred to in this Section V and customary stop
transfer instructions prior to the registration and sale of the Common Stock
pursuant to an effective Securities Act registration statement will be given to
its transfer agent for the Common Stock and that the Conversion Shares and the
Warrant Shares otherwise shall be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and applicable
law. Nothing contained in this Section V A. shall affect in any way Shaar's
obligations and agreement to comply with all applicable securities laws upon
resale of such Common Stock. If, at any time, Shaar provides the Company with an
opinion of counsel reasonably satisfactory to the Company that registration of
the resale by Shaar of such Common Stock is not required under the Securities
Act and that the removal of restrictive legends is permitted under applicable
law, the Company shall permit the transfer of such Common Stock and, promptly
instruct the Company's transfer agent to issue one or more certificates for
Common Stock without any restrictive legends endorsed thereon.
X. Xxxxx shall have the right to convert the Series C
Preferred Shares by telecopying an executed and completed Notice of Conversion
(as defined in the Series C Certificate of Designation) to the Company. Each
date on which a Notice of Conversion is telecopied to and received by the
Company in accordance with the provisions hereof shall be deemed a Conversion
Date (as defined in the Series C Certificate of Designation). The Company shall
transmit the certificates evidencing the shares of Common Stock issuable upon
conversion of any Series C Preferred Shares (together with certificates
evidencing any Series C Preferred Shares not being so converted) to Shaar via
express courier, by electronic transfer or otherwise, within five business days
after receipt by the Company of the Notice of Conversion (the "Delivery Date").
Within 30 days after Shaar delivers the Notice of Conversion to the Company,
Shaar shall deliver to the Company the Series C Preferred Shares being
converted.
X. Xxxxx shall have the right to purchase shares of
Common Stock pursuant to exercise of the Warrants in accordance with its
applicable terms of the Warrants. The last date that the Company may deliver
shares of Common Stock issuable upon any exercise of Warrants is referred to
herein as the "Warrant Delivery Date."
D. The Company understands that a delay in the issuance
of the shares of Common Stock upon the conversion of the Series C Preferred
Shares or exercise of the Warrants beyond the Delivery Date or Warrant Delivery
Date could result in economic loss to Shaar. As compensation to Shaar for such
loss (and not as a penalty), the Company agrees to pay to Shaar for late
issuance of Common Stock issuable upon conversion of the Series C Preferred
Shares or exercise of the Warrants in accordance with the following schedule
(where "No. Business Days" is defined as the number of business days beyond
thirty days from the Delivery Date or the Warrant Delivery Date, as applicable):
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COMPENSATION FOR EACH 10 SHARES OF
SERIES C PREFERRED SHARES NOT
CONVERTED TIMELY OR 500 SHARES OF
COMMON STOCK UPON EXERCISE OF
NO. BUSINESS DAYS WARRANTS NOT ISSUED TIMELY
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1 $25
2 50
3 75
4 100
5 125
6 150
7 175
8 200
9 225
10 250
more than 10 $250 + $100 for each Business
Day Late Beyond 10 days
The Company shall pay to Shaar the compensation described above by the transfer
of immediately available funds upon Shaar's demand. Nothing herein shall limit
Shaar's right to pursue actual damages for the Company's failure to issue and
deliver Common Stock to Shaar, and in addition to any other remedies which may
be available to Shaar, in the event the Company fails for any reason to effect
delivery of such shares of Common Stock within thirty business days after the
Delivery Date or the Warrant Delivery Date, as applicable, Shaar shall be
entitled to rescind the relevant Notice of Conversion or exercise of Warrants by
delivering a notice to such effect to the Company, whereupon the Company and
Shaar shall each be restored to their respective original positions immediately
prior to delivery of such Notice of Conversion on delivery.
VI. CLOSING DATE
The date and time (THE "CLOSING DATE") of the Exchange (the
"CLOSING") shall be February 27, 2004 at 10:00 a.m., time being of the essence,
or such other date and time as shall be mutually agreed upon in writing.
VII. CONDITIONS TO THE COMPANY'S OBLIGATIONS
The Company's obligation to complete the Exchange pursuant to
this Agreement is conditioned upon:
E. Delivery by Shaar to the Company of the Series B
Preferred Stock;
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F. Delivery by Shaar to the Company of a general
release, substantially in the form of Exhibit D hereto,
G. The accuracy on the Closing Date of the
representations and warranties of Shaar contained in this Agreement as if made
on the Closing Date (except for representations and warranties which, by their
express terms, speak as of and relate to a specified date, in which case such
accuracy shall be measured as of such specified date) and the performance by
Shaar in all material respects on or before the Closing Date of all covenants
and agreements of Shaar required to be performed by it pursuant to this
Agreement on or before the Closing Date; and
H. There shall not be in effect any law or order,
ruling, judgment or writ of any court or public or governmental authority
restraining, enjoining or otherwise prohibiting any of the transactions
contemplated by this Agreement.
VIII. CONDITIONS TO SHAAR'S OBLIGATIONS
Shaar's obligation to complete the Exchange pursuant to this
Agreement is conditioned upon:
A. Delivery by the Company to Shaar of evidence that the
Series C Certificate of Designation has been filed and is effective.
B. Delivery by the Company to Shaar of one or more
certificates (I/N/O Shaar or I/N/O Shaar's nominee) evidencing the Securities to
be acquired by Shaar pursuant to this Agreement;
C. The accuracy on the Closing Date of the
representations and warranties of the Company contained in this Agreement as if
made on the Closing Date (except for representations and warranties which, by
their express terms, speak as of and relate to a specified date, in which case
such accuracy shall be measured as of such specified date) and the performance
by the Company in all material respects on or before the Closing Date of all
covenants and agreements of the Company required to be performed by it pursuant
to this Agreement on or before the Closing Date, all of which shall be confirmed
to Shaar by the chief executive officer of the Company by delivery of a
certificate to that effect;
D. There not having occurred (i) any general suspension
of trading in, or limitation on prices listed for, the Common Stock on the Amex,
(ii) the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States or any of its territories, protectorates or
possessions, or (iv) in the case of the foregoing, existing at the date of this
Agreement, a material acceleration or worsening thereof;
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X. Xxxxxxxx by the Company to Shaar of a general
release, substantially in the form of Exhibit E hereto;
F. There shall not be in effect any law or order,
ruling, judgment or writ of any court or public or governmental authority
restraining, enjoining or otherwise prohibiting any of the transactions
contemplated by this Agreement;
G. Delivery by the Company of irrevocable instructions
to the Company's transfer agent to reserve 1,100,000 shares of Common Stock for
issuance of the Conversion Shares and the Warrant Shares;
H. The Company shall have obtained all consents,
approvals or waivers from governmental authorities and third persons necessary
for the execution, delivery and performance of the Documents and the
transactions contemplated thereby, all without material cost to the Company; and
X. Xxxxx shall have received such additional documents,
certificates, payment, assignments, transfers and other delivers, as it or its
legal counsel may reasonably request and as are customary to effect a closing of
the matters herein contemplated.
IX. TERMINATION
A. TERMINATION BY MUTUAL WRITTEN CONSENT. This Agreement
may be terminated and the transactions contemplated hereby may be abandoned, for
any reason and at any time prior to the Closing Date, by the mutual written
consent of the Company and Shaar.
B. TERMINATION BY THE COMPANY OR SHAAR. This Agreement
may be terminated and the transactions contemplated hereby may be abandoned by
action of the Company or Shaar if (i) the Closing shall not have occurred at or
prior to 5:00 p.m., New York City time, on March 5, 2004 (the "LATEST CLOSING
DATE"); provided, however, that the right to terminate this Agreement pursuant
to this Section IX.B. shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement has been the cause of or
resulted in the failure of the Closing to occur at or before such time and date.
C. TERMINATION BY SHAAR. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by Shaar at
any time prior to the Closing Date, if (i) the Company shall have failed to
comply in all material respects with its covenants or agreements contained in
this Agreement, (ii) there shall have been a breach by the Company with respect
to any representation or warranty made by it in this Agreement, (iii) there
shall have occurred any event or development, or there shall be in existence any
condition, having or reasonably likely to have a material adverse effect upon
the Company or (iv) the Company shall have failed to satisfy the conditions
provided in Section VII hereof.
12
D. TERMINATION BY THE COMPANY. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by the
Company at any time prior to the Closing Date, if (i) Shaar shall have failed to
comply in all material respects with its covenants or agreements contained in
this Agreement or (ii) there shall have been a breach by Shaar with respect to
any representation or warranty made by it in this Agreement.
E. EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to this Section IX, this Agreement shall
thereafter become void and have no effect, and no party hereto shall have any
liability or obligation to any other party hereto in respect of this Agreement,
except that the provisions of Article X, this Section IX.E and Section IX.F
shall survive any such termination; provided, however, that no party shall be
released from any liability hereunder if this Agreement is terminated and the
transactions contemplated hereby abandoned by reason of (i) willful failure of
such party to perform its obligations hereunder or (ii) any misrepresentation
made by such party of any matter set forth herein.
X. SURVIVAL; INDEMNIFICATION
A. The representations, warranties and covenants made by
each of the Company and Shaar in this Agreement, the annexes, schedules and
exhibits hereto and in each instrument, agreement and certificate entered into
and delivered by them pursuant to this Agreement, shall survive the Closing and
the consummation of the transactions contemplated hereby. In the event of a
breach or violation of any of such representations, warranties or covenants, the
party to whom such representations, warranties or covenants have been made shall
have all rights and remedies for such breach or violation available to it under
the provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or prior
to the Closing Date.
B. The Company hereby agrees to indemnify and hold
harmless Shaar, its Affiliates and their respective officers, directors,
partners and members (collectively, the "SHAAR INDEMNITEES"), from and against
any and all losses, claims, damages, judgments, penalties, liabilities and
deficiencies (collectively, "Losses"), and agrees to reimburse Shaar Indemnitees
for all out of-pocket expenses (including the fees and expenses of legal
counsel), in each case promptly as incurred by Shaar Indemnitees and to the
extent arising out of or in connection with:
1. any misrepresentation, omission of fact or
breach of any of the Company's representations or warranties contained
in this Agreement or the other Documents, or the annexes, schedules or
exhibits hereto or thereto or any instrument, agreement or certificate
entered into or delivered by the Company pursuant to this Agreement or
the other Documents;
2. any failure by the Company to perform in any
material respect any of its covenants, agreements, undertakings or
obligations set forth in this Agreement or the other Documents or any
instrument, certificate or agreement
-13-
entered into or delivered by the Company pursuant to this Agreement or
the other Documents.
X. Xxxxx hereby agrees to indemnify and hold harmless
the Company, its Affiliates and their respective officers, directors, partners
and members (collectively, the "COMPANY INDEMNITEES"), from and against any and
all Losses, and agrees to reimburse the Company Indemnitees for all
out-of-pocket expenses (including the fees and expenses of legal counsel), in
each case promptly as incurred by the Company Indemnitees and to the extent
arising out of or in connection with:
1. any misrepresentation, omission of fact, or
breach of any of Shaar's representations or warranties contained in
this Agreement or the other Documents, or the annexes, schedules or
exhibits hereto or thereto or any instrument, agreement or certificate
entered into or delivered by Shaar pursuant to this Agreement or the
other Documents; and
2. any failure by Shaar to perform in any
material respect any of its covenants, agreements, undertakings or
obligations set forth in this Agreement or the other Documents or any
instrument, certificate or agreement entered into or delivered by Shaar
pursuant to this Agreement or the other Documents.
D. Promptly after receipt by either party hereto seeking
indemnification pursuant to this Section X (an "INDEMNIFIED PARTY") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "CLAIM"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section X is being sought (the "INDEMNIFYING PARTY") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party except
to the extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in
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circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified Party. Except as provided above, the Indemnifying Party shall not,
in connection with any Claim in the same jurisdiction, be liable for the fees
and expenses of more than one firm of legal counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party (which consent shall
not unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnified Party from all liabilities with respect to such Claim or judgment.
E. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.
XI. 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
conflicts of law principles of such state.
XII. SUBMISSION TO JURISDICTION
Each of the parties hereto consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
the other Documents. Each party hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may effectively do so, any defense of an
inconvenient forum or improper venue to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile. Each party hereto irrevocably and
unconditionally consents to the service of any and all process in any such
action or proceeding in such courts by the mailing of copies of such process by
certified or registered airmail at its address specified in Section XVIII. Each
party hereto agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
-15-
XIII. WAIVER OF JURY TRIAL
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS. EACH PARTY HERETO (i)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
XIV. COUNTERPARTS; EXECUTION
This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument. A facsimile transmission of
this signed Agreement shall be legal and binding on all parties hereto.
XV. HEADINGS
The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
XVI. SEVERABILITY
In the event any one or more of the provisions contained in
this Agreement or in the other Documents should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
XVII. ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS
This Agreement and the Documents constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, modification or waiver
of this Agreement shall be binding unless executed in writing, by all parties.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
-16-
XVIII. NOTICES
Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail, postage
prepaid, or by a nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight courier service, or,
if mailed, three (3) days after the date of deposit in the United States mails,
as follows:
A. if to the Company, to:
CVF Technologies Corporation
0000 Xxxx Xxxxxx, Xxxxx 0
Xxxxxxxxxxxxx, XX 00000
Attention. Xxxxxxx X. Xxxxxx
(000)000-0000
(000)000-0000 (Fax)
with a copy to:
Xxxxxxx Xxxx LLP
Xxx X&X Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxx, Esq.
(000)000-0000
(000)000-0000 (Fax)
B. if to Shaar, to:
The Shaar Fund, Ltd.
c/x Xxxxxxxx Capital Management
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
(000)000-0000
(000)000-0000 (Fax)
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with a copy to:
Xxxxxxx, Xxxxx & Xxxxxxxxx, LLP
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxx, Esq.
(000)000-0000
(000)000-0000 (Fax)
The Company or Shaar may change the foregoing address by notice given pursuant
to this Section XVIII.
XIX. CONFIDENTIALITY
Each of the Company and Shaar agrees to keep confidential and
not to disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by law (including, without limitation, pursuant to Item 601(b)(10)
of Regulation S-K under the Securities Act and the Exchange Act).
XX. NON DISPARAGEMENT
Each of the Company and Shaar agrees not to make or cause to
be made any statement, oral, written or electronic, which disparages the other,
or the other's respective officers, directors, employees and affiliates.
XXI. ASSIGNMENT
This Agreement shall not be assignable by either of the
parties hereto prior to the Closing without the prior written consent of the
other party, and any attempted assignment contrary to the provisions hereby
shall be null and void; provided, however, that Shaar may assign its rights and
obligations hereunder, in whole or in part, to any affiliate of Shaar.
[SIGNATURE PAGE FOLLOWS.]
-18-
In Witness Whereof, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.
CVF TECHNOLOGIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
19
'
In Witness Whereof, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.
THE SHAAR FUND, LTD.
By: InterCaribbean Services, Ltd.,
Sole Director
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxxx
------------------------
Title: Attorney-in-Fact
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------
Title: Attorney-in-Fact
-19-
EXHIBIT A
CERTIFICATE OF DESIGNATION
-20-
EXHIBIT B
COMMON STOCK PURCHASE WARRANTS
-21-
EXHIBIT C
PRESS RELEASE
CVF TECHNOLOGIES CORPORATION RESTRUCTURES
PREFERRED SHARES
CVF Technologies Corporation and the holder of its outstanding Series B
Convertible Preferred Stock entered into a transaction to restructure the
Company's equity.
On February______, 2004, the holder exchanged its Series B Convertible Preferred
Stock with a stated value of $3,390,000 and accrued dividends of approximately
$630,000, which was accruing dividends at an annual rate of 10%, for 1,000,000
shares of CVF common stock and a new Series C 6% Convertible Preferred Stock
with a stated value of $1,000,000, convertible into common stock at $1 per
share. The 6% annual dividend will accrue for two years and be payable on
February_______, 2006 and semi-annually thereafter. The Series C Preferred will
be subject to mandatory redemption on February___________, 2006; however, CVF's
obligation to redeem will be limited to cash available to it at that time in
excess of one year's prospective working capital. CVF also issued to the former
Series B holder a three-year warrant to purchase 100,000 shares of CVF common
stock at an exercise price of $.35 per share.
This represents an important and beneficial development for CVF and all of its
shareholders. The former Series B holder's agreement to restructure its
preferred stock significantly streamlines the Company's capital structure,
largely eliminating the overhand on CVF's common shares and creating a stronger
company going forward. CVF appreciates the holder's professionalism throughout
this process, and its willingness to work constructively on behalf of the
Company and the interests of all shareholders and other constituencies.
-22-
EXHIBIT D
SHAAR RELEASE
For and in consideration of the obligations of THE SHAAR FUND, LTD.
("SHAAR"), and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, CVF TECHNOLOGIES CORPORATION ("CVF"),
individually and derivatively and on behalf of its predecessors, successors,
affiliates, subsidiaries, heirs, trustees, officers, directors, successors and
assigns (hereinafter individually and collectively referred to as the "CVF
Releasing Parties"), hereby release, acquit, and forever discharge SHAAR, its
subsidiaries, affiliates, advisors, including, without limitation, Shaar
Advisory Services, N.V., Xxxxxxxx Capital Management LLC, Cita Investments
Israel Ltd., and all of its officers, directors, members, shareholders,
employees, consultants, attorneys, representatives, agents, predecessors,
successors, assigns, heirs, executors, administrators and personal
representatives and each and every one of them, including, without limitation,
Xxx Xxxxxxxx and Xxx Xxxxxxx, (hereinafter individually and collectively
referred to as the "Shaar Released Parties") of and from any and all actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
covenants, contracts, agreements, promises, damages, judgments, obligations,
liabilities, controversies, costs, expenses, attorneys' fees, executions,
claims, and demands whatsoever, whether known or unknown, asserted or
unasserted, in law or equity, of every kind and nature whatsoever, which the CVF
Releasing Parties ever had, now have, or hereafter can, shall, or may have, or
claim to have, against the Shaar Released Parties, for, upon, or by reason of
any matter, cause of action, or thing, whatsoever from the beginning of the
world to the date hereof (collectively, the "Shaar Released Claims"), but
expressly excluding from the Shaar Released Claims (i) any claim arising under
the Exchange Agreement, dated February 20,2004, between SHAAR and CVF (the
"Exchange Agreement"), (ii) any claim with respect to any act or omission that
occurs after the time that the Exchange Agreement is executed and delivered and
(iii) any claim pursuant to any equity or debt security issued by CVF, or any
right to acquire any equity or debt security of CVF, registered in the name of
SHAAR or any nominee of SHAAR, which debt or equity security or right is
acquired by or after the date of this Release. The Shaar Released Claims
include, without limitation, any claims for breach of implied or express
contract, interference with contract, breach of promise, promissory estoppel,
misrepresentation, negligence, negligent misrepresentation, breach of fiduciary
duty, actual or constructive fraud, including, without limitation, common law
fraud or fraud asserted under any statutory theory under any federal or state
law and including, without limitation, under any theory of primary, secondary or
control person liability, estoppel, defamation, conspiracy, business or economic
interference, violation of any federal or state securities law or administrative
regulation, violation of public policy and for attorneys' or other professional
fees, that the CVF Releasing Parties, including, without limitation, their
successors, trustees, heirs, executors, administrators, successors and assigns,
now have, ever had or may hereafter have, whether known or unknown, suspected or
unsuspected, up to and including the date of this Release.
This RELEASE may not be changed orally.
-23-
IN WITNESS WHEREOF, the RELEASOR has duly executed this Release as of
the 27th day of February, 2004.
CVF TECHNOLOGIES CORPORATION
By:_________________________________________
-24-
EXHIBIT E
COMPANY RELEASE
For and in consideration of the obligations of CVF TECHNOLOGIES
CORPORATION ("CVF"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, THE SHAAR FUND, LTD. ("SHAAR"),
individually and derivatively and on behalf of its predecessors, successors,
affiliates, subsidiaries, heirs, trustees, officers, directors, successors and
assigns, including, without limitation, Shaar Advisory Services N.V., Xxxxxxxx
Capital Management LLC, Cita Investments Israel Ltd., Xxx Xxxxxxxx and Xxx
Xxxxxxx (hereinafter individually and collectively referred to as the "SHAAR
Releasing Parties"), hereby release, acquit, and forever discharge CVF, its
subsidiaries, affiliates, advisors, and all of its officers, directors, members,
shareholders, employees, consultants, attorneys, representatives, agents,
predecessors, successors, assigns, heirs, executors, administrators and personal
representatives and each and every one of them, (hereinafter individually and
collectively referred to as the "CVF Released Parties") of and from any and all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, covenants, contracts, agreements, promises, damages, judgments,
obligations, liabilities, controversies, costs, expenses, attorneys' fees,
executions, claims, and demands whatsoever, whether known or unknown, asserted
or unasserted, in law or equity, of every kind and nature whatsoever, which the
SHAAR Releasing Parties ever had, now have, or hereafter can, shall, or may
have, or claim to have, against the CVF Released Parties, for, upon, or by
reason of any matter, cause of action, or thing, whatsoever from the beginning
of the world to the date hereof (collectively, the "CVF Released Claims"), but
expressly excluding from the CVF Released Claims (i) any claim arising under the
Exchange Agreement, dated February 20, 2004, between CVF and SHAAR (the
"Exchange Agreement") and (ii) any claim with respect to any act or omission
that occurs after the time that the Exchange Agreement is executed and
delivered. The CVF Released Claims include, without limitation, any claims for
breach of implied or express contract, interference with contract, breach of
promise, promissory estoppel, misrepresentation, negligence, negligent
misrepresentation, breach of fiduciary duty, actual or constructive fraud,
including, without limitation, common law fraud or fraud asserted under any
statutory theory under any federal or state law and including, without
limitation, under any theory of primary, secondary or control person liability,
estoppel, defamation, conspiracy, business or economic interference, violation
of any federal or state securities law or administrative regulation, violation
of public policy and for attorneys' or other professional fees, that the SHAAR
Releasing Parties, including, without limitation, their successors, trustees,
heirs, executors, administrators, successors and assigns, now have, ever had or
may hereafter have, whether known or unknown, suspected or unsuspected, up to
and including the date of this Release.
This RELEASE may not be changed orally.
-25-
IN WITNESS WHEREOF, the RELEASOR has duly executed this Release as of
the 27th day of February, 2004.
THE SHAAR FUND, LTD.
By: InterCaribbean Services, Ltd.,
Sole Director
By:________________________________
Name:
Title: Attorney-in-Fact
By:________________________________
Name:
Title: Attorney-in-Fact
-26-
