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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 17, 2000
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5B Technologies Corporation
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(Exact name of Registrant as Specified in its Charter)
Delaware 0-27190 11-3529387
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
One Jericho Plaza, Jericho, New York 11753
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code (516) 938-3400
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Not Applicable
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On April 17, 2000, 5B Technologies Corporation ("5B") received an
equity investment of $1 million from a fund managed by WEC Asset Management LLC,
a New York-based investment management company ("WEC"). In connection with its
investment, WEC received shares of 5B's Series A 6% Convertible Preferred Stock,
convertible over the next three years into shares of 5B's Common Stock, and
warrants to purchase 5B's Common Stock.
A copy of the press release further describing the transaction is
attached hereto as Exhibit 99.1.
5B hereby incorporates by reference (i) the Certificate of Designations
of Series A 6% Convertible Preferred Stock attached hereto as Exhibit 3.3, (ii)
the Common Stock Purchase Warrant attached hereto as Exhibit 4.6, (iii) the
Securities Purchase Agreement attached hereto as Exhibit 10.13, (iv) the
Registration Rights Agreement attached hereto as Exhibit 10.14 and (v) the press
release attached hereto as Exhibit 99.1, each made a part hereof, into this Item
5.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
3.3 Certificate of Designations of Series A 6%
Convertible Preferred Stock of 5B Technologies
Corporation, filed with the Secretary of State of the
State of Delaware on April 14, 2000.
4.6 Common Stock Purchase Warrant, dated April 17, 2000,
issued to La Vista Investors LLC by 5B Technologies
Corporation.
10.13 Securities Purchase Agreement, dated April 17, 2000,
by and between 5B Technologies Corporation and La
Vista Investors LLC.
10.14 Registration Rights Agreement, dated April 17, 2000,
by and between 5B Technologies Corporation and La
Vista Investors LLC.
99.1 Press Release, dated April 18, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
5B TECHNOLOGIES CORPORATION
Date: April 28, 2000 By /s/ Glenn Nortman
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Glenn Nortman, Chief Executive Officer
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION
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3.3 Certificate of Designations of Series A 6% Convertible
Preferred Stock of 5B Technologies Corporation, filed with the
Secretary of State of the State of Delaware on April 14, 2000.
4.6 Common Stock Purchase Warrant, dated April 17, 2000, issued to
La Vista Investors LLC by 5B Technologies Corporation.
10.13 Securities Purchase Agreement, dated April 17, 2000, by and
between 5B Technologies Corporation and La Vista Investors
LLC.
10.14 Registration Rights Agreement, dated April 17, 2000, by and
between 5B Technologies Corporation and La Vista Investors
LLC.
99.1 Press Release, dated April 18, 2000.
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EXHIBIT 3.3
CERTIFICATE OF DESIGNATIONS OF
SERIES A 6% CONVERTIBLE PREFERRED STOCK OF
5B TECHNOLOGIES CORPORATION
PURSUANT TO SECTION 151 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned, Glenn Nortman, hereby certifies that:
I. I am the duly elected and acting Chief Executive Officer of 5B
Technologies Corporation, a Delaware corporation (the "CORPORATION").
II. The Certificate of Incorporation of the Corporation authorizes five
million (5,000,000) shares of preferred stock, $0.01 par value per share.
III. The following is a true and correct copy of resolutions duly adopted
by the Board of Directors of the Corporation (the "BOARD OF DIRECTORS") on April
13, 2000 pursuant to the Certificate of Incorporation of the Corporation and in
accordance with the provisions of the General Corporation Law of the State of
Delaware.
RESOLUTIONS
WHEREAS, the Board of Directors is authorized to provide for the issuance
of the shares of preferred stock in series, and by filing a certificate pursuant
to the applicable law of the State of Delaware, to establish and issue one or
more series of preferred stock with such voting powers, full or limited, or no
voting powers, and such designations, preferences and relative, participating,
optional or other special rights, and with such qualifications, limitations or
restrictions thereon as the Board of Directors may determine.
WHEREAS, the Board of Directors desires, pursuant to its authority as
aforesaid, to designate a new series of preferred stock, set the number of
shares constituting such series and fix the rights, preferences, privileges and
restrictions of such series.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
designates a new series of preferred stock and the number of shares constituting
such series and fixes the rights, preferences, privileges and restrictions
relating to such series as follows:
A. DESIGNATION, AMOUNT AND PAR VALUE. The series of preferred stock shall
be designated as the Series A 6% Convertible Preferred Stock (the "Series A
Preferred Stock"), and the number of shares so designated shall be three
thousand five hundred (3,500) (which shall not be subject to increase or
decrease). Each share of Series A Preferred Stock shall have a par value of
$0.01 per share and a stated value (the "Stated Value") of the Liquidation
Preference (as hereinafter defined in Section C(1)).
B. DIVIDENDS.
(1) Holders of the Series A Preferred Stock shall be entitled to receive,
out of funds legally available therefor, dividends at a rate equal to 6% (the
"Dividend Rate") of the Liquidation Preference per share per annum (subject to
appropriate adjustments in the event
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of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares), and no more, payable in accordance with
the provisions of this Certificate of Designations.
(2) At the election of the Corporation, each dividend on the Series A
Preferred Stock shall be paid on the Delivery Date (as defined in Subsection
G(2)(a) of this Certificate of Designations) either in shares of Common Stock of
the Corporation, $0.04 par value per share ("Common Stock"), or in cash with
respect to any shares of Series A Preferred Stock which are the subject of a
Notice of Conversion (as defined in Subsection G(2)(a) of this Certificate of
Designations). Dividends paid in shares of Common Stock shall be paid (based on
an assumed value of $1,000 per share) in full shares only, with a cash payment
equal to the value of any fractional shares. Each dividend paid in cash or
capital stock of the Corporation shall be mailed to the holders of record of the
Series A Preferred Stock as their names and addresses appear on the share
register of the Corporation or at the office of the transfer agent on the
corresponding dividend payment date. Holders of Series A Preferred Stock will
receive written notification from the Corporation or the transfer agent if a
dividend is paid in kind, which notification will specify the number of shares
of Common Stock paid as a dividend. All holders of shares of Common Stock issued
as dividends shall be entitled to all of the rights and benefits relating to
shares of Common Stock as set forth in the Corporation's Certificate of
Incorporation.
(3) Holders of the Series A Preferred Stock shall be entitled to payment of
any dividends in preference and priority to any payment of any cash dividend on
Common Stock or other class or series of capital stock ranking junior to the
Series A Preferred Stock (such stock being collectively referred to herein as
the "Junior Stock"). Dividends on the Series A Preferred Stock shall accrue with
respect to each share of the Series A Preferred Stock from the date on which
such share is issued and outstanding and thereafter shall be deemed to accrue
from day to day whether or not earned or declared and whether or not there
exists profits, surplus or other funds legally available for the payment of
dividends, and shall be cumulative so that if such dividends on the Series A
Preferred Stock shall not have been paid, or declared and set apart for payment,
the deficiency shall be fully paid or declared and set apart for payment before
any dividend shall be paid or declared or set apart for any Junior Stock and
before any purchase or acquisition of any Junior Stock is made by the
Corporation. At the earlier of: (1) the redemption or conversion of the Series A
Preferred Stock, or (2) the liquidation of the Corporation, any accrued but
undeclared dividends shall be paid to the holders of record of outstanding
shares of the Series A Preferred Stock in accordance with the provisions of this
Certificate of Designations. No accumulation of dividends on the Series A
Preferred Stock shall bear interest.
C. LIQUIDATION, DISSOLUTION OR WINDING UP.
(1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of the
Series A Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders,
before any payment shall be made to the holders of Junior Stock by reason of
their ownership thereof, an amount equal to one thousand dollars ($1,000) per
share of Series A Preferred Stock (the "Liquidation Preference") plus any
accrued but unpaid dividends (whether or not declared). If upon any such
liquidation, dissolution or winding up of
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the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of the Series A Preferred Stock the full amount to which they shall be
entitled, the holders of shares of the Series A Preferred Stock shall share
ratably in any distribution of the remaining assets and funds of the Corporation
in proportion to the respective amounts which would otherwise be payable in
respect of the shares held by them upon such distribution if all amounts payable
on or with respect to such shares were paid in full.
(2) After the payment of all preferential amounts required to be paid to
the holders of the Series A Preferred Stock upon the dissolution, liquidation,
or winding up of the Corporation, all of the remaining assets and funds of the
Corporation available for distribution to its stockholders shall be distributed
ratably among the holders of the Series A Preferred Stock and the Junior Stock,
with each share of Series A Preferred Stock being deemed, for such purpose, to
be equal to the number of shares of Common Stock, including fractions of a
share, into which such share of Series A Preferred Stock is convertible
immediately prior to the close of business on the business day fixed for such
distribution.
D. VOTING.
(1) Each holder of outstanding shares of Series A Preferred Stock
shall be entitled, at each meeting of stockholders of the Corporation (and with
respect to written consents of stockholders in lieu of meetings) with respect to
any and all matters presented to the stockholders of the Corporation for their
action or consideration, to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Series A Preferred Stock held by
such holder are convertible (as adjusted from time to time pursuant to
Subsection I hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent. Except as
provided by law, and by the provisions of Section J below, holders of Series A
Preferred Stock shall vote together with the holders Common Stock as a single
class.
(2) The holders of the Series A Preferred Stock shall not be entitled
to any rights of cumulative voting with respect to their shares.
E. OTHER SECURITIES. Subject to any limitations contained in this
Certificate of Designations, the Corporation's Certificate of Incorporation
and/or the Primary Documents (as defined in the Securities Purchase Agreement,
dated as of the Closing Date (as defined therein), hereinafter the "Securities
Purchase Agreement"), the Board of Directors of the Corporation reserves the
right to establish additional classes and/or series of capital stock of the
Corporation and to designate the preferences, limitations and relative rights of
any such classes and/or series; provided, however, that no such class and/or
series may have preferences, limitations and relative rights which are superior
to or senior to the preferences, limitations and relative rights granted to the
holders of the Series A Preferred Stock.
F. CAPITAL REORGANIZATION. If the Corporation shall at any time hereafter
subdivide or combine its outstanding shares of Common Stock, declare a dividend
payable in Common Stock, or in case of any capital reorganization or
reclassification of the shares of Common Stock of the Corporation, the number of
shares of the Series A Preferred Stock and the
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Stated Value of the Series A Preferred Stock shall be adjusted appropriately to
allow the holders of the Series A Preferred Stock, as nearly as reasonably
possible, to maintain (i) the aggregate Stated Value of the Series A Preferred
Stock, and (ii) their pro rata interest in the Corporation and in the Common
Stock upon conversion of the Series A Preferred Stock, that each holder had
prior to any such subdivision, combination, stock dividend, reorganization or
reclassification.
G. Conversion.
(1) The holders of the Series A Preferred Stock shall have conversion
rights as follows (the "Series A Preferred Stock Conversion Rights"):
(a) Each share of Series A Preferred Stock shall be convertible,
at the option of the holder thereof, at any time and from time to
time, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing $1,000, plus the amount of
any accrued and unpaid dividends the Corporation elects to pay in
Common Stock, by the Conversion Price (as defined below) in effect at
the time of conversion. The Conversion Price at which shares of Common
Stock shall be deliverable upon conversion of Series A Preferred Stock
without the payment of additional consideration by the holder thereof
(the "Conversion Price") shall be the lower of (i) nine dollars
($9.00) or (ii) 80% of the average of the three lowest Closing Bid
Prices of the shares of Common Stock during the thirty (30) trading
days immediately preceding the Series A Preferred Stock Conversion
Date (as hereinafter defined). For purposes of this Certificate of
Designations, the term "Closing Bid Price" means, for any security as
of any date, the closing bid price on the principal securities
exchange or trading market where the Common Stock is listed or traded
as reported by Bloomberg, L.P. ("Bloomberg") or, if applicable, the
closing bid price of the Common Stock in the over-the-counter market
on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported for the Common
Stock by Bloomberg, then 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 Closing Bid Price of the Common
Stock can not be calculated on such date on any of the foregoing
bases, the Closing Bid Price of the Common Stock on such date shall be
the fair market value as determined in good faith by the Board of
Directors of the Corporation and the holders of a majority of the
outstanding shares of Series A Preferred Stock being converted for
which the calculation of the Closing Bid Price is required in order to
determine the Conversion Price of such shares. "Trading day" shall
mean any day on which the Corporation's Common Stock is traded for any
period on the principal securities exchange or other securities market
on which the Common Stock is then being traded. If, during any period
following the Closing Date (such period, a "Blackout Period"), as a
result of the occurrence of any of the events set forth in Section
3(f) and 3(g) of the Registration Rights Agreement, dated as of the
Closing Date, by and between the Corporation and the Purchaser set
forth therein (the "Registration Rights Agreement"), the Purchaser set
forth therein is not able to sell shares of Common Stock issuable upon
conversion of, or in lieu of dividends on, shares of Series A
Preferred Stock pursuant to a registration statement filed pursuant to
such agreement, the holders of shares of Series A Preferred Stock
shall have the right, for the next three (3) trading days following
any Blackout Period, to designate as the Conversion Price any
Conversion Price that would
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have been applicable during such Blackout Period had such Series A
Preferred Stock shareholder delivered a Notice of Conversion with
respect to any such Series A Preferred Stock on any date during such
Blackout Period.
(b) In the event that the Corporation's stock is listed on the
Nasdaq SmallCap or National Market, at any time that the number of
shares of Common Stock issued (A) upon conversion of the Series A
Preferred Stock and (B) in lieu of dividend payments on the Series A
Preferred Stock, shall equal 19.9% or more of the Corporation's
outstanding Common Stock (a "Common Stock Redemption Event"), the
Corporation shall (x) redeem, all of the remaining shares of Series A
Preferred Stock at a price per share equal to 120% of the Liquidation
Preference per share of Series A Preferred Stock plus all accrued but
unpaid dividends on such shares of Series A Preferred Stock or (y)
call a special meeting of its stockholders for the purpose of
approving the transactions contemplated by the Securities Purchase
Agreement, including the issuance of the Series A Preferred Stock on
the terms set forth therein, together with any other approvals that
shall be required so as to cause the transactions contemplated by the
Securities Purchase Agreement to remain in compliance with the Rules
and Regulations of The Nasdaq Stock Market (including Rules 4300 and
4310 of Nasdaq's Non-Qualitative Designation Criteria in connection
with conversions of Series A Preferred Stock; such approvals are
referred to herein as the "Required Approvals"). The Corporation shall
determine within five (5) business days following the receipt of a
Notice of Conversion which of such actions it shall take, and shall
promptly furnish notice to each of the holders of Series A Preferred
Stock as to such determination, including, if applicable, a notice of
redemption. In no event shall the Corporation issue shares of Common
Stock upon conversion of, or in lieu of dividend payments on, the
Series A Preferred Stock, after the occurrence of a Common Stock
Redemption Event until the Required Approvals, if any, are obtained.
In no event may the Company issue more than 19.9% of the Corporation's
outstanding Common Stock shares of Common Stock as a result of a
conversion of Series A Preferred Stock pursuant to this Section G.
(c) If the Corporation elects to call a special meeting of its
stockholders pursuant to Subsection G(1)(b) of this Certificate of
Designations to obtain the Required Approvals, the Corporation shall
use its best efforts to obtain such Required Approvals within
forty-five (45) days after the date of the related Common Stock
Redemption Event (such forty-five (45) day period is referred to
herein as an "Approval Period"). If the Corporation does not obtain
the Required Approvals within the Approval Period and the Corporation
receives a Notice of Conversion after the termination of the Approval
Period, the Corporation must promptly redeem, all of the remaining
shares of Series A Preferred Stock at a price per share equal to 120%
of the Liquidation Preference per share of Series A Preferred Stock
plus all accrued but unpaid dividends on such shares of Series A
Preferred Stock.
(2) The Series A Preferred Stock Conversion Rights shall be
exercised as follows:
(a) The Corporation will permit each holder of Series A Preferred
Stock to exercise its right to convert the Series A Preferred Stock by
faxing an
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executed and completed notice of conversion (the "Notice of
Conversion") to the Corporation, and delivering within three (3)
business days thereafter, the original Notice of Conversion (and the
certificates representing the related shares of Series A Preferred
Stock) to the Corporation by hand delivery or by express courier, duly
endorsed. Each date on which a Notice of Conversion is faxed in
accordance with the provisions hereof shall be deemed a "Series A
Preferred Stock Conversion Date." The Corporation will transmit the
certificates representing the Common Stock issuable upon conversion of
the Series A Preferred Stock (together with certificates representing
the related shares of Series A Preferred Stock not so converted and,
if applicable, a check representing any fraction of a share not
converted) to such holder via express courier as soon as practicable,
but in all events no later than (the "Delivery Date") three (3)
business days after the Series A Preferred Stock Conversion Date. For
purposes of this Certificate of Designations, such conversion of the
Series A Preferred Stock shall be deemed to have been made immediately
prior to the close of business on the Series A Preferred Stock
Conversion Date.
(b) In lieu of delivering physical certificates representing the
Common Stock issuable upon the conversion of the Series A Preferred
Stock, provided that the Corporation's transfer agent is participating
in the Depository Trust Corporation ("DTC") Fast Automated Securities
Transfer program, on the written request of a holder of Series A
Preferred Stock who shall have previously instructed such holder's
prime broker to confirm such request to the Corporation's transfer
agent, the Corporation shall use its commercially reasonable efforts
to cause its transfer agent to electronically transmit such Common
Stock to such holder by crediting the account of the holder's prime
broker with DTC through its Deposit Withdrawal Agent Commission system
no later than the applicable Delivery Date.
(c) The Corporation will at all times have authorized and
reserved for the purpose of issuance a sufficient number of shares of
Common Stock to provide for the conversion of the Series A Preferred
Stock. The Corporation will use its commercially reasonable efforts at
all times to maintain a number of shares of Common Stock so reserved
for issuance that is no less than the sum of (i) two (2) times the
number that would then actually be issuable upon the conversion of
five thousand (5,000) shares of Series A Preferred Stock, and (ii) the
exercise of the Warrants (each as defined in the Securities Purchase
Agreement). Before taking any action which would cause an adjustment
reducing the Conversion Price below the established par value of the
shares of Common Stock issuable upon conversion of the Series A
Preferred Stock, the Corporation shall take any corporate action which
may, in the opinion of its counsel or in the opinion of counsel to
holders of the Series A Preferred Stock, be necessary in order that
the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Conversion
Price.
(3) In the event of a liquidation of the Corporation, the Series
A Preferred Stock Conversion Rights shall terminate at the close of business on
the first full day preceding the date fixed for the payment of any amounts
distributable on liquidation to the holders of the Series A Preferred Stock.
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(4) If the conversion is in connection with an underwritten offer
of securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may (subject to the rules of the SEC or unless the underwriter
reasonably objects), at the option of any holder tendering Series A Preferred
Stock for conversion, be conditioned upon the closing with the underwriter of
the sale of securities pursuant to such offering, in which event the person(s)
entitled to receive the Common Stock issuable upon such conversion of the Series
A Preferred Stock shall not be deemed to have converted such Series A Preferred
Stock until immediately prior to the closing of the sale of securities.
(5) A holder may not convert its shares of Series A Preferred
Stock or receive shares of Common Stock as payment of dividends hereunder to the
extent such conversion or receipt of such dividend payment would result in such
holder, together with any affiliate thereof, beneficially owning (as determined
in accordance with Section 13(d) of the Exchange Act (as defined below) and the
rules promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon conversion
of, and payment of accrued dividends on, the shares of Series A Preferred Stock
held by such holder after application of this Section. Since such holder will
not be obligated to report to the Corporation the number of shares of Common
Stock it may hold at the time of a conversion hereunder, unless the conversion
at issue would result in the issuance of shares of Common Stock in excess of
4.999% of the then outstanding shares of Common Stock without regard to any
other shares which may be beneficially owned by such holder or an affiliate
thereof, such holder shall have the authority and obligation to determine
whether the restriction contained in this Section will limit any particular
conversion hereunder and to the extent that such holder determines that the
limitation contained in this Section applies, the determination of which portion
of the shares of Series A Preferred Stock are convertible shall be the
responsibility and obligation of such holder. If such holder has delivered a
Notice of Conversion for shares of Series A Preferred Stock that, without regard
to any other shares that such holder or its affiliates may beneficially own,
would result in the issuance in excess of the permitted amount hereunder, the
Corporation shall notify such holder of this fact and shall honor the conversion
for the maximum number of shares of Series A Preferred Stock permitted to be
converted on such Conversion Date in accordance with the periods described in
Section G and, at the option of such holder, either retain shares of Series A
Preferred Stock tendered for conversion in excess of the permitted amount
hereunder for future conversions or return such excess shares of Series A
Preferred Stock permitted to such holder. The provisions of this Section may be
waived by a holder (but only as to itself and not to any other holder) upon not
less than 61 days prior notice to the Corporation. Other holders shall be
unaffected by any such waiver.
(6) No fractional shares of Common Stock shall be issued upon
conversion of the Preferred Stock. In lieu of fractional shares, the Corporation
shall pay cash equal to such fraction multiplied by the then effective and
applicable Conversion Price.
(7) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Certificate of Designations by the Corporation,
but will at all times in good faith assist in the carrying out of all the
provisions of this Certificate of Designations and in the taking of all such
action as may be
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necessary or appropriate in order to protect the Series A Preferred Stock
Conversion Rights of the holders of the Series A Preferred Stock against
impairment.
(8) In the event (a) that the Corporation declares a dividend (or
any other distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation, (b) that the Corporation subdivides or combines
its outstanding shares of Common Stock, (c) of any reclassification of the
Common Stock of the Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock or a stock dividend or stock distribution
thereon), (d) of any consolidation or merger of the Corporation into or with
another corporation, (e) of the sale of all or substantially all of the assets
of the Corporation, or (f) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation, then the Corporation shall cause
to be filed at its principal office or at the office of the transfer agent of
the Series A Preferred Stock, and shall cause to be mailed to each holder of the
Series A Preferred Stock at their last address as shown on the records of the
Corporation or such transfer agent, at least ten (10) days prior to the record
date specified in (i) below or twenty (20) days before the date specified in
(ii) below, a notice stating
(i) the record date of such dividend, distribution, subdivision
or combination, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such
dividend, distribution, subdivision or combination are to be
determined, or
(ii) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or winding
up.
(9) All shares of Series A Preferred Stock, plus all accrued
and unpaid dividends thereon, shall, without any further action on the part
of the Corporation, the holders of the Series A Preferred Stock or any other
person, automatically be converted into shares of Common Stock in accordance
with the terms of this Section G on April 17, 2003.
H. SINKING FUND. There shall be no sinking fund for the payment
of dividends, or liquidation preferences on the Series A Preferred Stock or the
redemption of any shares thereof.
I. REDEMPTION EVENTS. In case one or more of the following
events, each a redemption event, shall have occurred:
(a) if the Corporation fails to have the Registration Statement
covering the Registrable Securities (as such terms are defined in the
Registration Rights Agreement) first become effective within one
hundred fifty (150) days of the date of the Stock Purchase Agreement,
at the option of the Purchaser; or
(b) failure to deliver the shares of Common Stock required to be
delivered upon conversion of the shares of Series A Preferred
Stock in the manner and at the time required by Section 5 of the
Securities Purchase Agreement; or
(c) failure of the Corporation to have authorized the number of
shares of Common Stock issuable upon conversion of the shares of
Series A Preferred
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Stock or exercise of the Stock Purchase Warrants (as defined in the
Securities Purchase Agreement);
(d) failure on the part of the Corporation to cure any material
breach in a material provisions of this Certificate of Designations or
any of its other material covenants or agreements contained in the
Securities Purchase Agreement, or to cure any material breach in a
material representation or covenant contained in the Securities
Purchase Agreement or the Registration Rights Agreement, for a period
of ten (10) days after the date on which written notice of such
failure or breach requiring the same to be remedied has been given by
a registered holder of shares of Series A Preferred Stock to the
Corporation;
(e) a decree or order by a court having jurisdiction has been
entered adjudging the Corporation (or any Material Subsidiary) a
bankrupt or insolvent, or approving a petition seeking reorganization
of the Corporation (or any Material Subsidiary) under any applicable
bankruptcy law and such decree or order has continued undischarged or
unstayed for a period of sixty (60) days; or a decree or order of a
court having jurisdiction for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the
Corporation (or any Material Subsidiary) or of all or substantially
all of its property, or for the winding-up or liquidation of its
affairs, has been entered, and has remained in force undischarged or
unstayed for a period of sixty (60) days;
(f) the Corporation (or any Material Subsidiary) institutes
proceedings to be adjudicated a voluntary bankrupt, or consents to the
filing of a bankruptcy proceeding against it, or files a petition or
answer or consent seeking reorganization under applicable law, or
consents to the filing of any such petition or to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of all or substantially all of its property, or
makes an assignment for the benefit of creditors, or admits in writing
its inability to pay its debts generally as they become due; or if the
Corporation (or any Material Subsidiary) shall suffer any writ of
attachment or execution or any similar process to be issued or levied
against it or any significant part of its property which is not
released, stayed, bonded or vacated within sixty (60) days after its
issue or levy; or if the Corporation (or any Material Subsidiary)
takes corporate action in furtherance of any of the aforesaid purposes
or conditions; or
(g) if any default shall occur under any indenture, mortgage,
agreement, instrument or commitment evidencing or under which there is
at the time outstanding any indebtedness (excluding, non-recourse
indebtedness relating to the leasing or financing of equipment or
software) of the Corporation (or a Material Subsidiary), in excess of
$250,000, or which results in such indebtedness, in an aggregate
amount (with other defaulted indebtedness) in excess of $250,000
becoming due and payable prior to its due date and if such indenture
or instrument so requires, the holder or holders thereof (or a trustee
on their behalf) shall have declared such indebtedness due and
payable;
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(h) If a final judgment which, either alone or together with
other outstanding final judgments against the Corporation and its
subsidiaries, exceeds an aggregate of $250,000 shall be rendered
against the Corporation (or any Material Subsidiary) and such judgment
shall have continued undischarged or unstayed for thirty (30) days
after entry thereof; or
(i) If there shall occur a Change in Control of the Corporation
(as defined below). Nothing in this subsection shall limit the right
of a holder of Series A Preferred Stock to convert their shares of
Series A Preferred Stock on or prior to such Change in Control. For
purposes hereof, a "Change in Control" shall be deemed to have
occurred if (A) any person or group (as defined for purposes of
Regulation 13D of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) shall have become the beneficial owner or owners of
more than 50% of the outstanding voting stock of the Corporation; (B)
there shall have occurred a merger or consolidation in which the
Corporation or an affiliate of the Corporation is not the survivor or
in which holders of the Common Stock of the Corporation shall have
become entitled to receive cash, securities of the Corporation other
than voting common stock or securities of any other person; (C) at any
time persons constituting the Existing Board of Directors cease for
any reason whatsoever to constitute at least a majority of the members
of the Board of Directors of the Corporation; or (D) there shall have
occurred a sale of all or substantially all the assets of the
Corporation. For purposes hereof, the term "Existing Board of
Directors" shall mean the persons constituting the Board of Directors
of the Corporation on the date hereof, together with each new director
whose election, or nomination for election by the Corporation's
stockholders is approved by a vote of the majority of the members of
the Existing Board of Directors who are in office immediately prior to
the election or nomination of such director.
then, and in each and every such case, so long as such redemption
event has not been remedied, the holders of not less than fifty-one
percent (51%) of the shares of Series A Preferred Stock then
outstanding, by notice in writing to the Corporation (the date of such
notice the "Redemption Notice Date"), may demand that the Corporation
redeem, and the Corporation shall redeem, each share of Series A
Preferred Stock then outstanding at a price per share equal to one
hundred twenty-five percent (125%) of the sum of (x) the Stated Value
and (y) the aggregate accrued and unpaid dividends on such Redemption
Notice Date
For purposes of this Section I "Material Subsidiary" means any
subsidiary with respect to which the Corporation has directly or indirectly
invested, loaned, advanced or guaranteed the obligations of an aggregate amount
exceeding fifteen percent (15%) of the Corporation's gross assets, or the
Corporation's proportionate share of the assets or net income of which (based on
the subsidiary's most recent financial statements) exceed fifteen percent (15%)
of the Corporation's gross assets or net income, respectively, or the gross
revenues of which exceed fifteen percent (15%) of the gross revenues of the
Corporation based upon the most recent financial statements of such subsidiary
and the Corporation.
J. AMENDMENT. This Certificate of Designations constitutes an
agreement between the Corporation and the holders of the Series A Preferred
Stock. The Corporation shall not amend this Certificate of Designations or alter
or repeal the preferences, rights, powers or
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other terms of the Series A Preferred Stock so as to affect adversely the Series
A Preferred Stock, without the written consent or affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the then
outstanding shares of Series A Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class.
IN WITNESS WHEREOF, the Corporation., has caused its corporate
seal to be hereunto affixed and this certificate to be signed by Glenn Nortman,
its Chief Executive Officer, this 14th day of April, 2000.
5B TECHNOLOGIES CORPORATION
By: /s/ Glenn Nortman
------------------------------
Name: Glenn Nortman
Title: Chief Executive Officer
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EXHIBIT 4.6
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND
REGULATIONS THEREUNDER OR ANY STATE SECURITIES LAWS OR THE PROVISIONS OF THIS
WARRANT.
No. of Shares of Common Stock: 100,000
WARRANT
To Purchase Common Stock of
5B TECHNOLOGIES CORPORATION
THIS IS TO CERTIFY THAT La Vista Investors LLC, a Delaware limited
liability company, or its registered assigns, is entitled, at any time from the
Warrant Issuance Date (as hereinafter defined) to the Expiration Date (as
hereinafter defined), to purchase from 5B Technologies Corporation, a Delaware
corporation (the "Company"), one hundred thousand (100,000) shares of Common
Stock (as hereinafter defined and subject to adjustment as provided herein), in
whole or in part, including fractional parts, at a purchase price per share
equal to ten dollars ($10.00) (subject to any adjustments made to such amount
pursuant to Section 4 hereto) on the terms and conditions and pursuant to the
provisions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective meanings
set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common Stock
issued by the Company after the Closing Date, other than Warrant Stock.
"Book Value" shall mean, in respect of any share of Common Stock on any
date herein specified, the consolidated book value of the Company as of the last
day of any month immediately preceding such date, divided by the number of Fully
Diluted Outstanding shares of Common Stock as determined in accordance with GAAP
(assuming the payment of the exercise prices for such shares) by a firm of
independent certified public accountants of recognized national standing
selected by the Company and reasonably acceptable to the Holder.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
"Closing Date" shall have the meaning set forth in the Securities Purchase
Agreement.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
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"Common Stock" shall mean (except where the context otherwise indicates)
the Common Stock, par value $.04 per share, of the Company as constituted on the
Closing Date, and any capital stock into which such Common Stock may thereafter
be changed, and shall also include (i) capital stock of the Company of any other
class (regardless of how denominated) issued to the holders of shares of Common
Stock upon any reclassification thereof which is also not preferred as to
dividends or assets over any other class of stock of the Company and which is
not subject to redemption and (ii) shares of common stock of any successor or
acquiring corporation received by or distributed to the holders of Common Stock
of the Company in the circumstances contemplated by Section 4.4.
"Convertible Securities" shall mean evidences of indebtedness, shares of
stock or other securities, which are convertible into or exchangeable, with or
without payment of additional consideration in cash or property, for shares of
Common Stock, either immediately or upon the occurrence of a specified date or a
specified event.
"Current Warrant Price" shall mean ten dollars ($10.00) subject to any
adjustments to such amount made in accordance with Section 4 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1.
"Expiration Date" shall mean April 17, 2005.
"Fully Diluted Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all shares of Common Stock Outstanding at such date and all shares of Common
Stock issuable in respect of this Warrant and other options or warrants to
purchase, or securities convertible into, including without limitation the
shares of Common Stock outstanding on such date which would be deemed
outstanding in accordance with GAAP for purposes of determining book value or
net income per share.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as from time to time in effect.
"Holder" shall mean the Person in whose name the Warrant or Warrant Stock
set forth herein is registered on the books of the Company maintained for such
purpose.
"Market Price" per Common Share means for any security as of any date, the
closing bid price on the principal securities exchange or trading market where
the Common Stock is listed or traded as reported by Bloomberg, L.P.
("Bloomberg") or, if applicable, the closing bid price of the Common Stock in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no closing bid price is reported for the Common
Stock by Bloomberg, then 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 of the Common Stock can not be calculated on such date
on any of the foregoing bases, the Market Price of the Common Stock on such date
shall be the fair market value as determined in good faith by the Board of
Directors of the Company and the holders of a majority of the
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outstanding shares of Series A Preferred Stock being converted for which the
calculation of the Market Price is required.
"Other Property" shall have the meaning set forth in Section 4.4.
"Outstanding" shall mean, when used with reference to Common Stock, at any
date as of which the number of shares thereof is to be determined, all issued
shares of Common Stock, except shares then owned or held by or for the account
of the Company or any subsidiary thereof, and shall include all shares issuable
in respect of outstanding scrip or any certificates representing fractional
interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated a date even herewith by and between the Company and La Vista
Investors LLC, as it may be amended from time to time.
"Restricted Common Stock" shall mean shares of Common Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of a date even herewith by and between the Company and La
Vista Investors LLC, as it may be amended from time to time.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or of
any interest in either thereof, which would constitute a sale thereof within the
meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Issuance Date" shall mean the date hereof.
"Warrants" shall mean this Warrant and all warrants issued upon transfer,
division or combination of, or in substitution for, any thereof. All Warrants
shall at all times be identical as to terms and conditions and date, except as
to the number of shares of Common Stock for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number of shares of
Common Stock being purchased upon exercise of this Warrant pursuant to Section
2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the
holders of the Warrants upon the exercise thereof.
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2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. From and after the Warrant Issuance Date and until
5:00 P.M., New York City time, on the Expiration Date, Holder may exercise this
Warrant, on any Business Day, for all or any part of the number of shares of
Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder shall
deliver to the Company at the office or agency designated by the Company
pursuant to Section 12, (i) a written notice of Holder's election to exercise
this Warrant, which notice shall specify the number of shares of Common Stock to
be purchased, (ii) payment by cash, check or bank draft payable to the Company
of the Warrant Price in cash or by wire transfer or cashier's check drawn on a
United States bank or to the extent permitted under Section 2.5 by the Holder's
surrender of Warrant Stock (or the right to receive such number of shares)
having an aggregate Market Price equal to the Warrant Price for all shares then
being purchased and (iii) this Warrant. Such notice shall be substantially in
the form of the subscription form appearing at the end of this Warrant as
EXHIBIT A, duly executed by Holder or its agent or attorney. Upon receipt of the
items referred to in clauses (i), (ii) and (iii) above, the Company shall, as
promptly as practicable, and in any event within three (3) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to Holder a certificate or certificates representing the aggregate number of
full shares of Common Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as Holder shall request in the notice and shall be
registered in the name of Holder or, subject to Section 9, such other name as
shall be designated in the notice. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued, and Holder or any other Person so designated to be named therein shall
be deemed to have become a holder of record of such shares for all purposes, as
of the date the Warrant has been exercised by payment to the Company of the
Warrant Price. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Stock, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased shares of Common Stock called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant.
The Holder shall be entitled to exercise the Warrant 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 Holder's exercise right.
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 exercise of the
Warrant. The Company agrees, without cost or expense to the Holder, to take or
consent to any and all action necessary to effectuate relief under 11 U.S.C.
Section 362.
2.2. PAYMENT OF TAXES AND CHARGES. All shares of Common Stock issuable upon
the exercise of this Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable, and without any preemptive rights. The
Company shall pay all expenses in
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connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Market Price per share
of Common Stock on the relevant exercise date.
2.4. CONTINUED VALIDITY. A holder of shares of Common Stock issued upon the
exercise of this Warrant, in whole or in part (other than a holder who acquires
such shares after the same have been publicly sold pursuant to a Registration
Statement under the Securities Act or sold pursuant to Rule 144 thereunder),
shall continue to be entitled with respect to such shares to all rights to which
it would have been entitled as Holder under Sections 9, 10 and 14 of this
Warrant and subject to the terms thereof. The Company will, at the time of
exercise of this Warrant, in whole or in part, upon the request of Holder,
acknowledge in writing, in form reasonably satisfactory to Holder, its
continuing obligation to afford Holder all such rights; PROVIDED, HOWEVER, that
if Holder shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to Holder all such rights.
2.5. RIGHT TO CONVERT WARRANT. The Holder shall have the right to convert,
in whole or in part, this Warrant (the "Conversion Right") at any time prior to
the expiration of the Exercise Period into shares of Common Stock in accordance
with this Section 2.5, provided that such Conversion Right shall not be
available to the Holder in the event that the registration statement filed
pursuant to the Registration Rights Agreement covering the Registrable
Securities (as defined in the Registration Rights Agreement) is effective. Upon
exercise of the Conversion Right, the Company shall deliver to the Holder
(without payment by the Holder of the Warrant Price) that number of shares of
Common Stock equal to the quotient obtained by dividing (x) the value of the
portion of this Warrant being converted at the time the Conversion Right is
exercised (determined by subtracting the Warrant Price for the portion of this
Warrant being converted (in effect immediately prior to the exercise of the
Conversion Right) from the amount obtained by multiplying the number of shares
of Common Stock issuable upon the whole or partial exercise of this Warrant, as
the case may be, by the Market Price immediately prior to the exercise of the
Conversion Right) by (y) the Market Price of one share of Common Stock
immediately prior to the exercise of the Conversion Right.
The Conversion Right may be exercised by the Holder, at any time or from
time to time, prior to its expiration, on any business day by delivering a
written notice (the "Conversion Notice") to the Company at the offices of the
Company, exercising the Conversion Right and specifying (i) the total number of
shares of Common Stock the Holder will purchase pursuant to the conversion, and
(ii) a place and date not less than two (2) nor more than twenty (20) Business
Days from the date of the Conversion Notice for the closing of such purchase.
At any closing under this Section 2.5, (i) the Holder will surrender this
Warrant, and (ii) the Company will deliver to the Holder a certificate or
certificates for the number of shares of Common Stock issuable upon such
conversion. If this Warrant shall have been converted only in part, the Company
shall, at the time of delivery of said stock certificate or
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certificates, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical to this
Warrant, or, at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issue and delivery of such stock certificates and new Warrants, except that, in
case such stock certificates and/or new Warrants shall be registered in a name
or names other than the name of the Holder, funds sufficient to pay all stock
transfer taxes that are payable upon the issuance of such stock certificates or
new Warrants shall be paid by the Holder at the time of delivering the notice of
exercise mentioned above.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Sections 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered on
the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of the Company referred to in Section 2.1
or the office or agency designated by the Company pursuant to Section 12,
together with a written assignment of this Warrant substantially in the form of
EXHIBIT B hereto duly executed by Holder or its agent or attorney. Upon such
surrender, the Company shall, subject to Section 9, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense the new Warrant or Warrants under this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its aforesaid
office or agency, books for the registration and the registration of transfer of
the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is exercisable,
or the price at which such shares may be purchased upon exercise of this
Warrant, shall be subject to adjustment from time to time as set forth in this
Section 4. The Company shall give Holder
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notice of any event described below which requires an adjustment pursuant to
this Section 4 at the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS.
(a) If at any time prior to the Expiration Date the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive any dividend or other distribution of:
(i) cash,
(ii) any evidences of its indebtedness, any shares of
its stock or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or
Additional Shares of Common Stock), or
(iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of
its stock or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or
Additional Shares of Common Stock),
then Holder shall be entitled to receive such dividend or distribution as if
Holder had exercised the Warrant. A reclassification of the Common Stock (other
than a change in par value, or from par value to no par value or from no par
value to par value) into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Company to the holders
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of its Common Stock of such shares of such other class of stock within the
meaning of this Section 4.2 and, if the outstanding shares of Common Stock shall
be changed into a larger or smaller number of shares of Common Stock as a part
of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.
(b) In case the Company shall issue any Common Stock, or any
rights, options or warrants to all holders of record of its Common Stock
entitling all holders to subscribe for or purchase shares of Common Stock at a
price per share less than the Market Price per share of the Common Stock on the
date fixed for such issue, the Current Warrant Price in effect immediately prior
to the close of business on the date fixed for such determination shall be
reduced to the amount determined by multiplying such Current Warrant Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the close of business on the date fixed for
such determination plus the number of shares of Common Stock which the aggregate
of the offering price of the total number of shares of Common Stock so offered
for subscription or purchase would purchase at such Market Price and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduced amount to become effective immediately
after the close of business on the date fixed for such determination. For the
purposes of this clause (b), (i) the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company,
(ii) in the case of any rights, options or warrants which expire by their terms
not more than 60 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Current Warrant Price shall be made until the
expiration or exercise of all rights, options or warrants, whereupon such
adjustment shall be made in the manner provided in this clause (b), but only
with respect to the shares of Common Stock actually issued pursuant thereto and
(iii) the adjustments described in this Section 4.2(b) shall not apply to (x)
the issuance of options or Common Stock pursuant to a stock option or other
compensation plan adopted by the Board of Directors of the Company or (y) the
issuance of Common Stock pursuant to an acquisition of another company or entity
by the Company by merger, consolidation, stock acquisition or purchase of all or
substantially all the assets of such other company. Such adjustment shall be
made successively whenever any event specified above shall occur. In the event
that any or all rights, options or warrants covered by this clause (b) are not
so issued or expire or terminate before being exercised, the Current Warrant
Price then in effect shall be appropriately readjusted.
4.3. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(f) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event requiring
an adjustment shall occur. For the purpose of any, any specified event shall be
deemed to have occurred at the close of business on the date of its occurrence.
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(g) FRACTIONAL INTERESTS. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.
(h) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(i) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board of
Directors of the Company shall be required to make a determination in good faith
of the fair value of any item under this Section 4, such determination may be
challenged in good faith by the Holder, and any dispute shall be resolved by an
investment banking firm of recognized national standing selected by the Holder
and reasonably acceptable to the Company.
4.4. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION
OF ASSETS. In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of the Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate, subject to the Holder's consent, in order to provide for
adjustments of shares of Common Stock for which this Warrant is exercisable
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 4. For purposes of this Section 4.4, "common stock of the
successor or acquiring corporation" shall include stock of such corporation of
any class which is not preferred as to dividends or assets over any other class
of stock of such corporation and which is not subject to redemption and shall
also include any evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe
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for or purchase any such stock. The foregoing provisions of this Section 4.4
shall similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.5. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from time
to time the Company shall take any action in respect of its Common Stock, other
than any action taken in the ordinary course of the Company's business or any
action described in this Section 4, which would have a material adverse effect
upon the rights of the Holder, the number of shares of Common Stock and/or the
purchase price thereof shall be adjusted in such manner as may be equitable in
the circumstances, as determined in good faith by an investment bank selected by
Holder.
4.6. CERTAIN LIMITATIONS. Notwithstanding anything herein to the contrary,
the Company agrees not to enter into any transaction which, by reason of any
adjustment hereunder, would cause the Current Warrant Price to be less than the
par value per share of Common Stock.
4.7. NO VOTING RIGHTS. This Warrant shall not entitle its Holder to any
voting rights or other rights as a shareholder of the Company.
5. NOTICES TO HOLDER
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common Stock
for which this Warrant is exercisable, or whenever the price at which a share of
such Common Stock may be purchased upon exercise of the Warrants, shall be
adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by an executive officer of the Company setting forth,
in reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated, specifying the number of shares of Common Stock
for which this Warrant is exercisable and (if such adjustment was made pursuant
to Section 4.4 or 4.5) describing the number and kind of any other shares of
stock or Other Property for which this Warrant is exercisable, and any change in
the purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate to be
delivered to the Holder in accordance with Section 14.2. The Company shall keep
at its office or agency designated pursuant to Section 12 copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by the Holder, its representatives, or any
prospective purchaser of a Warrant designated by the Holder.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation, or
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(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least thirty (30) Business Days' prior written notice of the date on which a
record date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least thirty (30)
Business Days' prior written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause also shall specify (i) the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 14.2.
6. NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (c) use its commercially reasonable
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form reasonably
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
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7. RESERVATION AND AUTHORIZATION OF COMMON STOCK
From and after the Closing Date, the Company shall at all times reserve and
keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the number
of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record as of the close of business on a Business Day. The
Company will not at any time close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of any
Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred, hypothecated
or assigned before satisfaction of the conditions specified in this Section 9,
which conditions are intended to ensure compliance with the provisions of the
Securities Act with respect to the Transfer of any Warrant or any Warrant Stock.
Holder, by acceptance of this Warrant, agrees to be bound by the provisions of
this Section 9.
9.1. RESTRICTIVE LEGEND. The Holder by accepting this Warrant and any
Warrant Stock agrees that this Warrant and the Warrant Stock issuable upon
exercise hereof may not be assigned or otherwise transferred unless and until
(i) the Company has received an opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the
Securities Act, or (ii) a registration statement relating to such securities has
been filed by the Company and declared effective by the Commission.
12
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(a) Each certificate for Warrant Stock issuable hereunder shall bear a
legend substantially worded as follows unless such securities have been sold
pursuant to an effective registration statement under the Securities Act:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act") or
any state securities laws. The securities may not be offered for sale,
sold, assigned, offered, transferred or otherwise distributed for
value except (i) pursuant to an effective registration statement under
the Act or any state securities laws or (ii) pursuant to an exemption
from registration or prospectus delivery requirements under the Act or
any state securities laws in respect of which the Company has received
an opinion of counsel satisfactory to the Company to such effect.
Copies of the agreement covering both the purchase of the securities
and restricting their transfer may be obtained at no cost by written
request made by the holder of record of this certificate to the
Secretary of the Company at the principal executive offices of the
Company."
(b) Except as otherwise provided in this Section 9, the Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or any state
securities laws and may not be transferred in violation of such Act,
the rules and regulations thereunder or any state securities laws or
the provisions of this Warrant."
9.2. NOTICE OF PROPOSED TRANSFERS. Prior to any Transfer or attempted
Transfer of any Warrants or any shares of Restricted Common Stock, the Holder
shall give five (5) days' prior written notice (a "Transfer Notice") to the
Company of Holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and obtain from counsel to Holder an
opinion that the proposed Transfer of such Warrants or such Restricted Common
Stock may be effected without registration under the Securities Act or state
securities laws. After the Company's receipt of the Transfer Notice and opinion,
such Holder shall thereupon be entitled to Transfer such Warrants or such
Restricted Common Stock, in accordance with the terms of the Transfer Notice.
Each certificate, if any, evidencing such shares of Restricted Common Stock
issued upon such Transfer and the Warrant issued upon such Transfer shall bear
the restrictive legends set forth in Section 9.1, unless in the opinion of such
counsel such legend is not required in order to ensure compliance with the
Securities Act.
9.3. REQUIRED REGISTRATION. Pursuant to the terms and conditions set forth
in the Registration Rights Agreement, the Company shall prepare and file with
the Commission not later than the thirtieth (30th) day after the Closing Date, a
Registration Statement relating to the
13
<PAGE>
offer and sale of the Common Stock issuable upon exercise of the Warrants and
shall use its commercially reasonable efforts to cause the Commission to declare
such Registration Statement effective in accordance with the terms set forth in
Section 2(a) of the Registration Rights Agreement.
9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing provisions
of Section 9, the restrictions imposed by this Section upon the transferability
of the Warrants, the Warrant Stock and the Restricted Common Stock (or Common
Stock issuable upon the exercise of the Warrants) and the legend requirements of
Section 9.1 shall terminate as to any particular Warrant or share of Warrant
Stock or Restricted Common Stock (or Common Stock issuable upon the exercise of
the Warrants) (i) when and so long as such security shall have been effectively
registered under the Securities Act and applicable state securities laws and
disposed of pursuant thereto, or (ii) when the Company shall have received an
opinion of counsel that such shares may be transferred without registration
thereof under the Securities Act and applicable state securities laws. Whenever
the restrictions imposed by Section 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company upon written request of the Holder, at the expense of the Company, a new
Warrant bearing the following legend in place of the restrictive legend set
forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN
WARRANT CONTAINED IN SECTION 9 HEREOF TERMINATED ON APRIL
17, 2002, AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Whenever the restrictions imposed
by this Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate representing such Common
Stock not bearing the restrictive legends set forth in Section 9.1.
9.5. LISTING ON SECURITIES EXCHANGE. If the Company shall list any shares
of Common Stock on any securities exchange, it will, at its expense, list
thereon, maintain and, when necessary, increase such listing of, all shares
of Common Stock issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this Warrant so long
as any shares of Common Stock shall be so listed during the Exercise Period.
10. SUPPLYING INFORMATION
The Company shall cooperate with Holder in supplying such information as
may be reasonably necessary for Holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock.
14
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11. LOSS OR MUTILATION
Upon receipt by the Company from Holder of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of this
Warrant and indemnity reasonably satisfactory to it (it being understood that
the written agreement of the Holder shall be sufficient indemnity), and in case
of mutilation upon surrender and cancellation hereof, the Company will execute
and deliver in lieu hereof a new Warrant of like tenor to Holder; PROVIDED, in
the case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant, such office to be
initially located at One Jericho Plaza, Jericho, New York 11753, fax: (516)
938-3995, provided, however, that the Company shall provide prior written notice
to Holder of a change in address no less than thirty (30) days prior to such
change.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
14. MISCELLANEOUS
14.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Expiration Date. If the
Company fails to make, when due, any payments provided for hereunder, or fails
to comply with any other provision of this Warrant, the Company shall pay to
Holder such amounts as shall be sufficient to cover any direct losses, damages,
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
14.2. NOTICE GENERALLY. 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:
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(a) if to the Company, to: 5B Technologies Corporation
One Jericho Plaza
Jericho, New York 11753
Attention: Glenn Nortman
Tel: (516) 938-3400
Fax: (516) 938-3995
with a copy to: Piper Marbury Rudnick & Wolfe LLP
1251 Avenue of the Americas
New York, New York 10020
Attention: Danal F. Abrams, Esq.
Tel: (212) 835-6000
Fax: (212) 835-6001
(b) if to the Purchaser to: La Vista Investors LLC
WEC Asset Management LLC
110 Colabaugh Pond Road
Croton-on-Hudson, New York 10520
New York, New York 10048
Attention: Daniel J. Saks
Tel: (914) 271-2211
Fax: (914) 817-0889
with a copy to: Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
Attention: Mark Saks, Esq.
Tel: (212) 326-0140
Fax: (212) 326-0806
The Company or the Holder may change the foregoing address by notice given
pursuant to this Section 14.2.
14.3. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of any failure by the
Company to perform or observe in any respect any of its covenants, agreements,
undertakings or obligations set forth in this Warrant.
14.4. REMEDIES. Holder in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
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14.5. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and, with
respect to Section 9 hereof, holders of Warrant Stock, and shall be enforceable
by any such Holder or holder of Warrant Stock.
14.6. AMENDMENT. This Warrant and all other Warrants may be
modified or amended or the provisions hereof waived only with the prior written
consent of the Company and the Holder.
14.7. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
14.8. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
14.9. GOVERNING LAW. This Warrant shall be governed by the laws
of the State of New York, without regard to the provisions thereof relating to
conflict of laws. The Company consents to the jurisdiction of the federal courts
whose districts encompass any part of the City of New York or the state courts
of the State of New York sitting in the City of New York in connection with any
dispute arising under this Warrant or any of the transactions contemplated
hereby, and hereby waives, to the maximum extent permitted by law, any
objection, including any objections based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions.
[REMAINDER OF PAGE INTENTIONALLY BLANK, SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and its corporate seal to be impressed hereon and attested by its Secretary or
an Assistant Secretary.
Dated: April 17, 2000
5B TECHNOLOGIES CORPORATION
By: /s/ Glenn Nortman
------------------------------
Name: Glenn Nortman
Title: Chief Executive Officer
Attest:
By: /s/ Anthony Fernandez
---------------------------
Name:
Title:
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for the purchase of ______ Shares of Common Stock of 5B Technologies
Corporation, and herewith makes payment therefor in cash or by check or bank
draft made payable to the Company, all at the price and on the terms and
conditions specified in this Warrant and requests that certificates for the
shares of Common Stock hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of and delivered to
_____________ whose address is _________________ and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.
-------------------------------
(Name of Registered Owner)
-------------------------------
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF
COMMON STOCK
and does hereby irrevocably constitute and appoint _______ ________________
attorney-in-fact to register such transfer on the books of 5B Technologies
Corporation, maintained for the purpose, with full power of substitution in the
premises.
Dated: Print Name:
--------------------- --------------------------
Signature:
---------------------------
Witness:
------------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT 10.13
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of April 17, 2000 (this
"Agreement"), is entered into by and between 5B TECHNOLOGIES CORPORATION, a
Delaware corporation (the "Company"), and LA VISTA INVESTORS LLC, a Delaware
limited liability company.
W I T N E S S E T H:
WHEREAS, the Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemptions from registration provided by
Regulation D ("Regulation D") promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), and/or Section 4(2) of the Securities Act; and
WHEREAS, the Purchaser wishes to purchase, and the Company wishes to issue
and sell, upon the terms and conditions of this Agreement for an aggregate
purchase price of one million dollars ($1,000,000), (i) one thousand (1,000)
shares (the "Shares") of the Company's 6% Convertible Series A Preferred Stock,
stated value one thousand dollars ($1,000) per share, par value $.01 per share
(the "Preferred Stock") which shall be governed by the Certificate of
Designations attached hereto as EXHIBIT A (the "Certificate of Designations")
and (ii) warrants ("Stock Purchase Warrants") to purchase one hundred thousand
(100,000) shares (the "Warrants") of the Company's common stock, par value $.04
per share (the "Common Stock"); and
WHEREAS, the Series A Preferred Stock shall be convertible into shares of
the Company's Common Stock on the terms set forth in the Certificate of
Designations, and the Stock Purchase Warrants (which shall be in substantially
the form attached as EXHIBIT B) may be exercised for the purchase of Common
Stock, on the terms set forth therein.
NOW, THEREFORE, in consideration of the premises the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE
a. PURCHASE OF SHARES AND WARRANTS. Purchaser hereby agrees to purchase
from the Company, and the Company hereby agrees to issue and sell to the
Purchaser, the Shares and the Warrants for an aggregate purchase price of one
million dollars ($1,000,000) which shall be payable on the Closing Date (as
defined herein) in immediately available funds.
b. CLOSINGS. The Shares and the Warrants to be purchased by Purchaser
hereunder, in definitive form, and in such denominations as Purchaser or its
representative, if any, may request upon at least twenty-four hours' prior
notice to the Company, shall be delivered by or on behalf of the Company for the
account of Purchaser, against payment by the Purchaser of the aggregate purchase
price one million dollars ($1,000,000) therefor by wire transfer to an
<PAGE>
account of the Company, all at the offices of Pryor Cashman Sherman & Flynn LLP,
410 Park Avenue, New York, New York 10022, New York time on the date hereof, or
at such other time and date as Purchaser or their representative, if any, and
the Company may agree upon in writing, such date being referred to herein as the
"Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION
The Purchaser represents and warrants to, and covenants and agrees with,
the Company as follows:
a. The Purchaser is (i) experienced in making investments of the kind
described in this Agreement and the related documents, (ii) able, by reason of
the business and financial experience of its management, to protect its own
interests in connection with the transactions described in this Agreement and
the related documents, and (iii) able to afford the entire loss of its
investment in the Shares and the Warrants.
b. All subsequent offers and sales by the Purchaser of the Shares and the
Warrants and the Common Stock issuable upon conversion or exercise of, or in
lieu of dividend payments on the Shares and the Warrants, it shall have
purchased, shall be made pursuant to an effective registration statement under
the Securities Act or pursuant to an applicable exemption from such
registration.
c. The Purchaser understands that the Shares and the Warrants are being
offered and sold to it in reliance upon exemptions from the registration
requirements of the United States federal securities laws, and that the Company
is relying upon the truth and accuracy of the Purchaser's representations and
warranties, and the Purchaser's compliance with its agreements, each as set
forth herein, in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Shares and the Warrants.
d. The Purchaser: (A) has been provided with sufficient information with
respect to the business of the Company and such documents relating to the
Company as the Purchaser has requested and Purchaser has carefully reviewed the
same including, without limitation, the Company's Form 10-K for the fiscal year
ended December 31, 1999 filed with the Securities and Exchange Commission (the
"Commission"), (B) has been provided with such additional information with
respect to the Company and its business and financial condition as the
Purchaser, or the Purchaser's agent or attorney, has requested, and (C) has had
access to management of the Company and the opportunity to discuss the
information provided by management of the Company and any questions that the
Purchaser had with respect thereto have been answered to the full satisfaction
of the Purchaser.
e. The Purchaser has the requisite corporate power and authority to enter
into this Agreement and the registration rights agreement, dated as of the date
hereof, between the Company and the Purchaser (the "Registration Rights
Agreement").
f. This Agreement and the Registration Rights Agreement and the
transactions contemplated hereby and thereby, have been duly and validly
authorized, executed and delivered
2
<PAGE>
by the Purchaser; and such agreements, when executed and delivered by the
Company will each be a valid and binding agreement of the Purchaser, enforceable
in accordance with their respective terms, except to the extent that enforcement
of each such agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and to general principles of
equity.
g. The execution and delivery of this Agreement and the Registration Rights
Agreement, and the consummation by the Purchaser of the transactions
contemplated by this Agreement and the Registration Rights Agreement do not and
will not conflict with or result in a breach by the Purchaser of any of the
terms or provisions of, or constitute a default under, the organizational
documents of the Purchaser, or any material indenture, mortgage, deed of trust
or other agreement or instrument to which the Purchaser or any of its
subsidiaries is a party or by which they or any of their properties or assets
are bound, or any existing applicable law, rule, or regulation or any applicable
decree, judgment or order of any court or United States or foreign federal or
state regulatory body, administrative agency, or any other governmental body
having jurisdiction over the Purchaser, its subsidiaries, or any of their
properties or assets.
3. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Purchaser that:
a. ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
the Company's subsidiaries, if any, is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction.
Each of the Company and its subsidiaries, if any, is duly qualified as a foreign
corporation in all jurisdictions in which the failure to so qualify would have a
material adverse effect on the Company and its subsidiaries taken as a whole.
SCHEDULE 3(a) lists all subsidiaries of the Company and, except as noted
therein, all of the outstanding capital stock of all such subsidiaries is owned
of record and beneficially by the Company or one of the wholly owned
subsidiaries.
b. CAPITALIZATION. On the date hereof, the authorized capital of the
Company consists of 17,500,000 shares of Common Stock, par value $.04 per share,
of which 2,135,500 shares are issued and outstanding and 5,000,000 shares of
Preferred Stock, par value $.01 per share of which no shares are outstanding.
SCHEDULE 3(b) sets forth all of the options, warrants and convertible securities
of the Company, and any other rights to acquire securities of the Company
(collectively, the "Derivative Securities") which are outstanding on the date
hereof, including in each case (i) the name and class of such Derivative
Securities, (ii) the issue date of such Derivative Securities, (iii) the number
of shares of Common Stock of the Company into which such Derivative Securities
are convertible as of the date hereof, (iv) the conversion or exercise price or
prices of such Derivative Securities as of the date hereof, (v) the expiration
date of any conversion or exercise rights held by the owners of such Derivative
Securities, and (vi) any registration rights associated with such Derivative
Securities or outstanding Common Stock.
c. CONCERNING THE COMMON STOCK AND THE WARRANTS. The Shares, the
Warrants, and Common Stock issuable upon conversion of, or in lieu of dividend
payments on the Shares,
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and upon exercise of the Warrants shall be duly and validly issued, fully paid
and non-assessable, will not be subject to preemptive rights and will not
subject the holder thereof to personal liability by reason of being such a
holder. There are currently no preemptive rights of any stockholder of the
Company, as such, to acquire the Shares, the Warrants or the Common Stock
issuable to the Purchaser pursuant to the terms of the Shares and the Warrants.
d. REPORTING COMPANY STATUS. The Common Stock is registered under Section
12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Company has duly filed all materials and documents required to be filed pursuant
to all reporting obligations under either Section 13(a) or 15(d) of the Exchange
Act, if any, prior to the offer and sale of the Securities (as defined below).
The Common Stock is listed and traded on the NASADQ SmallCap Stock Market, and
the Company is not aware of any pending or contemplated action or proceeding of
any kind to suspend the trading of the Common Stock.
e. AUTHORIZED SHARES. The Company has available a sufficient number of
authorized and unissued shares of Common Stock as may be necessary to effect the
conversion of the Shares and the exercise of the Warrants. The Company
understands and acknowledges the potentially dilutive effect to the Common Stock
of the issuance of shares of Common Stock upon the conversion of the Shares and
the exercise of the Warrants. The Company further acknowledges that its
obligation to issue shares of Common Stock upon conversion of the Shares and
upon exercise of 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 becomes 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 Preferred Shares. The Company
agrees, without cost or expense to the Purchaser, to take or consent to any and
all action necessary to effectuate relief under 11 U.S.C. 362.
f. LEGALITY. The Company has the requisite corporate power and
authority to enter into this Agreement and the Registration Rights Agreement,
and to issue and deliver the Shares, the Warrants and the Common Stock issuable
upon conversion of, or in lieu of dividend payments on, the Shares and the
exercise of the Warrants.
g. TRANSACTION AGREEMENTS. This Agreement, the Registration Rights
Agreement, the Certificate of Designations and the Stock Purchase Warrants
(collectively, the "Primary Documents"), and the transactions contemplated
hereby and thereby, have been duly and validly authorized by the Company; this
Agreement and the Registration Rights Agreement have been duly executed and
delivered by the Company and this Agreement is, and the other Primary Documents,
when executed and delivered by the Company, will each be, a legal, valid and
binding agreement of the Company, enforceable in accordance with their
respective terms, except to the extent that enforcement of each of the Primary
Documents may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally and to general principles of equity.
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h. NON-CONTRAVENTION. The execution and delivery of this Agreement and each
of the other Primary Documents, and the consummation by the Company of the
transactions contemplated by this Agreement and each of the other Primary
Documents, does not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under, the
Certificate of Incorporation or By-laws of the Company, or any material
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which they or any of their
properties or assets are bound, or any existing applicable law, rule or
regulation or any applicable decree, judgment or order of any court or United
States or foreign federal or state regulatory body, administrative agency, or
any other governmental body having jurisdiction over the Company, its
subsidiaries or any of their properties or assets. Except as set forth on
SCHEDULE 3(h), neither the filing of the registration statement required to be
filed by the Company pursuant to the Registration Rights Agreement nor the
offering or sale of the Shares or the Warrants as contemplated by this
Agreement, and the shares of Common Stock into which all such securities may be
converted or exercised, as applicable, gives rise to any rights, other than
those which have been waived or satisfied on or prior to the Closing Date, for
or relating to the registration of any shares of the Common Stock.
i. APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization or stock
exchange or market is required to be obtained by the Company for the entry into
or the performance of this Agreement and the other Primary Documents.
j. SEC FILINGS. None of the reports or documents filed by the Company with
the Commission (the "SEC Documents") contained, at the time they were filed, any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein, or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
k. STABILIZATION. Neither the Company, nor any of its affiliates, has taken
or may take, directly or indirectly, any action designed to cause or result in,
or which has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the shares of Common Stock.
l. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company's SEC
Documents, since December 31, 1999, there has been no material adverse change
nor any material adverse development in the business, properties, operations,
financial condition, outstanding securities or results of operations of the
Company and its subsidiaries taken as a whole.
m. FULL DISCLOSURE. Except as set forth on SCHEDULE 3(m), there is no fact
known to the Company (other than general economic conditions known to the public
generally) that has not been disclosed in writing to the Purchaser (i) that
could reasonably be expected to have a material adverse effect upon the
condition (financial or otherwise) or the earnings, business affairs, properties
or assets of the Company, or (ii) that could reasonably be expected to
materially and adversely affect the ability of the Company to perform the
obligations set forth in the Primary Documents. The representations and
warranties of the Company set forth in this
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Agreement (and the schedules thereto) do not contain any untrue statement of a
material fact or omit any material fact necessary to make the statements
contained herein, in light of the circumstances under which they were made, not
misleading.
n. TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company has good and
marketable title to all of its material properties and assets, both real and
personal, and has good title to all its leasehold interests, in each case
subject only to mortgages, pledges, liens, security interests, sale agreements,
encumbrances or charges created in the ordinary course of business.
o. PERMITS. The Company has all franchises, permits, licenses and any
similar authority necessary for the conduct of its business as now conducted,
the lack of which would materially and adversely affect the business or
financial condition of the Company. The Company is not in default in any respect
under any of such franchises, permits, licenses or similar authority.
p. ABSENCE OF LITIGATION. Except as disclosed in the Company's SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against or affecting the Company
or any of its subsidiaries, in which an unfavorable decision, ruling or finding
would have a material adverse effect on the properties, business, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, or the transactions contemplated by the Primary
Documents, or which would adversely affect the validity or enforceability of, or
the authority or ability of the Company to perform its obligations under, the
Primary Documents.
q. NO DEFAULT. Each of the Company and its subsidiaries is not in default
in the performance or observance of any obligation, covenant or condition
contained in any indenture, mortgage, deed of trust or other instrument or
agreement to which it is a party or by which it or its property may be bound.
r. TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE 3(r) or
disclosed in the Company's public filings with the Commission, there are no
agreements, understandings or proposed transactions between the Company and any
of its officers, directors or affiliates that, had they existed on December 31,
1999, will be required to be disclosed in the Company's 1999 Annual Report to
stockholders.
s. EMPLOYMENT MATTERS. The Company is in compliance in all respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified
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in all material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
t. INSURANCE. The Company maintains property and casualty, general
liability, personal injury and other similar types of insurance with financially
sound and reputable insurers that is adequate, consistent with industry
standards and the Company's historical claims experience. The Company has not
received notice from, and has no knowledge of any threat by, any insurer (that
has issued any insurance policy to the Company) that such insurer intends to
deny coverage under or cancel, discontinue or not renew any insurance policy
covering the Company or any of its Subsidiaries presently in force.
u. TAXES. All applicable tax returns required to be filed by the Company
and each of its subsidiaries have been prepared and filed in compliance with all
applicable laws, or if not yet filed have been granted extensions of the filing
dates which extensions have not expired, and all taxes, assessments, fees and
other governmental charges upon the Company, its subsidiaries, or upon any of
their respective properties, income or franchises, shown in such returns and on
assessments received by the Company or its subsidiaries to be due and payable
have been paid, or adequate reserves therefor have been set up if any of such
taxes are being contested in good faith; or if any of such tax returns have not
been filed or if any such taxes have not been paid or so reserved for, the
failure to so file or to pay would not in the aggregate have a material adverse
effect on the business or financial condition of the Company and its
subsidiaries, taken as a whole.
v. FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any of its
directors, officers or other employees has (i) used any Company funds for any
unlawful contribution, endorsement, gift, entertainment or other unlawful
expense relating to any political activity; (ii) made any direct or indirect
unlawful payment of Company funds to any foreign or domestic government official
or employee; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other similar payment to any person.
w. INTERNAL CONTROLS. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
x. INVESTMENT COMPANY ACT. The Company is not conducting, and will not
conduct, its business in a manner which would cause it to become, an "investment
company," as defined in Section 3(a) of the Investment Company Act of 1940, as
amended.
y. AGENT FEES. Other (i) the cash payment of $30,000 and issuance of a
Stock Purchase Warrant to purchase 6,000 shares of Common Stock to Banyan
Investment Advisors, Inc. and (ii) the cash payment of $50,000 and issuance of a
Stock Purchase Warrant to purchase
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4,000 shares of Common Stock to Institutional Finance Group, Inc., the Company
has not incurred any liability for any finder's or brokerage fees or agent's
commissions in connection with the offer and sale of the transactions
contemplated by this Agreement.
z. PRIVATE OFFERING. Subject to the accuracy of the Purchaser's
representations and warranties set forth in Section 2 hereof, (i) the offer,
sale and issuance of the Shares and the Warrants, (ii) the issuance of Common
Stock in lieu of dividend payments on the Shares, and (iii) the conversion
and/or exercise of such securities into shares of Common Stock, each as
contemplated by the Primary Documents are exempt from the registration
requirements of the Securities Act. The Company agrees that neither the Company
nor anyone acting on its behalf will offer any of the Preferred Stock or the
Stock Purchase Warrants or any similar securities for issuance or sale, or
solicit any offer to acquire any of the same from anyone so as to render the
issuance and sale of such securities subject to the registration requirements of
the Securities Act. The Company has not offered or sold the Preferred Stock or
the Stock Purchase Warrants by any form of general solicitation or general
advertising, as such terms are used in Rule 502(c) under the Securities Act.
aa. ENVIRONMENTAL MATTERS. Neither the Company and its subsidiaries, nor
any predecessor in interest has ever caused or permitted any Hazardous Material
(as defined below) to be released, treated or disposed of on, at, under or
within any real property owned, leased or operated by the Company and its
subsidiaries or any predecessor in interest, and no such real property has ever
been used (either by the Company and its subsidiaries, any predecessor in
interest) as a treatment, storage or disposal site for any Hazardous Material.
The Company has no liabilities with respect to Hazardous Materials, and to the
knowledge of the Company, after due inquiry, no facts or circumstances exist
which could give rise to liabilities with respect to Hazardous Materials, which
could have any reasonable likelihood of having a material adverse effect on the
Company. For purposes of this Agreement "Hazardous Materials" shall mean (a) any
pollutants or contaminations, (b) any asbestos or insulation or other material
composed of or containing asbestos and (c) any petroleum product and any
hazardous, toxic or dangerous waste, substance or material defined as such in,
or for purposes of, the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, or (d) any other
applicable federal, state, local or other statute, law, ordinance, code, rule,
regulation, order or decree concerning the protection of human health or the
environment or otherwise regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect.
bb. INTELLECTUAL PROPERTY. Except as set forth in the SEC Documents, to
the best of the Company's knowledge, each of the Company and its subsidiaries
owns or possesses adequate rights to use all material patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names
and copyrights which are described in the SEC Documents; except as set forth
in the SEC Documents, the Company has not received any notice of, and has no
knowledge of, any infringement of or conflict with asserted rights of the
Company by others with respect to any patent, patent rights, inventions,
trade secrets, know-how, trademarks, service marks, trade names and
copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business of
the Company and its subsidiaries, taken as a whole, as presently conducted;
and, except as set forth in the SEC Documents, the
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Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with the asserted rights of others with respect
to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names and copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the condition (financial or
otherwise), earnings, operations, or business of the Company and its
subsidiaries, taken as a whole, as presently conducted.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS
A. TRANSFER RESTRICTIONS. The Purchaser acknowledges that, except as
provided in the Registration Rights Agreement, (1) neither the Shares, the
Warrants or the Common Stock issuable upon conversion of, or in lieu of dividend
payments on, the Shares or upon exercise of the Warrants, have been, or are
being, registered under the Securities Act, and such securities may not be
transferred unless (A) subsequently registered thereunder, or (B) they are
transferred pursuant to an exemption from such registration; and (2) any sale of
the Shares, the Warrants or the Common Stock issuable upon conversion or
exchange thereof (collectively, the "Securities") made in reliance upon Rule 144
under the Securities Act may be made only in accordance with the terms of said
Rule. The provisions of Section 4(a) and 4(b) hereof, together with the rights
of the Purchaser under this Agreement and the other Primary Documents, shall be
binding upon any subsequent transferee of the Preferred Stock and the Stock
Purchase Warrants.
B. RESTRICTIVE LEGEND. The Purchaser acknowledges and agrees that, until
such time as the Securities shall have been registered under the Securities Act
or the Purchaser demonstrates to the reasonable satisfaction of the Company and
its counsel that such registration shall no longer be required, such Securities
may be subject to a stop-transfer order placed against the transfer of such
Securities, and such Securities shall bear a restrictive legend in substantially
the following form:
THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
SHALL NO LONGER BE REQUIRED.
C. FILINGS. The Company undertakes and agrees that it will make all
required filings in connection with the sale of the Securities to the Purchaser
as required by United States laws and regulations, or by any domestic securities
exchange or trading market, and if applicable, the filing of a notice on Form D
(at such time and in such manner as required by the Rules and Regulations of the
Commission), and to provide copies thereof to the Purchaser promptly after such
filing or filings.
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D. NASDAQ LISTING. The Company agrees and covenants that it will not seek
to have the trading of its Common Stock through the NASDAQ SmallCap Market
suspended or terminated, will use its best efforts to maintain its eligibility
for trading on the NASDAQ Small-Cap Market (including, the filing of a listing
application with NASDAQ to list all of the shares of Common Stock issuable upon
conversion of, or in lieu of dividend payments on, the Shares and upon the
exercise of the Warrants) and, if such trading of its Common Stock is suspended
or terminated, will use its best efforts to requalify its Common Stock or
otherwise cause such trading to resume. The Company shall promptly provide to
the Purchaser copies of any notices it receives from the Nasdaq SmallCap Market
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(d).
E. REPORTING STATUS. So long as the Purchaser beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act and shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination.
F. STATE SECURITIES FILINGS. The Company shall from time to time promptly
take such action as the Purchaser or any of its representatives, if applicable,
may reasonably request to qualify the Securities for offering and sale under the
securities laws (other than United States federal securities laws) of the
jurisdictions in the United States as shall be so identified to the Company, and
to comply with such laws so as to permit the continuance of sales therein,
provided that in connection therewith, the Company shall not be required to
qualify as a foreign corporation or to file a general consent to the service of
process in any jurisdiction.
G. USE OF PROCEEDS. The Company will use all of the net proceeds from the
issuance of the Securities to fund acquisitions and working capital.
H. RESERVATION OF COMMON STOCK. The Company will at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the conversion of the Shares and the
exercise of the Warrants. Accordingly, the Company will use its commercially
reasonable efforts at all times to maintain a number of shares of Common Stock
so reserved for issuance that is no less than the sum of (i) two (2) times the
maximum number of shares of Common Stock that could be issuable upon the
conversion of the Shares and (ii) the number of shares of Common Stock issuable
upon exercise in full of the Warrants.
I. SALES OF ADDITIONAL SHARES. The Company shall not, directly or
indirectly, without the prior written consent of the Purchaser, offer, sell,
offer to sell, contract to sell or otherwise dispose of any shares of its
capital stock or any security or other instrument convertible into or
exchangeable for shares of Common Stock, in each case for a period of
two-hundred and seventy (270) days after the date on which a registration
statement relating to Common Stock issuable upon conversion of any of the
Shares, or the Warrants is declared effective by the Securities and Exchange
Commission (the "Lock-Up Period"), except that the Company (i) may issue
securities for the aggregate consideration of at least seven million dollars
($7,000,000) in connection with a bona fide, firm commitment, underwritten
public offering under the Securities Act (it being
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acknowledged and agreed that equity line transactions, including, without
limitation, ongoing warrant financing or any similar arrangements, shall not
constitute a bona fide, firm commitment, underwritten public offering for
purposes hereof); (ii) may issue shares of Common Stock which are issued in
connection with a bona fide transaction involving the acquisition of another
business entity or segment of any such entity by the Company by merger, asset
purchase, stock purchase or otherwise; (iii) may issue shares of Common Stock
upon the exercise or conversion of currently outstanding options, warrants and
other convertible securities identified on Schedule 3(b) hereto; (iv) may issue
options to purchase shares of its Common Stock to its directors, officers,
employees and consultants in connection with its stock option plans approved by
the Board of Directors of the Company ("New Options"); provided, that, during
the Lock-Up Period, New Options to purchase not more than 500,000 shares of
Common Stock shall vest or become exercisable; and (v) may issue Common Stock in
connection with a stock split, stock dividend or similar recapitalization of the
Company which affects all holders of the Company's Common Stock on an equivalent
basis, in each case, without the prior written consent of the Purchaser. In
addition, the Company agrees that it will not cause any shares of its capital
stock that are issued in connection with a transaction of the type contemplated
by clause (ii) (or upon the conversion or exercise of other securities that are
issued in connection with such transaction) or that were issued in connection
with financing, acquisition or other transaction that occurred prior or
subsequent to the date of this Agreement to be covered by a registration
statement that is filed with the Commission or declared effective by the
Commission until the later to occur of (A) the expiration of the Lock-Up Period,
or (B) the registration statement filed by the Company pursuant to its
obligations under the Registration Rights Agreement has been effective under the
Securities Act for a period of at least two hundred seventy (270) days (which
two hundred seventy (270) day period need not consist of consecutive days).
J. RIGHT OF FIRST REFUSAL. Subject to Section 4(i), if during the eighteen
(18) month period following the date hereof the Company shall desire to sell,
offer to sell, contract to sell or otherwise dispose of any securities or any
security or other instrument convertible into or exchangeable for shares of
Common Stock (collectively, the "Offered Securities") to a prospective investor
(the "Prospective Investor"), the Company shall notify (the "Offer Notice") the
Purchaser in accordance with Section 10 hereof of the terms (the "Third Party
Terms") on which the Company proposes to sell, contract to sell or otherwise
dispose of the Offered Securities to the Prospective Investor. If, within the
five (5) day period following the Purchaser's receipt of the Offer Notice, the
Purchaser delivers a written notice (the "Acceptance Notice") to the Company
stating its desire to purchase all of the Offered Securities on the Third Party
Terms, the Company shall be required to sell the Offered Securities (or any
portion thereof so desired by the Purchaser) to the Purchaser at the price and
on the terms set forth in the Offer Notice and the Company shall not be
permitted to sell such Offered Securities to the Prospective Investor. If the
Purchaser does not deliver an Acceptance Notice to the Company in such five (5)
day period, then for a period of sixty (60) days following the date of the Offer
Notice the Company may sell the Offered Securities to the Prospective Investor
on the terms set forth in the Offer Notice.
K. ADDITIONAL REGISTRATION STATEMENTS. At any time during the period
beginning on the date hereof and ending on the first date that follows a
period of one hundred eighty (180) consecutive days following the
effectiveness of the Registration Statement (as defined in the Registration
Rights Agreement) during which there has been no Blackout Event (as defined in
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the Registration Rights Agreement) relating to such Registration Statement,
the Company agrees that it will not cause any registration statement to be
declared effective by the Commission other than (i) any Registration
Statement relating to the Securities, (ii) a Registration Statement on Form
S-8 with respect to employee options (provided that such registration
statement is for less than 512,500 shares of Common Stock), (iii) a
Registration Statement on Form S-1 with respect to the warrants identified on
Schedule 3(b) (provided that such registration statement is for less than
1,562,500 shares of Common Stock) or (iv) a Registration Statement on Form
S-3 with respect to a sale by selling shareholders of shares of Common Stock
(provided that such registration statement is for less than 306,000 shares of
Common Stock).
L. STOCKHOLDER APPROVAL. If required in accordance with Nasdaq Rule 4310 or
4460, the Company agrees to use its commercially reasonable efforts (including
obtaining any vote of its stockholders required by applicable law or Nasdaq
rules) to authorize and approve the issuance of the Common Stock issuable upon
conversion of the Shares and upon exercise of the Warrants, to the extent that
such conversion or issuance results in the issuance of 20% or more of the
Company's outstanding Common Stock; provided, however, that the failure to
obtain any such stockholder approval shall not limit any of Purchaser's rights
hereunder or pursuant to any Primary Document.
M. RETURN OF CERTIFICATES ON CONVERSION AND STOCK PURCHASE WARRANTS ON
EXERCISE. (i) Upon any conversion by Purchaser of less than all of the Shares of
Preferred Stock pursuant to the terms of the Certificate of Designations, the
Company shall issue and deliver to Purchaser within three (3) days of the Series
A Preferred Stock Conversion Date (as defined in the Certificate of
Designations), a new certificate or certificates for, as applicable, the total
number of shares of Preferred Stock, in each case, which Purchaser has not yet
elected to convert (with the number of and denomination of such new
certificate(s) designated by Purchaser).
(ii) Upon any partial exercise by Purchaser of Stock Purchase
Warrants, the Company shall issue and deliver to Purchaser within three (3) days
of the date on which such Stock Purchase Warrants are exercised, a new Stock
Purchase Warrant or Stock Purchase Warrants representing the number of adjusted
Shares covered thereby, in accordance with the terms thereof.
N. REPLACEMENT CERTIFICATES AND STOCK PURCHASE WARRANTS. (i) The
certificate(s) representing the shares of Preferred Stock held by Purchaser
shall be exchangeable, at the option of Purchaser, at any time and from time to
time at the office of Company, for certificates with different denominations
representing, as applicable, an equal aggregate number of shares of Preferred
Stock, as requested by Purchaser upon surrendering the same. No service charge
will be made for such registration or transfer or exchange.
(ii) The Stock Purchase Warrants will be exchangeable, at the option
of Purchaser, at any time and from time to time at the office of the Company,
for other Stock Purchase Warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock as are purchasable under such Stock Purchase Warrants. No service charge
will be made for such transfer or exchange.
O. BANKRUPTCY WAIVER. In the event the Company becomes a debtor under the
Bankruptcy Code, the Company hereby waives to the fullest extent permitted any
rights to relief
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it may have under 11 U.S.C. Section 362 in respect of the conversion of the
Shares and the exercise of the Warrants. At the direction of Purchaser, the
Company agrees, without cost or expense to the Purchaser, to take or consent to
any and all action necessary to effectuate relief under 11 U.S.C. Section 362.
5. TRANSFER AGENT INSTRUCTIONS
a. The Company warrants that no instruction, other than the instructions
referred to in this Section 5 and stop transfer instructions to give effect to
Sections 4(a) and 4(b) hereof prior to the registration and sale under the
Securities Act of the Common Stock issuable upon conversion of the Shares or the
shares of Common Stock issuable upon exercise of the Warrants, will be given by
the Company to the transfer agent and that the shares of Common Stock issuable
upon conversion of, or in lieu of dividend payments on, the Shares or upon
exercise of the Warrants, shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this Agreement, the
Registration Rights Agreement and applicable law. Nothing in this Section shall
affect in any way the Purchaser's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities. If the Purchaser
provides the Company with an opinion of counsel reasonably acceptable to the
Company that registration of a resale by the Purchaser of any of the Securities
in accordance with clause (1)(B) of Section 4(a) of this Agreement is not
required under the Securities Act, the Company shall permit the transfer of the
Securities and, in the case of the Common Stock, promptly instruct the Company's
transfer agent to issue one or more certificates for Common Stock without legend
in such names and in such denominations as specified by the Purchaser.
b. Purchaser shall exercise its right to convert the Shares or to exercise
the Warrants by faxing an executed and completed Notice of Conversion or Form of
Election to Purchase, as applicable, to the Company, and delivering within three
(3) business days thereafter the original Notice of Conversion (and the related
certificates representing the shares of Preferred Stock, as applicable) or Form
of Election to Purchase (and the related original Stock Purchase Warrants) to
the Company by hand delivery or by express courier, duly endorsed. Each date on
which a Notice of Conversion or Form of Election to Purchase is faxed in
accordance with the provisions hereof shall be deemed a "Conversion Date." The
Company will transmit the certificates representing the Common Stock issuable
upon conversion of any shares of Preferred Stock or upon exercise of any Stock
Purchase Warrants (together with the shares of Preferred Stock not so converted
or the Stock Purchase Warrants not so exercised) to the Purchaser via express
courier as soon as practicable, but in all events no later than three (3)
business days after the Conversion Date relating to shares of Preferred Stock or
Stock Purchase Warrants (each such delivery date, together with the Dividend
Delivery Date referred to in paragraph c below, is referred to herein as a
"Delivery Date") and in the event that the Common Stock issuable is subject to
an effective registration statement and is in connection with a sale of such
shares of Common Stock by the Purchaser (as indicated by the Purchaser in the
related Notice of Conversion), such certificate shall not bear a restrictive
legend and shall not be subject to a stop transfer order. For purposes of this
Agreement, any conversion of the Shares or the exercise of the Warrants shall be
deemed to have been made immediately prior to the close of business on the
Conversion Date.
c. The Company will transmit the certificates representing the Common Stock
issuable in lieu of dividends payable on any shares of Preferred Stock to the
Purchaser via express courier
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as soon as practicable, but in all events no later than three (3) business days
after the dividend payment date applicable to which such Common Stock is
delivered (the "Dividend Delivery Date") and in the event that the Common Stock
issuable is subject to an effective registration statement and is in connection
with a sale of such shares of Common Stock by the Purchaser (as indicated by the
Purchaser in the related Notice of Conversion), such certificate shall not bear
a restrictive legend and shall not be subject to a stop transfer order.
d. In lieu of delivering physical certificates representing the Common
Stock issuable upon the conversion of, or in lieu of dividends on, the Shares or
upon the exercise of the Warrants, provided the Company's transfer agent is
participating in the Depositary Trust Company ("DTC") Fast Automated Securities
Transfer program, on the written request of the Purchaser, who shall have
previously instructed the Purchaser's prime broker to confirm such request to
the Company's transfer agent, the Company shall cause its transfer agent to
electronically transmit such Common Stock to the Purchaser by crediting the
account of the Purchaser's prime broker with DTC through its Deposit Withdrawal
Agent Commission system no later than the applicable Delivery Date.
e. The Company understands that a delay in the issuance of Common Stock
beyond the applicable Delivery Date or issuance of such Common Stock via a
certificate containing a restrictive legend or stop transfer legend if such
shares are subject to an effective registration statement and are being issued
in connection with a sale of such shares of Common Stock by the Purchaser (as
indicated by the Purchaser in the related Notice of Conversion) could result in
an economic loss to the Purchaser. As compensation to the Purchaser for such
loss, the Company agrees to pay to the Purchaser for late issuance of Common
Stock or issuance of Common Stock which is subject to an effective registration
statement with a restrictive legend or stop transfer order upon conversion of,
or in lieu of dividend payments on, the Shares or upon exercise of the Warrants
the sum of three thousand dollars ($3,000) per day for each (i) one hundred
thousand dollars ($100,000) of aggregate Stated Value (as defined in the
Certificate of Designations) amount of Shares, or (ii) twenty-five thousand
(25,000) shares of Common Stock purchased upon the exercise of Warrants. The
Company shall pay any payments that are payable to the Purchaser pursuant to
this Section 5 in immediately available funds upon demand. Nothing herein shall
limit the Purchaser's right to pursue actual damages for the Company's failure
to so issue and deliver Common Stock to the Purchaser. Furthermore, in addition
to any other remedies which may be available to the Purchaser, in the event that
the Company fails for any reason to effect delivery of such Common Stock, or
fails to deliver the related certificate without a restrictive legend or stop
transfer order if such shares are subject to an effective registration statement
and are being issued in connection with a sale of such shares of Common Stock by
the Purchaser (as indicated by the Purchaser in the related Notice of
Conversion), within five (5) business days after the relevant Delivery Date, the
Purchaser will be entitled to revoke the relevant Notice of Conversion or Form
of Election to Purchase by delivering a notice to such effect to the Company,
whereupon the Company and the Purchaser shall each be restored to their
respective positions immediately prior to delivery of such Notice of Conversion
or Form of Election to Purchase. For purposes of this Section 5, "business day"
shall mean any day in which the financial markets of New York are officially
open for the conduct of business therein.
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6. CONDITIONS TO THE COMPANY'S OBLIGATION TO ISSUE THE SHARES AND THE
WARRANTS.
The Purchaser understands that the Company's obligation to issue the
Shares and the Warrants on the Closing Date to the Purchaser pursuant to this
Agreement is conditioned upon:
a. The accuracy on the Closing Date of the representations and warranties
of the Purchaser contained in this Agreement as if made on the Closing Date and
the performance by the Purchaser on or before the Closing Date of all covenants
and agreements of the Purchaser required to be performed on or before the
Closing Date.
b. The absence or inapplicability of any and all laws, rules or regulations
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
7. CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE THE SHARES AND THE
WARRANTS.
The Company understands that the Purchaser's obligation to purchase
the Shares and the Warrants on the Closing Date is conditioned upon:
a. The Certificate of Designations shall have been filed with the Secretary
of State of the State of Delaware, and a copy thereof certified by such
Secretary of State shall have been delivered to the Purchaser.
b. 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, and
the performance by the Company on or before the Closing Date of all covenants
and agreements of the Company required to be performed on or before the Closing
Date.
c. On the Closing Date, the Purchaser shall have received an opinion of
counsel for the Company, dated the Closing Date, in substantially the form as
attached in EXHIBIT D.
d. The Company shall have executed and delivered to the Purchaser (i) a
signed counterpart to the Registration Rights Agreement, in the form of EXHIBIT
C attached hereto, (ii) the Shares and (iii) the Warrants.
e. On the Closing Date, the Purchaser shall have received from the Company
such other certificates and documents as it or its representatives, if
applicable, shall reasonably request, and all proceedings taken by the Company
in connection with the Primary Documents contemplated by this Agreement and the
other Primary Documents and all documents and papers relating to such Primary
Documents shall be satisfactory to the Purchaser.
f. On or prior to the Closing Date, there shall not have occurred any of
the following: (i) a suspension or material limitation in the trading of
securities generally on the New York
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Stock Exchange, NASDAQ or the NASDAQ Bulletin Board; (ii) a general moratorium
on commercial banking activities in New York declared by the applicable banking
authorities; (iii) the outbreak or escalation of hostilities involving the
United States, or the declaration by the United States of a national emergency
or war; or (iv) a change in international, political, financial or economic
conditions, if the effect of any such event, in the judgment of the Purchaser,
makes it impracticable or inadvisable to proceed with the purchase of the
Securities on the terms and in the manner contemplated in this Agreement and in
the other Primary Documents.
g. Subject to the limitations in Section 8 below, the Company shall have
delivered to the Purchaser reimbursement of the Purchaser's out-of-pocket costs
and expenses incurred in connection with the transactions contemplated by this
Agreement (including fees and disbursements of the Purchaser's legal counsel).
8. EXPENSES
The Company covenants and agrees with the Purchaser that the Company will
pay or cause to be paid the following: (a) the fees, disbursements and expenses
of the Purchaser and the Purchaser's counsel in connection with the issuance of
the Securities payable on the Closing Date up to a maximum of fifteen thousand
dollars ($15,000), (b) all expenses in connection with registration or
qualification of the Securities for offering and sale under state securities
laws as provided in Section 4(f) hereof, and (c) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 8, including the fees and
disbursements of the Company's counsel, accountants and other professional
advisors, if any. If the Company fails to satisfy its obligations or to satisfy
any condition set forth in this Agreement, as a result of which the Securities
are not delivered to the Purchaser on the terms and conditions set forth herein,
the Company shall reimburse the Purchaser for any out-of-pocket expenses
reasonably incurred in securing delivery of the Securities not so delivered.
9. GOVERNING LAW; ADDITIONAL COVENANT AND MISCELLANEOUS
A. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to principles
of conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement or any of the
transactions contemplated hereby, and hereby waives, to the maximum extent
permitted by law, any objection, including any objections based on FORUM NON
CONVENIENS, to the bringing of any such proceeding in such jurisdictions.
B. OWNERSHIP LIMITATION. The Purchaser may not convert its shares of
Preferred Stock or receive shares of Common Stock as payment of accrued
dividends hereunder to the extent such conversion or receipt of such dividend
payment would result in the Purchaser, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
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Exchange Act and the rules promulgated thereunder) in excess of 4.999% of the
then issued and outstanding shares of Common Stock, including shares issuable
upon conversion of, and payment of accrued dividends on, the shares of Preferred
Stock held by the Purchaser after application of this Section. Since the
Purchaser will not be obligated to report to the Corporation the number of
shares of Common Stock it may hold at the time of a conversion hereunder, unless
the conversion at issue would result in the issuance of shares of Common Stock
in excess of 4.999% of the then outstanding shares of Common Stock without
regard to any other shares which may be beneficially owned by the Purchaser or
an affiliate thereof, the Purchaser shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular conversion hereunder and to the extent that the Purchaser determines
that the limitation contained in this Section applies, the determination of
which portion of the shares of Preferred Stock are convertible shall be the
responsibility and obligation of the Purchaser. If the Purchaser has delivered a
Notice of Conversion for shares of Preferred Stock that, without regard to any
other shares that the Purchaser or its affiliates may beneficially own, would
result in the issuance in excess of the permitted amount hereunder, the
Corporation shall notify the Purchaser of this fact and shall honor the
conversion for the maximum number of shares of Preferred Stock permitted to be
converted on such Conversion Date in accordance with the periods described in
Section G of the Certificate of Designations and, at the option of the
Purchaser, either retain shares of Preferred Stock tendered for conversion in
excess of the permitted amount hereunder for future conversions or return such
excess shares of Preferred Stock permitted to the Purchaser. The provisions of
this Section may be waived by the Purchaser (but only as to itself and not to
any other holder) upon not less than 61 days prior notice to the Corporation.
C. COUNTERPARTS. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original.
D. HEADINGS. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of this
Agreement.
E. REPRESENTATION BY COUNSEL. This Agreement and each of the Primary
Documents have been entered into freely by each of the parties, following
consultation with their respective counsel, and shall be interpreted fairly in
accordance with its respective terms, without any construction in favor of or
against either party.
F. VALIDITY. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or unenforceability of this Agreement in any other jurisdiction.
G. SUCCESSORS, ASSIGNS AND AMENDMENTS. This Agreement shall inure to the
benefit of, and be binding upon the successors and assigns of each of the
parties hereto, including any transferees of the Shares and the Warrants. This
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
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10. NOTICES
Any notice required or permitted hereunder shall be given in writing
(unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error-free transmission
and mailing a copy of such confirmation, postage prepaid by certified mail,
return receipt requested) or two business days following deposit of such notice
with an internationally recognized courier service, with postage prepaid and
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by five days
advance written notice to each of the other parties hereto.
COMPANY: 5B Technologies Corporation
One Jericho Plaza
Jericho, New York 11753
Attention: Glenn Nortman
Tel: (516) 938-3400
Fax: (516) 938-3995
WITH A COPY TO:
Piper Marbury Rudnick & Wolfe LLP
1251 Avenue of the Americas
New York, New York 10020
Attention: Danal F. Abrams, Esq.
Tel: (212) 835-6000
Fax: (212) 835-6001
PURCHASER: La Vista Investors LLC
WEC Asset Management LLC
110 Colabaugh Pond Road
Croton-on-Hudson, New York 10520
Attention: Daniel J. Saks
Tel: (914) 271-2211
Fax: (914) 817-0889
WITH A COPY TO:
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue, 10th Floor
New York, New York 10022
Attention: Mark Saks, Esq.
Tel: (212) 326-0140
Fax: (212) 326-0806
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11. SURVIVAL
The agreements, covenants representations and warranties of the Company and
the Purchaser shall survive the execution and delivery of this Agreement and the
delivery of the Securities hereunder.
12. INDEMNIFICATION
The Company agrees to indemnify the Purchaser and each officer, director,
employee, agent, partner, stockholder, member and affiliate of the Purchaser
(collectively, the "Indemnified Parties") for, and hold each Indemnified Party
harmless from and against: (i) any and all damages, losses, claims and other
liabilities of any and every kind, including, without limitation, judgments and
costs of settlement, and (ii) any and all reasonable out-of-pocket costs and
expenses of any and every kind, including, without limitation, reasonable fees
and disbursements of counsel for such Indemnified Parties (all of which expenses
periodically shall be reimbursed as incurred), in each case, arising out of or
suffered or incurred in connection with any of the following: (a) any
misrepresentation or any breach of any warranty made by the Company herein or in
any of the other Primary Documents, (b) any breach or non-fulfillment of any
covenant or agreement made by the Company herein or in any of the other Primary
Documents, and (c) any claim relating to or arising out of a violation of
applicable federal or state securities laws by the Company in connection with
the sale or issuance of the Shares or Warrants by the Company to the Purchaser
(collectively, the "Indemnified Liabilities"). To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.
[SIGNATURE PAGE FOLLOWS, REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly
executed by each of the undersigned.
5B TECHNOLOGIES CORPORATION
By: /s/ Glenn Nortman
--------------------------------------------
Name: Glenn Nortman
Title: Chief Executive Officer
LA VISTA INVESTORS LLC
By: WEC Asset Management LLC, Manager
By: /s/ Daniel J. Saks
--------------------------------------------
Name: Daniel J. Saks
Title: Managing Director
20
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EXHIBIT INDEX
EXHIBIT A FORM OF CERTIFICATE OF DESIGNATIONS
EXHIBIT B FORM OF STOCK PURCHASE WARRANT
EXHIBIT C FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT D OPINION OF COUNSEL
SCHEDULE INDEX
SCHEDULE 3(a) LIST OF SUBSIDIARIES
SCHEDULE 3(b) CAPITALIZATION, DERIVATIVE SECURITIES
AND REGISTRATION RIGHTS
SCHEDULE 3(h) NON-CONTRAVENTION
SCHEDULE 3(m) FULL DISCLOSURE
SCHEDULE 3(r) TRANSACTIONS WITH AFFILIATES
<PAGE>
EXHIBIT 10.14
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of April 17, 2000 (this
"Agreement"), is made by and between 5B TECHNOLOGIES CORPORATION, a Delaware
corporation (the "Company"), and LA VISTA INVESTORS LLC, a Delaware limited
liability company (the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of the date
hereof among the Purchaser and the Company (the "Securities Purchase
Agreement"), the Company has agreed to issue and sell to the Purchaser (i) one
thousand (1,000) shares (the "Preferred Shares") of the Company's 6% Convertible
Series A Preferred Stock, stated value $1,000 per share, and (ii) a warrant (the
"Warrants") to purchase one hundred thousand (100,000) shares of the common
stock, par value $0.04 per share, of the Company (the "Common Stock").
WHEREAS, pursuant to the terms of the Preferred Shares and the Warrants,
(i) upon the conversion of the Preferred Shares, (ii) in lieu of dividend
payments on the Preferred Shares, and (iii) upon exercise of the Warrants, the
Company will issue to the Purchaser shares of Common Stock (such shares are
referred to herein as the "Shares"); and
WHEREAS, to induce the Purchaser to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Filing Deadline" shall have the meaning set forth in Section
2(a)(i) hereof.
(ii) "Initial Registration Statement" means a registration
statement or registration statements of the Company filed under the Securities
Act covering Registrable Securities.
(iii) "Purchase Price" means the aggregate purchase price paid by
the Purchaser for the Shares the Warrants.
(iv) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a registration statement or
statements in compliance with the
<PAGE>
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the
"Commission").
(v) "Registrable Securities" means the Shares..
(vi) "Registration Statement" means a registration statement of
the Company under the Securities Act.
(vii) "Required Effective Date" shall have the meaning set forth
in section 2(a)(i) hereof.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings set-forth in the Securities Purchase Agreement.
2. REGISTRATION.
A. MANDATORY REGISTRATIONS.
(i) INITIAL REGISTRATION STATEMENT. The Company shall prepare, and, as soon as
practicable but in no event later than thirty (30) days after the Closing Date
(as defined in the Securities Purchase Agreement) (the "Filing Deadline"), file
with the Commission an Initial Registration Statement or Initial Registration
Statements (as necessary) on Form S-3, covering the resale of all of the
Registrable Securities. In the event that Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration. Any Initial Registration Statement prepared pursuant hereto shall
register for resale at least that number of shares of Common Stock equal to the
product of (x) two and, (y) the sum of (i) the maximum number of Shares that are
issuable upon conversion of the Preferred Shares and the Warrants on the date of
filing, and (ii) the maximum number of Shares issuable upon exercise of the
Warrants, in each case, without regard to any limitation on any holder's ability
to convert any of the Warrants or the Preferred Shares and without regard to
whether any or all of such Preferred Shares or Warrants have been issued to
Purchaser (on the date calculated, the "Minimum Conversion Amount"). If
permitted by the rules of the Securities and Exchange Commission, such
Registration Statement shall state that, in accordance with Rule 416 under the
Securities Act, it also covers such indeterminate number of additional Shares as
may become issuable upon conversion of such Preferred Shares or exercise of such
Warrants (i) resulting from any adjustment in the applicable Conversion Price of
such Preferred Shares or the Exercise Price of such Warrants, or (ii) to prevent
dilution resulting from stock splits or stock dividends. If at any time the
Minimum Conversion Amount exceeds the total number of Shares so registered, the
Company shall, within five (5) business days after receipt of a written notice
from the Purchaser, either (i) amend the Registration Statement or Registration
Statements filed by the Company pursuant to the preceding sentence, if such
Registration Statement has not been declared effective by the Commission at that
time, to register all of the Shares into which the Preferred Shares and the
Warrants may be converted or exercised, as applicable, or (ii) if such
Registration Statement has been declared effective by the Commission at that
time, file with the Commission an additional Registration Statement on Form S-3,
or such other appropriate form, to register the
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<PAGE>
number of shares of Common Stock into which the Preferred Shares and Warrants
may be converted or exercised, as applicable, that exceed the number of Shares
already registered. The Company shall use its best efforts to have the Initial
Registration Statement declared effective within the earliest to occur of (i)
ninety (90) days following the Closing Date, or (ii) if the Commission elects
not to conduct a review of the Initial Registration Statement, the date which is
three (3) business days after the date upon which either the Company or its
counsel is so notified, whether orally or in writing. The earliest of such dates
is referred to herein as the "Required Effective Date." Notwithstanding the use
of the terms "Filing Deadline" and "Required Effective Date" herein, the Company
shall at all times use its best efforts to file each required Registration
Statement or amendment to a Registration Statement as soon as possible after the
Closing Date or after the date the Company becomes obligated to file such
Registration Statement or amendment, as the case may be, and to cause each such
Registration Statement or amendment to become effective as soon as possible
thereafter. No securities of the Company other than the Registrable Securities
shall be included in any such Registration Statement.
(ii) The Company shall keep each Registration Statement effective
pursuant to Rule 415 at all times until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold, (ii) the date on
which the Registrable Securities (in the reasonable opinion of counsel to the
Purchaser) may be immediately sold without restriction (including without
limitation as to volume by each holder thereof) without registration under the
Securities Act and (iii) the date which is twenty four (24) months following the
date on which the Registration Statement was declared effective (the
"Registration Period").
(B) PAYMENTS BY THE COMPANY.
(i) (A) If the Registration Statement covering the Registrable
Securities is not filed in proper form with the Commission on or prior to the
Filing Deadline, (B) if the Registration Statement covering the Registrable
Securities is not effective on or prior to the Required Effective Date, or (C)
if the number of Shares listed for trading or the NASDAQ SmallCap Stock Market,
as applicable, or reserved by the Company for issuance shall be insufficient,
for any period of seven (7) consecutive days at any time after the Required
Effective Date, for issuance upon the conversion of the Preferred Shares and the
exercise of the Warrants, or (D) upon the occurrence of a Blackout Event (as
described in Section 3(f) or Section 3(g) below), for any period of five (5)
consecutive days at any time after the Required Effective Date (each of the
events described in clauses (A) through (D) of this paragraph are referred to
herein as a "Registration Default"), the Company will make payments to the
Purchaser in such amounts and at such times as shall be determined pursuant to
this Section 2(b).
(ii) The amount (the "Periodic Amount") to be paid by the Company to
the Purchaser as of each thirty (30) day period during which a Registration
Default shall be in effect (each such period, a "Default Period") shall be equal
to two percent (2%) of the Purchase Price; PROVIDED that, with respect to any
Default Period during which the relevant Registration Defaults shall have been
cured, the Periodic Amount shall be PRO RATED for the number of days during such
period during which the Registration Defaults were pending; and PROVIDED,
however, that the payment of such Periodic Amounts shall not relieve the Company
from its continuing obligations to register the Warrants and Shares pursuant to
Section 2(a).
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<PAGE>
(iii) Each Periodic Amount shall be payable by the Company in cash or
other immediately available funds to the Purchaser monthly, without demand
therefor by the Purchaser.
(iv) The parties acknowledge that the damages which may be incurred by
the Purchaser if the Registration Statement is not filed by the Filing Deadline,
if the Registration Statement has not been declared effective by the Required
Effective Date, or if the provisions of Section 3(e) become applicable, may be
difficult to ascertain. The parties agree that the Periodic Amount represents a
reasonable estimate on the part of the parties, as of the date of this
Agreement, of the amount of such damages.
(C) PIGGYBACK REGISTRATION. (i) If at any time or from time to time, the
Company shall determine to register any of its securities, for its own account
or the account of any of its stockholders, other than a Registration relating
solely to employee share option plans or pursuant to an acquisition transaction
on Form S-4, the Company will:
(A) provide to the Purchaser written notice thereof as soon as
practicable prior to filing the Registration Statement; and
(B) include in such Registration Statement and in any underwriting
involved therein, all of the Registrable Securities (not already included in an
effective registration statement) specified in a written request by the
Purchaser made within fifteen (15) days after receipt of such written notice
from the Company.
(ii) If the Registration is for a registered public offering involving an
underwriting, the Company shall so advise the Purchaser as a part of the written
notice given pursuant to this Section. In such event, the rights of the
Purchaser hereunder shall include participation in such underwriting and the
inclusion of the Registrable Securities in the underwriting to the extent
provided herein. To the extent that the Purchaser proposes to distribute its
securities through such underwriting, the Purchaser shall (together with the
Company and any other security holders of the Company distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
Section, if the managing underwriter of such underwriting determines that
marketing factors require a limitation of the number of shares to be offered in
connection with such underwriting, the managing underwriter may limit the number
of Registrable Securities to be included in the Registration and underwriting
(PROVIDED, HOWEVER, (a) the Registrable Securities shall not be excluded from
such underwritten offering prior to any securities held by officers and
directors of the Company or their affiliates, (b) the Registrable Securities
shall be entitled to at least the same priority in an underwritten offering as
any of the Company's existing security holders, and (c) the Company shall not
enter into any agreement that would provide any security holder with priority in
connection with an underwritten offering greater than the priority granted to
the Purchaser hereunder). The Company shall so advise any of its other security
holders who are distributing their securities through such underwriting pursuant
to their respective piggyback registration rights, and the number of shares of
Registrable Securities and other securities that may be included in the
registration and underwriting shall be allocated among the Purchaser and all
other security holders of the Company in proportion, as nearly as practicable,
to the respective
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amounts of Registrable Securities held by the Purchaser and such other security
holders at the time of the filing of the registration statement. If the
Purchaser disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company. Any Registrable Securities
so excluded or withdrawn from such underwriting shall be withdrawn from such
Registration.
(D) ELIGIBILITY FOR FORM S-3. The Company represents and warrants that
it meets all of the registrant requirements for the use of Form S-3 and the
Company shall file all reports required to be filed by the Company with the
Commission in a timely manner, and shall take such other actions as may be
necessary to maintain such eligibility for the use of Form S-3.
(E) PRIORITY IN FILING. From the date hereof until one hundred eighty
(180) days following the effective date of the Initial Registration Statement
pursuant to Section 2(a) of this Agreement, the Company shall not permit the
registration of any of its securities under the Securities Act to become
effective, other than those covered by this Agreement, without the prior written
approval of the Purchaser. The foregoing notwithstanding, the Company may permit
a registration statement to be filed or to become effective during the foregoing
period provided that (i) such registration statement relates to a bona fide,
firm commitment, underwritten public offering of the Company's securities that
provides the Company with at least seven million dollars ($7,000,000) (it being
acknowledged and agreed that equity line transactions, including, without
limitation, ongoing warrant financing or any similar arrangements, shall not
constitute a bona fide, firm commitment, underwritten public offering for
purposes hereof), (ii) a Registration Statement on Form S-8 with respect to
employee options (provided that such registration statement is for less than
512,500 shares of Common Stock), (iii) a Registration Statement on Form S-1 with
respect to the public warrants identified on Schedule 3(b) attached to the
Securities Purchase Agreement (provided that such registration statement is for
less than 1,562,500 shares of Common Stock) or (iv) a Registration Statement on
Form S-3 with respect to a sale by selling shareholders of shares of Common
Stock (provided that such registration statement is for less than 306,000 shares
of Common Stock).
3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the
Registrable Securities, the Company shall do each of the following:
(a) Prepare and file with the Commission the Registration Statements
required by Section 2 of this Agreement and such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectuses used in connection with the Registration Statement, each in such
form as to which the Purchaser and its counsel shall not have reasonably
objected, as may be necessary to keep the Registration effective at all times
during the Registration Period, and, during the Registration Period, comply with
the provisions of the Securities Act until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the Registration
Statement;
(b) Furnish to the Purchaser and its legal counsel identified to the
Company, promptly after the same is prepared and publicly distributed, filed
with the Commission, or received by the Company, a copy of the Registration
Statement, each preliminary prospectus, each final prospectus and all amendments
and supplements thereto and such other documents, as
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<PAGE>
the Purchaser may reasonably request in order to facilitate the disposition of
its Registrable Securities and Warrants;
(c) Furnish to the Purchaser and its counsel copies of any
correspondence between the Company and the Commission with respect to any
registration statement or amendment or supplement thereto filed pursuant to this
Agreement;
(d) Use all commercially reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or blue sky laws of such jurisdictions as the Purchaser
may reasonably request, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof at all times during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period and (iv)
take all other actions necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions, PROVIDED, that in connection
therewith, the Company shall not be required to qualify as a foreign corporation
or to file a general consent to the service of process in any jurisdiction;
(e) List such securities on the NASDAQ SmallCap Stock Market and all
the other national securities exchanges on which any securities of the Company
are then listed, and file any filings required by the NASDAQ SmallCap Stock
Market and/or such other exchanges;
(f) As promptly as practicable after becoming aware of such event,
notify each Purchaser of the occurrence of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and to use its best efforts to promptly prepare a
supplement or amendment to the Registration Statement or other appropriate
filing with the Commission to correct such untrue statement of omission, and to
deliver a number of copies of such supplement or amendment to the Purchaser as
the Purchaser may reasonably request;
(g) As promptly as practicable after becoming aware of such event,
notify the Purchaser who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the underwriters) of the issuance by the
Commission or any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time, and to use its best
efforts to promptly obtain the withdrawal of such stop order or other suspension
of effectiveness;
(h) As promptly as practicable after becoming aware of such event,
notify the Purchaser who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the Commission of any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time, and to use its best
efforts to promptly obtain the withdrawal of such stop order or other suspension
of effectiveness (the occurrence of any of the events described in paragraphs
(f) and (g) of this Section 3 is referred to herein as a "Blackout Event");
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(i) During the period commencing upon (i) the Purchaser's receipt of a
notification pursuant to Section 3(f) above, or (ii) the entry of a stop order
or other suspension of effectiveness of the Registration Statement described in
Section 3(g) above, and ending at such time as (y) the Company shall have
completed the applicable filings (and if applicable, such filings shall have
been declared effective) and shall have delivered to the Purchaser the documents
required pursuant to Section 3(f) above, or (z), such stop order or other
suspension of the effectiveness of the Registration Statement shall have been
removed, the Company shall be liable to remit the payments required to be paid
pursuant to Section 2(b) above;
(j) If the offering is underwritten, at the request of a Purchaser, to
furnish on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such registration: (i) an opinion dated such
date of counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to any Purchaser selling Registrable
Securities in connection with such underwriting, stating that such registration
statement has become effective under the Securities Act and that (A) to the best
knowledge of such counsel, no stop order suspending the effectiveness thereof
has been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, and (B) the registration
statement, the related prospectus and each amendment or supplement thereof
comply as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion as to
financial statements or other financial data contained therein) and (ii) a
letter dated such date from the Company's independent public accountants
addressed to the underwriters and to the Purchaser, stating that they are
independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five (5) business days prior to the date of
such letter) with respect to such registration as such underwriters may
reasonably request; and
(k) Cooperate with the Purchaser to facilitate the timely preparation
and delivery of certificates for the Registrable Securities to be offered
pursuant to the Registration Statement and to enable such certificates for the
Registrable Securities to be in such denominations or amounts, as the case may
be, as the Purchaser may reasonably request, and registered in such names as the
Purchaser may request; and, within three (3) business days after a Registration
Statement which includes Registrable Securities is ordered effective by the
Commission, the Company shall deliver, and shall cause legal counsel selected by
the Company to deliver, to the transfer agent for the Registrable Securities
(with copies to the Purchaser) an appropriate instruction and opinion of such
counsel.
4. OBLIGATIONS OF THE PURCHASER. In connection with the registration of the
Registrable Securities, the Purchaser shall have the following obligations;
(a) Take all other reasonable actions necessary to expedite and
facilitate the disposition by the Purchaser of the Warrants and the Registrable
Securities pursuant to the Registration Statement;
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<PAGE>
(b) Furnish to the Company such information regarding itself, the
Warrants and Registrable Securities held by it, and the intended method of
disposition of the Warrants and the Registrable Securities held by it, as shall
be reasonably required to effect the registration of such Warrants and such
Registrable Securities, and the Purchaser 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 Purchaser of the
information the Company included in the Registration Statement;
(c) The Purchaser, by its acceptance of the Warrants or Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder; and
(d) The Purchaser agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(h) above, it will immediately discontinue disposition of its Warrants or
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such copies of the supplemented or amended
prospectus contemplated by Section 3(f) or 3(h) shall be furnished to the
Purchaser.
5. EXPENSES OF REGISTRATION. All 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 Section 3, but including, without
limitation, all registration, listing and qualification fees, printing and
accounting fees, and the fees and disbursements of counsel for the Company, and
the fees of one counsel to the Purchaser with respect to each Registration
Statement filed pursuant hereto, shall be borne by the Company.
6. INDEMNIFICATION. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:
(a) The Company will indemnify and hold harmless the Purchaser, each
of its officers, directors, shareholders and members, and each person, if any,
who controls the Purchaser within the meaning of the Securities Act or the
Exchange Act of 1934, as amended (the "Exchange Act"), (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities or expenses (joint or
several) incurred (collectively, "Claims") to which any of them may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any post-effective amendment thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the Commission) or the omission to state
therein any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, or (iii) any violation or alleged
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<PAGE>
violation by the Company of the Securities Act, the Exchange Act, any state or
foreign securities law or any rule or regulation under the Securities Act, the
Exchange Act or any state or foreign securities law (the matters in foregoing
clauses (i) through (iii) being, collectively, "Violations"). The Company shall,
subject to the provisions of Section 6(b) below, reimburse the Purchaser,
promptly as such expenses are incurred and are due and payable, for any legal
and other costs, expenses and disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise, including without limitation,
the costs, expenses and disbursements, as and when incurred, of investigating,
preparing or defending any such action, suit, proceeding or investigation
(whether or not in connection with litigation in which the Purchaser is a
party), incurred by it in connection with the investigation or defense of any
such Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) shall not (i) apply to
any Claim arising out of or based upon a modification which occurs in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of any Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) with respect to any preliminary prospectus, inure to
the benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the final prospectus, as then amended or supplemented, if such final
prospectus was timely made available by the Company pursuant to Section 3(b)
hereof; (iii) be available to the extent that such Claim is based upon a failure
of the Purchaser to deliver or to cause to be delivered the prospectus made
available by the Company, if such prospectus was timely made available by the
Company pursuant to Section 3(b) hereof; or (iv) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Purchaser pursuant to Section 9. The Purchaser
will indemnify the Company and its officers and directors against any Claims
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company, by or on behalf
of the Purchaser, expressly for use in connection with the preparation of the
Registration Statement, subject to such limitations and conditions as are
applicable to the Indemnification provided by the Company in this Section 6.
(b) Promptly after receipt by an Indemnified Person under this Section 6 of
notice of the commencement of any action (including any governmental action),
such Indemnified Person shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and to the extent that the indemnifying
party so desires, jointly with any other indemnifying party similarly notified,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person, PROVIDED, HOWEVER, that an
Indemnified Person shall have the right to retain its own counsel with the
reasonable fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person and the indemnifying
party would be inappropriate due to actual or potential differing interests
between
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<PAGE>
such Indemnified Person and any other party represented by such counsel
in such proceeding. In such event, the Company shall pay for only one separate
legal counsel for the Purchaser, and such legal counsel shall be selected by the
Purchaser. The failure to deliver written notice to an indemnifying party within
a reasonable time after the commencement of any such action shall not relieve
such indemnifying party of any liability to the Indemnified Person under this
Section 6, except to the extent that the indemnifying party is materially
prejudiced in its ability to such action. The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
(c) No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Person of an unconditional and irrevocable release from all
liability in respect of such claim or litigation.
(d) Notwithstanding the foregoing, to the extent that any provisions
relating to indemnification or contribution contained in the underwriting
agreements entered into among the Company, the underwriters and the Purchaser in
connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in such underwriting agreements shall be
controlling as to the Registrable Securities included in the public offering;
PROVIDED, HOWEVER, that if, as a result of this Section 6(d), the Purchaser, its
officers, directors, shareholders, members or any person controlling the
Purchaser is or are held liable with respect to any Claim for which they would
be entitled to indemnification hereunder but for this Section 6(d) in an amount
which exceeds the aggregate proceeds received by the Purchaser from the sale of
Registrable Securities included in a registration pursuant to such underwriting
agreement (the "Excess Liability"), the Company shall reimburse the Purchaser
for such Excess Liability.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying party
is prohibited or limited under applicable law, the indemnifying party agrees to
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the Indemnified Person on the other hand in connection with the
statements or omissions which resulted in such Claim, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and the Indemnified Person shall be determined by reference to, among other
things, whether the untrue statement of a material fact or the omission to state
a material fact on which such Claim is based relates to information supplied by
the indemnifying party or by the Indemnified Person, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Notwithstanding the forgoing, (a) no contribution
shall be made under circumstances where the payor would not have been liable for
indemnification under the fault standards set forth in Section 6, (b) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation and (c) contribution by any seller of
Registrable Securities shall be limited in amount to the net proceeds received
by such seller from the sale of such Registrable Securities. The Company and the
Purchaser agree that it would not be just and equitable if contribution
10
<PAGE>
pursuant to this Section 7 were determined by PRO-RATA allocation (even if the
Purchaser and any other party were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the equitable
considerations referred to in this Section.
8. REPORTS UNDER EXCHANGE ACT.
With a view to making available to the Purchaser the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the Commission that may at any time permit the Purchaser to sell securities
of the Company to the public without registration ("Rule 144"), the Company
agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(iii) furnish to the Purchaser so long as the Purchaser owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or periodic
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Purchaser to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the Company
register Warrants or Registrable Securities pursuant to this Agreement shall be
automatically assigned by Purchaser to any transferee of all or any portion of
the Preferred Shares, Warrants or the underlying Common Stock held by Purchaser
if: (a) Purchaser agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee, and (ii) the Securities with
respect to which such registration rights are being transferred or assigned; (c)
at or before the time the Company receives the written notice contemplated by
clause (b) of this sentence, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein; and (d) the
transfer of the relevant Securities complies with the restrictions set forth in
Section 4 of the Securities Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Purchaser. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon Purchaser and
the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Warrants or
Registrable Securities whenever such person or entity owns of record such
Warrants or Registrable
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Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same Warrants
or Registrable Securities, the Company shall act upon the basis of the
instructions, notice or election received from the registered owner of such
Warrants or Registrable Securities.
(b) Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error-free transmission
and mailing a copy of such confirmation postage prepaid by certified mail,
return receipt requested) or two business days following deposit of such notice
with an internationally recognized courier service, with postage prepaid and
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten (10) days
advance written notice to each of the other parties hereto.
COMPANY: 5B Technologies Corporation
One Jericho Plaza
Jericho, New York 11753
Attention: Glenn Nortman
Tel: (516) 938-3400
Fax: (516) 938-3995
WITH A COPY TO:
Piper Marbury Rudnick & Wolfe LLP
1251 Avenue of the Americas
New York, New York 10020
Attention: Danal F. Abrams, Esq.
Tel: (212) 835-6000
Fax: (212) 835-6001
PURCHASER: La Vista Investors LLC
WEC Asset Management LLC
110 Colabaugh Pond Road
Croton-on-Hudson, New York 10520
Attention: Daniel J. Saks
Tel: (914) 271-2211
Fax: (914) 271-0889
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<PAGE>
WITH A COPY TO:
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue, 10th Floor
New York, New York 10022
Attention: Mark Saks, Esq.
Tel: (212) 326-0140
Fax: (212) 326-0806
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York, except for provisions with respect to
internal corporate matters of the Company which shall be governed by the
corporate laws of the State of Delaware. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on FORUM NON CONVENIENS, to the bringing of any such
proceeding in such jurisdictions. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such validity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. Subject to the provisions of Section 10 hereof, this
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(e) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure for the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The Company acknowledges that any failure by the Company to
perform its obligations under Section 2(a), or any delay in such performance
could result in direct damages to the Purchaser, and the Company agrees that, in
addition to any other liability the Company may have by reason of any such
failure or delay, the Company shall be liable for all
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direct damages caused by any such failure or delay. Nothing herein shall limit
the Purchaser's right to pursue any claim seeking such direct damages.
[REMAINDER OF PAGE INTENTIONALLY BLANK, SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
undersigned.
COMPANY:
5B TECHNOLOGIES CORPORATION
By: /s/ Glenn Nortman
--------------------------------------------
Name: Glenn Nortman
Title: Chief Executive Officer
PURCHASER:
LA VISTA INVESTORS LLC
By: WEC ASSET MANAGEMENT LLC, Manager
By: /s/ Daniel J. Saks
--------------------------------------------
Name: Daniel J. Saks
Title: Managing Director
<PAGE>
EXHIBIT 99.1
NEWS RELEASE
Contact: or Investors:
Glenn Nortman Robert Weiner
5B Technologies, Inc. Capital Communications Group, Inc.
Chief Executive Officer Phone: (561) 391-2112
Phone: (516) 938-3400 Media:
Donna Autuori
Autuori Corporate Communications, Inc.
Phone: (631) 969-0958
5B TECHNOLOGIES CORPORATION RECEIVES $1 MILLION EQUITY INVESTMENT
JERICHO, NY, April 18, 2000 - 5B Technologies Corporation (Nasdaq: FIVE)
today announced that it has received an equity investment of $1 Million from a
fund managed by WEC Asset Management LLC, a New York-based investment management
company.
Glenn Nortman, CEO of 5B Technologies Corporation, commented, "We are very
pleased to have received an investment in the Company from a strong
institutional investor - WEC Asset Management. To complete an investment in the
Company during the recent weak market conditions indicates WEC's belief in our
growth strategy and commitment to our Company. Their investment further
signifies the strength of our Company's business operations as well as their
confidence in our abilities to generate continuing long-term growth and
profitability."
"Recent market conditions have caused our stock price to decline, however,
the fundamentals of our Company have not changed, and we are now better
positioned for positive developments in our future. We have improved our
liquidity and ability to leverage our current base of business as a result of
this transaction. We remain committed to the continued growth of our Internet
and e-commerce services business, and we remain very positive on the future of
the Company and our ability to generate sustained revenue growth and
profitability", concluded Mr. Nortman.
Daniel Saks, principal of WEC Asset Management LLC, said, "5B Technologies
possesses an exciting growth strategy, strong technological expertise, and is
well capitalized to fuel continuing growth. We are confident in the abilities of
Glenn Nortman and his team, and we look forward to participating in the long
term growth of the company."
WEC's $1 Million investment was made in a 6% convertible preferred security
that is convertible over the next three years into shares of the Company's
common stock. In addition, the
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<PAGE>
5B TECHNOLOGIES CORPORATION RECEIVES $1 MILLION EQUITY INVESTMENT
Page 2: April 18, 2000
Company issued warrants to WEC, which, when exercised into Shares of common
stock will provide additional capital to the Company to assist in fueling its
continued growth. The Company anticipates using the proceeds from the sale of
the convertible preferred stock to fund its growth strategy, including
acquisitions, strategic alliances, co-ventures and the expansion and enhancement
of Company resources, primarily focused on its Internet and e-commerce services
business.
5B Technologies Corporation and subsidiaries is a comprehensive business
solution provider, offering customers a wide range of integrated services,
including Internet solutions, information technology consulting, systems
integration, staffing services and lease financing.
Statements contained in this press release, which are not historical facts,
are forwarding-looking statements. The forward-looking statements in this press
release are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements made herein
contain a number of risks and uncertainties that could cause actual results to
differ materially. These risks and uncertainties include, but are not limited
to, specific factors impacting the Company's business including increased
competition; the ability of the Company to expand its operations and attract and
retain qualified sales representatives experienced in the Internet and
Information Technology ("IT") sectors; the ability of the Company to attract and
retain Internet solutions and IT professionals skilled in specific applications;
the ability of the Company to attract and retain qualified personnel in the
legal staffing sector; the availability of computer equipment; the availability
of capital and the Company's ability to attract investment capital technological
obsolescence of the Company's computer equipment; competition in the Internet
solutions and IT consulting sector and general economic conditions.
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