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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) March 3, 2000
MAREX.COM, INC.
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(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
Florida 000-25129 65-0354269
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
</TABLE>
2701 South Bayshore Drive, 5th Floor, Miami, Florida 33133
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(Address of principal offices) (Zip Code)
Registrant's telephone number including area code: (305) 285-2003
Former name or former address, if changed since last report:
Affiliated Networks, Inc.
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Item 5. OTHER EVENTS.
On November 17, 1999, Affiliated Networks, Inc. changed its name to
Marex.com, Inc. A copy of the Articles of Amendment to Amended and
Restated Articles of Incorporation of Affiliated Networks, Inc. is
attached hereto as Exhibit 3.1.
On March 3, 2000, Marex.com, Inc. sold $21 million of its of Series A1
Convertible Preferred Stock, par value $.01 (the "Preferred Stock"), to
accredited investors, as defined in the Securities Act of 1933, as
amended, in a private placement. A copy of the press release dated
March 7, 2000, announcing the private placement, is attached hereto as
Exhibit 99.1 and incorporated by reference herein.
The Certificate of Designation for the Preferred Stock, the Securities
Purchase Agreement pursuant to which the Preferred Stock were sold and
the Registration Rights Agreement relating to the Preferred Stock are
attached hereto as Exhibits 4.1, 4.2 and 4.3, respectively.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
3.1 Articles of Amendment to Amended and Restated Articles of
Incorporation of Affiliated Networks, Inc.
4.1 Certificate of Designation for the Series A1 Convertible
Preferred Stock, par value $.01.
4.2 Securities Purchase Agreement among Marex.com, Inc. and
certain Purchasers, dated March 2, 2000.
4.3 Registration Rights Agreement among Marex.com, Inc. and
certain Purchasers, dated March 2, 2000.
99.1 Press Release dated March 7, 2000.
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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 thereunto duly authorized.
MAREX.COM, INC.
By: /s/ Kenbian A. Ng
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Kenbian A. Ng
Chief Financial Officer
Dated: March 7, 2000
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[FILED]
99 NOV 17 PM 2:50
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
AFFILIATED NETWORKS, INC.
Pursuant to the provisions of Sections 607.1003 and 607.1006 of the
Florida Business Corporation Act, AFFILIATED NETWORKS, INC., a Florida
corporation, (the "Corporation"), in accordance with a vote of the shareholders
held on November 16, 1999, at which the number of votes cast for the amendment
contained herein were sufficient for approval, hereby adopt the following
amendment to the Amended and Restated Articles of Incorporation as follows:
1. Article I of the Amended and Restated Articles of Incorporation is
hereby amended as follows:
ARTICLE I
NAME AND ADDRESS
The name of this Corporation is MAREX.COM, INC. and its principal place of
business is 2701 South Bayshore Drive, 5th Floor, Coconut Grove, Florida 33133.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment this 16th day of November, 1999.
BY: /s/ David A. Schwedel
--------------------------------
David A. Schwedel
Chief Executive Officer,
President and Director
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Exhibit 4.1
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
OF
SERIES A1 CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE
OF
MAREX.COM, INC.
ARTICLES OF AMENDMENT PURSUANT TO SECTION 607.0602 OF THE
FLORIDA BUSINESS CORPORATION ACT
MAREX.COM, INC., F/K/A AFFILIATED NETWORKS, INC., hereafter called the
"Company," a corporation organized and existing under the Florida Business
Corporation Act, does hereby certify that, pursuant to the authority conferred
upon the Board of Directors of the Company (the "Board of Directors") by the
Amended and Restated Articles of Incorporation of the Company (the "Articles of
Incorporation"), and pursuant to the provisions of ss.607.0602 of the Florida
Business Corporation Act, said Board of Directors, by actions duly taken on
February 25, 2000, duly adopted a resolution providing for the issuance of a
series of 420,000 shares of the Company's Series A1 Convertible Preferred Stock,
$.01 par value, which resolution is as follows:
RESOLVED, that, pursuant to the authority vested in the Board of Directors by
the Amended and Restated Articles of Incorporation of the Company, the Board of
Directors does hereby designate, create, authorize and provide for the issuance
of a series of preferred stock, par value $0.01 per share, which shall be
designated as Series A1 Convertible Preferred Stock, and which shall have the
designation, preferences, rights and limitations as follows:
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CERTIFICATE OF DESIGNATION OF
SERIES A1 CONVERTIBLE PREFERRED STOCK
OF MAREX.COM, INC.
1. DESIGNATION, AMOUNT, PAR VALUE, STATED VALUE, RANK AND CERTAIN
DEFINED TERMS.
a. The preferred stock authorized under this Certificate of
Designation shall be designated as the Series A1 Convertible Preferred Stock
(the "SERIES A1 PREFERRED STOCK"), and the number of shares so designated shall
be 420,000, subject to adjustment for any stock splits, stock dividends or
similar transactions affecting the Series A1 Preferred Stock. Each share of
Series A1 Preferred Stock, par value .01 per share, shall have a stated value of
$100.00 per share (the "STATED VALUE").
b. The Series A1 Preferred Stock shall rank senior to all classes of
Common Stock and senior to or PARI PASSU with each other series of preferred
stock or class of other capital stock or instruments of the Company convertible
into Common Stock of the Company with respect to dividend distributions,
redemptions and distributions upon Liquidation.
c. Certain terms used herein are defined in Section 10 hereof.
2. DIVIDENDS. The Holders of the Series A1 Preferred Stock shall be
entitled to receive dividends, whether in cash, property or otherwise (other
than dividends payable solely in shares of Common Stock), out of any assets
legally available therefor, ratably with any declaration or payment of any
dividend to any Junior Securities of the Company, when, as and if declared by
the Board of Directors, in an amount per share equal to that which the Holders
would have been entitled had they converted such shares of Series A1 Preferred
Stock into Common Stock immediately prior to the payment of such dividends. No
rights to any dividends shall otherwise accrue to the Holders of the Series A1
Preferred Stock unless declared by the Board of Directors.
3. LIQUIDATION.
a. Upon any Liquidation, the Holders of record of the Series A1
Preferred Stock shall be entitled to receive, out of the assets of the Company
and before any distribution or payment is made upon any Junior Securities, for
each share of Series A1 Preferred Stock, an amount per share equal to the lesser
of (i) the Stated Value or (ii) the assets of the Company available for
distribution to its stockholders, distributed ratably among the Holders of the
outstanding Series A1 Preferred Stock (determined on an "as converted" basis)
and the holders of all of the outstanding capital stock of the Company.
b. The Company shall mail written notice of any such Liquidation,
not less than 45 days prior to the payment date stated therein, to each Holder.
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4. VOTING RIGHTS.
a. GENERAL VOTING RIGHTS. Each Holder shall have the right to one
vote for each share of Common Stock into which the shares Series A1 Preferred
Stock owned by such Holder could then be converted, and with respect to such
vote, such Holder shall have full voting rights and powers equal to the voting
rights and powers of the holders of Common Stock, and shall be entitled to
notice of any stockholders' meeting in accordance with the charter documents of
the Company, and shall be entitled to vote, together with the holders of Common
Stock, with respect to any question upon which holders of Common Stock have the
right to vote. Fractional votes shall not, however, be permitted and any
fractional voting rights available on an as-converted basis (after aggregating
all shares into which shares of Series A1 Preferred Stock held by each Holder
could be converted) shall be rounded to the nearest whole number.
b. CERTAIN LIMITATIONS. As long as any shares of Series A1 Preferred
Stock are outstanding, the Company shall not, and shall cause its subsidiaries
not to, without the affirmative vote or consent of the Holders of 90% of the
shares of the Series A1 Preferred Stock then outstanding (or, with respect to
clause (iv) only, 75% of the shares of the Series A1 Preferred Stock then
outstanding) (with shares held by the Company or any of its Affiliates not being
considered to be outstanding for this purpose) voting or consenting, as the case
may be, as one class:
(i) amend or otherwise alter this Certificate of Designation
in any manner that adversely affects the absolute or relative rights,
powers, preferences, privileges or voting rights given to the Series A1
Preferred Stock;
(ii) amend or otherwise alter the Articles of Incorporation,
bylaws or other charter documents of the Company so as to affect
adversely the absolute or relative powers, preferences or rights of the
Series A1 Preferred Stock;
(iii) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series A1
Preferred Stock;
(iv) sell all or substantially all of its assets;
(v) avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by the Company under this
Certificate of Designation; or
(vi) enter into any agreement with respect to the foregoing.
5. CONVERSION.
a. OPTIONAL CONVERSION. Each share of Series A1 Preferred Stock
shall be convertible, at the option of the Holder thereof, at any time after
Original Issue Date, into that number of fully paid and non-assessable shares of
Common Stock as is determined by the quotient of (i) the Stated Value over (ii)
the per share Conversion Price in effect at the time of conversion, determined
as hereinafter provided. The initial per share Conversion Price shall be $13.00,
subject to adjustment from time to time as provided herein (the "CONVERSION
PRICE").
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b. AUTOMATIC CONVERSION.
(i) Upon the completion of a QPO, all shares of Series A1
Preferred Stock then outstanding shall, by virtue of and simultaneously
with such QPO and without any action on the part of the Holders or the
Company, be automatically converted into that number of fully paid and
non-assessable shares of Common Stock into which such shares of Series
A1 Preferred Stock would have been convertible in the event of an
optional conversion at such time pursuant to Section 5(a) hereof.
(ii) Following the one-year anniversary of the date that
Securities and Exchange Commission declares effective the Initial
Registration Statement (as defined in the Registration Rights
Agreement), if the Per Share Market Value exceeds 200% of the then
effective Conversion Price for a period of twenty (20) consecutive
Trading Days (the "TRIGGERING EVENT") all shares of Series A1 Preferred
Stock then outstanding shall, by virtue of and simultaneously with such
Triggering Event and without any action on the part of the Holders or
the Company, be automatically converted into that number of fully paid
and non-assessable shares of Common Stock into which such shares of
Series A1 Preferred Stock would have been convertible in the event of
an optional conversion at such time pursuant to Section 5(a) hereof;
PROVIDED, HOWEVER, that such Triggering Event shall not trigger the
automatic conversion of the Series A1 Preferred Stock into Common Stock
unless (i) (a) any Registration Statement required to be filed and be
effective pursuant to the Registration Rights Agreement is then in
effect and has been in effect and sales of all of the Underlying Shares
can be made thereunder for at least five (5) Business Days prior to the
Triggering Event or (b) the Underlying Shares are able to be sold
without registration pursuant to Rule 144(k) promulgated under the
Exchange Act, (ii) the Company has a sufficient number of authorized
shares of Common Stock reserved for issuance upon full conversion of
the Series A1 Preferred Stock at the then applicable Conversion Price
and (iii) the Company is not then in breach of Section 5(c) hereof.
c. MECHANICS OF CONVERSION. A Holder shall effect conversions by
surrendering to the Company, or to the Company's transfer agent, the certificate
or certificates representing the shares of Series A1 Preferred Stock to be
converted, together with a copy of the form of conversion notice attached hereto
as EXHIBIT A (the "CONVERSION NOTICE"). Each Conversion Notice shall specify the
Holder, the name or names in which the certificate or certificates for shares of
Common Stock are to be issued, the number of shares of Series A1 Preferred Stock
to be converted and the date on which such conversion is to be effected, which
date may not be prior to the date the Holder delivers such Conversion Notice by
facsimile (the "CONVERSION DATE"). If no Conversion Date is specified in a
Conversion Notice, the Conversion Date shall be the date that the Conversion
Notice is deemed delivered pursuant to Section 11. The Company shall, within
three (3) Trading Days after the receipt of the Conversion Notice, cause to be
delivered to the Holder, or to such Holder's nominee or nominees, (i) a
certificate or certificates which shall be free of restrictive legends and
trading restrictions (other than those required pursuant to the Purchase
Agreement or otherwise required by law) representing the number of shares of
Common Stock being acquired upon the conversion of shares of Series A1 Preferred
Stock and (ii) if the Holder is converting less than all the shares of Series A1
Preferred Stock represented by the certificate or certificates tendered by the
Holder with the
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Conversion Notice, one or more certificates representing the number of shares of
Series A1 Preferred Stock not converted. The Person or Persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of the Conversion Date. Upon request of the Holder, and in
compliance with the provisions hereof, in lieu of physical delivery of the
shares of Common Stock, provided the Company's transfer agent is participating
in the Depositary Trust Company ("DTC") Fast Automated Securities Transfer
(FAST) program, the Company shall use its best efforts to cause its transfer
agent to electronically transmit any certificate or certificates required to be
delivered to the Holder (or the Holder's nominee) under this Section 5 by
crediting the account of the Holder's (or the Holder's nominee's) Prime Broker
with DTC through its Deposit Withdrawal Agent Commission system. The time period
for delivery described herein shall apply to any such electronic transmittals.
If in the case of any Conversion Notice such certificate or certificates are not
delivered to or as directed by the applicable Holder by the tenth (10th) Trading
Day after the Conversion Date, the Holder shall be entitled at any time on or
before its receipt of such certificate or certificates thereafter to rescind
such conversion by written notice to the Company, in which event the Company
shall immediately return the certificates representing the shares of Series A1
Preferred Stock for which Common Stock was not delivered pursuant to such
conversion.
d. FAILURE TO CONVERT. If the Company fails to deliver to the Holder
(or to the Holder's nominee) such certificate or certificates pursuant to this
Section 5 on or prior to the seventh (7th) Trading Day after the Conversion Date
(the "DELIVERY DATE"), in addition to all other remedies that such Holder may
pursue hereunder or under the Purchase Agreement, the Company shall pay to such
Holder upon demand an amount in cash equal to the product of (a) the number of
shares of Common Stock required to be issued upon conversion of such shares of
Series A1 Preferred Stock, (b) the Per Share Market Value on the Conversion
Date, (c) the number of days after the three (3) Trading Day period referred to
in Section 5(c) that the Company fails to deliver such certificates and (d)
.005. For the avoidance of doubt, no Holder shall be entitled to any such
payment if the Company delivers to such Holder a certificate or certificates
representing the total number of shares of Common Stock being acquired upon
conversion of such shares of Series A1 Preferred Stock prior to the Delivery
Date.
6. RESERVATION OF SHARES. The Company covenants that it will at all
times reserve and keep available out of its authorized and unissued Common
Stock, solely for the purpose of issuance upon conversion of the Series A1
Preferred Stock and free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holders of Series A1 Preferred Stock,
not less than 100% of such number of shares of Common Stock as shall (subject to
any additional requirements of the Company as to reservation of such shares set
forth in the Purchase Agreement) be issuable (taking into account the
adjustments of Section 7 hereof) upon the conversion of all outstanding shares
of Series A1 Preferred Stock (without regard to any limitations on conversion).
The Company shall, from time to time in accordance with Florida law, take all
steps necessary to increase the authorized amount of its Common Stock if at any
time the authorized number of shares of Common Stock remaining unissued shall
not be sufficient to permit the conversion of all of the shares of the Series A1
Preferred Stock. The Company covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly authorized, validly issued and
fully paid, nonassessable and, subsequent to the effectiveness of the Initial
Registration Statement (as defined in the Registration Rights
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Agreement) and other than any restrictions that may be imposed thereon by the
Holder thereof, freely tradable.
7. ADJUSTMENT OF CONVERSION PRICE.
a. COMMON STOCK DIVIDENDS; COMMON STOCK SPLITS; RECLASSIFICATION. If
the Company, at any time after the Original Issue Date (i) shall pay or make a
stock dividend on its Common Stock in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock into a larger number of shares or (iii) issue
by reclassification of shares of Common Stock any shares of Common Stock of the
Company, then the Conversion Price shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
before such event and the denominator of which shall be the number of shares of
Common Stock outstanding after such event. Any adjustment made pursuant to this
Section 7(a) shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision or re-classification.
b. RIGHTS; WARRANTS. If the Company, at any time after the Original
Issue Date, shall fix a record date for the issuance of rights, options,
warrants or other securities to the holders of its Common Stock entitling them
to subscribe for or purchase, exchange for, convert into or otherwise acquire
shares of Common Stock, or any stock or other securities convertible into or
exchangeable for Common Stock, for no consideration or for a price per share
less than the Conversion Price, then the Conversion Price shall be multiplied by
a fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus the number of shares
of Common Stock which the aggregate consideration received by the Company would
purchase at the Conversion Price, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issuance
or sale plus the number of additional shares of Common Stock offered for
subscription, purchase, conversion, exchange or acquisition, as the case may be.
Such adjustment shall be made whenever such rights, options, warrants or other
securities are issued, and shall become effective immediately after the record
date for the determination of shareholders entitled to receive such rights,
options, warrants or other securities.
c. SUBSCRIPTION RIGHTS. If the Company, at any time after the
Original Issue Date, shall fix a record date for the distribution to holders of
Common Stock evidence of its indebtedness or assets or rights, options, warrants
or other securities entitling them to subscribe for or purchase, convert into,
exchange for or otherwise acquire any security (excluding those referred to in
Sections 7(a) and (b) hereof), then in each such case the Conversion Price at
which the Series A1 Preferred Stock shall thereafter be convertible shall be
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Conversion
Price on such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of Common Stock as determined by the Board of Directors
in good faith, and the denominator of which shall be the Conversion Price as of
such record date; PROVIDED, HOWEVER, that in the event of a distribution
exceeding ten percent (10%) of the net assets of the
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Company, such fair market value shall be determined by an Appraiser selected in
good faith by the Holders of the Series A1 Preferred Stock; and PROVIDED,
FURTHER, that the Company, after receipt of the determination by such Appraiser,
shall have the right to select in good faith an additional Appraiser meeting the
same qualifications, in which case the fair market value shall be equal to the
average of the determinations by each such Appraiser. Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
d. RECORD DATE. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Stock, rights, options, warrants or other
securities or (ii) to subscribe for or purchase Common Stock, rights, options,
warrants or other securities, then, for the purposes of this Section 7, such
record date will be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
e. NOTICE OF ADJUSTMENT. Whenever the Conversion Price is adjusted
pursuant to this Section 7 the Company shall promptly deliver to the Holders a
notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Such notice
shall be signed by the chairman, president or chief financial officer of the
Company.
f. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at
any time after the Original Issue Date the Common Stock issuable upon the
conversion of the Series A1 Preferred Stock is changed into the same or a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision of its
Common Stock or dividend on it shares of Common Stock paid in shares of Common
Stock, and other than a reorganization, merger or consolidation provided for
elsewhere in this Section 7), in any such event each Holder of Series A1
Preferred Stock shall have the right thereafter to convert such stock into the
kind and amount of stock and other securities and property receivable in
connection with such recapitalization, reclassification or other change with
respect to the maximum number of shares of Common Stock into which such shares
of Series A1 Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustments
as provided herein or with respect to such other securities or property by the
terms thereof.
g. REORGANIZATIONS, MERGERS OR CONSOLIDATIONS. If at any time after
the Original Issue Date the Common Stock is converted into other securities or
property, whether pursuant to a reorganization, merger, consolidation or
otherwise (other than a recapitalization, subdivision, reclassification,
exchange or substitution of shares provided for elsewhere in this Section 7), as
a part of such transaction, provision shall be made so that the Holders of the
Series A1 Preferred Stock shall thereafter be entitled to receive upon
conversion thereof the number of shares of stock or other securities or property
to which a holder of the maximum number of shares of Common Stock deliverable
upon conversion would have been entitled in connection with such
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transaction, subject to adjustment in respect of such stock or securities by the
terms thereof. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect to the rights of
the Holders Series A1 Preferred Stock after such transaction to the end that the
provisions of this Section 7 (including adjustment of the Series A1 Conversion
Price then in effect and the number of shares issuable upon conversion of the
Series A1 Preferred Stock) shall be applicable after that event and be as nearly
equivalent as practicable. The Company shall not be a party to any
reorganization, merger or consolidation in which the Company is not the
surviving entity unless the entity surviving such transaction assumes all of the
Company's obligations hereunder.
h. ISSUANCES BELOW CONVERSION PRICE. If the Company, at any time
when any shares of Series A1 Preferred Stock are outstanding, takes any of the
actions described in this Section 7(h), the majority of the Holders shall have
the right to amend this Certificate of Designation as set forth below:
(i) issues or sells, or is deemed to have issued or sold, any
Common Stock (other than Excluded Securities);
(ii) in any manner grants, issues or sells any rights,
options, warrants, options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for
Common Stock (other than any Excluded Securities) (such rights, options
or warrants being herein called "OPTIONS" and such convertible or
exchangeable stock or securities being herein called "CONVERTIBLE
SECURITIES"); or
(iii) in any manner issues or sells any Convertible
Securities;
for (a) with respect to paragraph (h)(i), above, a price per share, or (b) with
respect to paragraphs h(ii) or h(iii), above, a price per share for which Common
Stock issuable upon the exercise of such Options or upon conversion or exchange
of such Convertible Securities is, less than the Conversion Price in effect
immediately prior to such issuance or sale, then, immediately after such
issuance, sale or grant, the majority of the Holders shall have the right to
amend the issuance terms of the Common Stock issuable upon conversion of the
shares of Series A1 Preferred Stock (including adjustment of the Conversion
Price) so that the issuance terms hereof are equivalent to the issuance terms of
such offering. No modification of the issuance terms shall be made upon the
actual issuance of such Common Stock upon conversion or exchange of such Options
or Convertible Securities. If there is a change at any time in (i) the exercise
price provided for in any Options, (ii) the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible Securities
or (iii) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock, then immediately after such change the Holders
shall have the right to amend the issuance terms of such Common Stock issuable
upon conversion of the shares of Series A1 Preferred Stock accordingly,
including, without limitation, by reducing the Conversion Price in effect to the
Conversion Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed exercise
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold; provided that no
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adjustment shall be made if such adjustment would result in an increase of the
Conversion Price then in effect.
i. EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Conversion Price under Section 7(h), the following
shall be applicable:
(i) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the Company
therefor, without deducting any expenses paid or incurred by the
Company or any commissions or compensations paid or concessions or
discounts allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale. In case any Common
Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other
than cash received by the Company will be the fair value of such
consideration, except where such consideration consists of securities
listed or quoted on a National Market, in which case the amount of
consideration received by the Company will be the arithmetic average of
the closing sale price of such security for the five (5) consecutive
Trading Days immediately preceding the date of receipt thereof. In case
any Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in
which the Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or Convertible Securities, as the case may
be. The fair value of any consideration other than cash or securities
listed or quoted on a National Market will be determined jointly by the
Company and the Holders of a majority of the shares of Series A1
Preferred Stock then outstanding. If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event
requiring valuation (the "VALUATION EVENT"), the fair value of such
consideration will be determined within forty-eight (48) hours of the
tenth (10th) day following the Valuation Event by an Appraiser selected
in good faith by the Company, and agreed upon in good faith by the
Holders of a majority of the shares of Series A1 Preferred Stock then
outstanding. The determination of such Appraiser shall be binding upon
all parties absent manifest error.
(ii) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto the
aggregate consideration of the Options shall be determined by an
Appraiser selected mutually, in good faith, by the Holders of a
majority in interest of the shares of the Series A1 Preferred Stock and
the Company.
j. NOTICE OF CERTAIN EVENTS. If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock;
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(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock;
(iii) the Company shall authorize the granting to the holders
of its Common Stock rights, options or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights;
(iv) the approval of any shareholders of the Company shall be
required in connection with any reclassification of the Common Stock or
any Change of Control Transaction; or
(v) the Company shall authorize the Liquidation of the affairs
of the Company;
then the Company shall cause to be delivered to the Holders at the address
specified herein, at least 15 (fifteen) calendar days prior to the applicable
record or effective date hereinafter specified, a notice (provided such notice
shall not include any material non-public information) stating (a) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, or granting of options, rights or warrants, 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, distributions, redemption, rights, options or
warrants are to be determined or (b) the date on which such reclassification,
Liquidation or Change of Control Transaction is expected to become effective or
close, and the date as of which it is expected that holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable in connection with such reclassification or
Change of Control Transaction. Nothing herein shall prohibit the Holders from
converting shares of Series A1 Preferred Stock held by such Holder during the
15-day period commencing on the date of such notice to the effective date of the
event triggering such notice.
k. ADJUSTMENT IN THE NUMBER OF SHARES. For the avoidance of doubt,
upon each adjustment in the Conversion Price pursuant to any provision of this
Section 7 the number of shares of Common Stock purchasable hereunder shall be
adjusted, to the nearest 1/100th of a whole share, to the product obtained by
multiplying such number of shares purchasable immediately prior to such
adjustment in the Conversion Price by a fraction, the numerator of which shall
be the Conversion Price immediately prior to such adjustment and the denominator
of which shall be the Conversion Price immediately thereafter.
l. ROUNDING. All calculations under this Section 7 shall be made to
the nearest cent or the nearest l/l00th of a share, as the case may be.
m. INCREASE OF CONVERSION PRICE. In the event that (i) each of the
conditions set forth in Section 4.2(b) of the Purchase Agreement have been
satisfied or waived by the Holders, (ii) the documents and certificates set
forth in Section 4.2(c) of the Purchase Agreement have been delivered or the
delivery thereof has been waived by the Holders and (iii) the Holders fail to
consummate the Second Closing (as defined in the Purchase Agreement), then the
Conversion Price shall be increased to $16.00 per share (subject to stock
splits, reclassifications and other similar transactions).
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<PAGE> 11
n. OTHER EVENTS. If the Company grants any stock appreciation
rights, phantom stock rights or other rights with equity features (excluding the
issuance of any Excluded Securities) that adversely affects the rights of any
holder of the Series A1 Preferred Stock occurs but is not expressly provided for
by Section 7 hereof then the Company's Board of Directors will make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the Holders or assigns; PROVIDED, HOWEVER, that no such adjustment will increase
the Conversion Price. In no event, other than as set forth in Section 7(m)
hereof, shall the Conversion Price be greater than the Conversion Price on the
Original Issue Date.
o. TREASURY SHARES. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company, if any, and the disposition of any shares so owned or held shall
be considered an issue or sale of Common Stock by the Company.
8. RESTRICTION ON CONVERSION BY EITHER THE HOLDER OR THE COMPANY.
Notwithstanding anything herein to the contrary, and except as provided in
Sections 5(b) and 9(b) hereof, in no event shall any Holder or the Company have
the right or be required to convert shares of Series A1 Preferred Stock if as a
result of such conversion the aggregate number of shares of Common Stock
beneficially owned by such Holder and its Affiliates would exceed 4.99% of the
outstanding shares of the Common Stock following such conversion. For purposes
of this Section 8, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act. The provisions of this Section 8 may be
waived by a Holder as to itself (and solely as to itself) upon not less than
sixty-five (65) days prior written notice to the Company, and the provisions of
this Section 8 shall continue to apply until such 65th day (or later, if stated
in the notice of waiver).
9. REDEMPTION. MANDATORY REDEMPTION. In case of (a) the Company's
notice to any Holder of the Series A1 Preferred Stock, including by way of
public announcement, at any time, of its intention, for any reason, not to
comply with proper requests for the conversion of any shares of Series A1
Preferred Stock into shares of Common Stock or (b) the Company's refusal to
honor a duly executed Conversion Notice delivered pursuant to Section 5 hereof
(each, a "REDEMPTION EVENT") each Holder shall have the option to require the
Company to redeem, from funds legally available therefor at the time of such
redemption, its shares of Common Stock immediately theretofore acquirable and
receivable upon the conversion of such Holder's Series A1 Preferred Stock at a
price (the "REDEMPTION PRICE") equal to, at the option of such Holder, (i) the
product of (A) the Per Share Market Value on the date the Redemption Event or,
at the option of the Holder, on the date immediately preceding the date of
payment in full by the Company of the Redemption Price (the "DETERMINATION
DATE"), and (B) the number of shares of Common Stock into which the Series A1
Preferred Stock is convertible as of such Determination Date or (ii) the product
of (A) the Stated Value and (B) the number of shares Preferred Stock then held
by such Holder. The Company shall pay the applicable Redemption Price to the
Holder of the shares of Series A1 Preferred Stock being redeemed in cash on the
Redemption Date. If the Company shall fail to pay the applicable Redemption
Price to such Holder on the Redemption Date, in addition to any remedy such
Holder may have under this Certificate of Designation and the Purchase
Agreement, such unpaid amount shall bear interest at the rate of 1.0% per month
until paid in full.
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<PAGE> 12
10. DEFINITIONS. For the purposes hereof, the following terms shall
have the following meanings:
"AFFILIATE" means, with respect to any Person, (i) any other Person of
which securities or other ownership interests representing more than fifty
percent (50%) of the voting interests are, at the time such determination is
being made, owned, Controlled or held, directly or indirectly, by such Person,
or (ii) any other Person which, at the time such determination is being made, is
Controlling, Controlled by or under common Control with, such Person. As used
herein, "CONTROL", whether used as a noun or verb, refers to the possession,
directly or indirectly, of the power to direct, or cause the direction of, the
management or policies of a Person, whether through the ownership of voting
securities or otherwise.
"APPRAISER" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing.
"APPROVED STOCK PLAN" means any contract, plan or agreement which has
been approved by the Board of Directors of the Company or committee thereof,
pursuant to which the Company's securities may be issued to any employee,
officer or director of the Company; PROVIDED, that such issuance or issuances
shall not exceed the greater of 35% of the Company's outstanding capital stock
on the date thereof or 4,900,000 shares of Common Stock of the Company.
"CHANGE OF CONTROL TRANSACTION" means the occurrence of any of (i) any
acquisition or series of related acquisitions by any Person or "group" (as
described in Section 13(d)(3) of the Exchange Act) of in excess of 50% of the
voting power of the Company, (ii) the merger or consolidation of the Company
with or into another Person, unless the holders of the Company's securities
immediately prior to such transaction or series of related transactions continue
to hold at least 50% of such securities following such transaction or series of
related transactions, (iii) a sale, conveyance, lease, transfer or disposition
of all or substantially all of the assets of the Company in one or a series of
related transactions or (iv) the execution by the Company of an agreement to
which the Company is a party or by which it is bound, providing for any of the
events set forth above in clauses (i), (ii) or (iv).
"COMMON STOCK" means the Company's common stock, $.01 par value per
share, and stock of any other class into which such shares may hereafter have
been reclassified or changed.
"CONVERSION PRICE" has the meaning set forth in Section 5(a).
"CONVERTIBLE SECURITIES" has the meaning set forth in Section 7(h)(ii).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED SECURITIES" means (i) shares of Common Stock issued or
issuable pursuant to the terms of this Certificate of Designation and the
Purchase Agreement, (ii) shares of Common Stock issued by the Company in
connection with an Approved Stock Plan, (iii) shares of Common Stock (including
options, rights and warrants) issuable upon the exercise of any options, rights
or warrants outstanding as of February 29, 2000 and set forth on Schedule 2.1(c)
of the Purchase Agreement, (iv) shares of Common Stock issued or deemed to be
issued by the
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<PAGE> 13
Company in connection with a strategic acquisition, joint venture or investment
by the Company of the assets or business, or division thereof, of another Person
or (v) any other issuance of Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock, on any day after the Original
Issue Date, in an amount fewer than 500,000 shares of Common Stock in the
aggregate.
"HOLDER" or "HOLDERS" means the holder or holders of the Series A1
Preferred Stock.
"JUNIOR SECURITIES" means all classes of Common Stock and each other
class of capital stock or preferred stock of the Company that is not, expressly
by its terms, made senior to or PARI PASSU with the Series A1 Preferred Stock.
"LIQUIDATION" means any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary.
"NATIONAL MARKET" means the NASDAQ National Market, the NASDAQ SmallCap
Market, the New York Stock Exchange and the American Stock Exchange.
"OPTIONS" has the meaning set forth in Section 7(h)(ii) hereof.
"ORIGINAL ISSUE DATE" shall mean the date of the first issuance of any
shares of the Series A1 Preferred Stock, regardless of the number of transfers
of any particular shares of Series A1 Preferred Stock and regardless of the
number of certificates which may be issued to evidence such Series A1 Preferred
Stock, which date shall coincide with the First Closing Date, as defined in the
Purchase Agreement.
"OTCBB" means the OTC Bulletin Board of the National Association of
Securities Dealers, Inc.
"PER SHARE MARKET VALUE" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on (a) the OTCBB, as
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its function of reporting prices) or (b) on the National
Market on which the Common Stock is then listed or quoted, or, if there is no
such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (ii) if the Common
Stock is not then listed or quoted on the OTCBB or any National Market, the fair
market value of a share of Common Stock as determined by an Appraiser selected
in good faith by the Holders of a majority in interest of the shares of the
Series A1 Preferred Stock; PROVIDED, HOWEVER, that the Company, after receipt of
the determination by such Appraiser, shall have the right to select, in good
faith, an additional Appraiser, in which case the fair market value shall be
equal to the average of the determinations by each such Appraiser; and PROVIDED,
FURTHER that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other similar
transactions during such period.
"PERSON" means a means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
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<PAGE> 14
"PUBLIC OFFERING" means a public offering of the shares of Common Stock
pursuant to an effective registration statement on Form S-1 or other appropriate
form (or such successor form as then in effect), underwritten by a nationally
recognized investment bank (as determined by the Company in good faith).
"PURCHASE AGREEMENT" means the Securities Purchase Agreement, dated as
of the Original Issue Date, among the Company and the original Holders of the
Series A1 Preferred Stock.
"QPO" means a Public Offering by the Company which raises gross
proceeds to the Company of at least $50,000,000, at an effective price per share
to the public of at least $26.00 as adjusted for stock splits, stock dividends
or other similar transactions.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the Original Issue Date, by and among the Company and the
original Holders.
"REGISTRATION STATEMENT" has the meaning set forth in the Registration
Rights Agreement.
"STATED VALUE" has the meaning set forth in Section 1 hereof.
"TRADING DAY" means any day on which the OTCBB or any National Market
on which the Common Stock is then listed or quoted is open for trading.
"UNDERLYING SHARES" means the shares of Common Stock into which the
Series A1 Preferred Stock are convertible in accordance with the terms hereof.
11. NOTICES. Except as otherwise provided in the event of conversion of
shares of Series A1 Preferred Stock, all notices or other communications
required hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by facsimile (with
transmission confirmation report received and with additional mailing by express
courier service made on the same day) at the address or number designated below
(if received by 5:00 p.m. EST where such notice is to be received), or the first
business day following such delivery (if received after 5:00 p.m. EST where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur; and shall
be regarded as properly addressed if sent to (i) the Company, to Marex.com,
Inc., 2701 S. Bayshore Drive, Fifth Floor, Coconut Grove, Florida, 33133,
facsimile no.: (305) 285-0001, Attention: Chief Financial Officer and (ii) if
the Holders, at their respective addresses set forth in the books and records of
the Company, or such other address as any of the above may have furnished to the
other parties in writing by registered mail, return receipt requested.
12. LOST OR STOLEN CERTIFICATES. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any stock certificates representing the shares of Series A1
Preferred Stock, and, in the case of loss, theft or destruction, of any
indemnification (and, if required by the Company, the posting of a bond)
undertaken by the Holder to the Company in customary form and, in the case of
mutilation, upon
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<PAGE> 15
surrender and cancellation of such certificates representing the shares of
Series A1 Preferred Stock the Company shall execute and deliver new preferred
stock certificate(s) of like tenor and date; PROVIDED, HOWEVER, the Company
shall not be obligated to re-issue preferred stock certificates if the Holder
contemporaneously requests the Company to convert such Series A1 Preferred Stock
into Common Stock.
13. REMEDIES CHARACTERIZED; OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Certificate of Designation shall be
cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a Holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the Holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holders of the Series A1 Preferred
Stock and that the remedy at law in the event of any such breach may be
inadequate. The Company therefore agrees that, in the event of any such breach
or threatened breach, the Holders of the Series A1 Preferred Stock shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
14. SPECIFIC SHALL NOT LIMIT GENERAL; CONSTRUCTION. No specific
provision contained in this Certificate of Designation shall limit or modify any
more general provision contained herein. This Certificate of Designation shall
be deemed to be jointly drafted by the Company and all Purchasers (as defined in
this Purchase Agreement) and shall not be construed against any Person as the
drafter hereof.
15. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of a Holder of Series A1 Preferred Stock in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
16. FRACTIONAL SHARES. Upon a conversion hereunder, the Company shall
not be required to issue stock certificates representing fractions of shares of
Common Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the Holder
of a share of Series A1 Preferred Stock shall be entitled to receive, in lieu of
the final fraction of a share, one whole share of Common Stock.
17. PAYMENT OF TAX UPON ISSUE OF TRANSFER. The issuance of certificates
for shares of the Common Stock upon conversion of the Series A1 Preferred Stock
shall be made without charge to the Holders thereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance
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<PAGE> 16
and delivery of any such certificate upon conversion in a name other than that
of the Holders so converted, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or is not payable.
18. SHARES OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining
whether the Holders of the outstanding shares of Series A1 Preferred Stock have
concurred in any direction, consent or waiver under this Certificate of
Designation, shares of Series A1 Preferred Stock which are owned by the Company
or any other obligor thereof shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; PROVIDED, that any Series
A1 Preferred Stock owned by the Holders shall be deemed outstanding for purposes
of making such a determination. Shares of the Series A1 Preferred Stock so owned
which have been pledged in good faith may be regarded as outstanding if (i) the
pledgee establishes to the satisfaction of the Holders and the Company the
pledgee's right so to act with respect to such shares and (ii) the pledgee is
not the Company or any other obligor of the Company.
19. COMMUNICATIONS. The Holders of the Series A1 Preferred Stock shall
be entitled to receive, and the Company shall deliver pursuant to Section 11
hereof, all communications sent by the Company to the holders of the Common
Stock.
20. REACQUIRED SHARES. Any shares of Series A1 Preferred Stock
redeemed, purchased, converted or otherwise acquired by the Company in any
manner whatsoever shall not be reissued as part of the Company's Series A1
Preferred Stock and shall be retired promptly after the acquisition thereof. All
such shares shall become, upon their retirement (and the filing of any
certificate required in connection therewith pursuant to the Florida Business
Corporation Act), authorized but unissued shares of preferred stock of the
Company.
21. REGISTRATION OF TRANSFER. The Company shall keep at its principal
office a register for the registration of the transfers of shares of Series A1
Preferred Stock. Upon the surrender of any certificate representing shares of
Series A1 Preferred Stock at such place, the Company shall, at the request of
the record Holder of such certificate, execute and deliver (at the Company's
expense) a new certificate or certificates in exchange therefor representing in
the aggregate the number of shares represented by the surrendered certificate.
Each such new certificate shall be registered in such name and shall represent
such number of shares as is requested by the Holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate.
22. NO IMPAIRMENT. The Company shall not, by amendment of its Articles
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, intentionally take any action to avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all of the provisions hereof and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Series A1 Preferred Stock against
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<PAGE> 17
impairment.
23. EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction hereof.
***
(signature on following page)
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<PAGE> 18
IN WITNESS WHEREOF, Marex.com, Inc. has caused this
Certificate of Designation to be signed by its Chief Executive Officer on this
26th day of February, 2000.
By: /s/ David A. Schwedel
-------------------------------
Name: David A. Schwedel
Title: President and Director
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EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(TO BE EXECUTED BY THE REGISTERED HOLDER IN
ORDER TO CONVERT SHARES OF SERIES A1 PREFERRED
STOCK)
The undersigned hereby elects to convert the number of shares of Series
A1 Convertible Preferred Stock indicated below, into shares of common stock, par
value $.01 per share (the "Common Stock"), of Marex.com, Inc. (the "COMPANY")
according to the conditions hereof, as of the date written below. If shares are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.
Conversion calculations:
--------------------------------------------
Date to Effect Conversion
--------------------------------------------
Number of shares of Series A1 Preferred Stock to
be Converted
--------------------------------------------
Number of shares of Common Stock to be Issued
--------------------------------------------
Applicable Conversion Price
--------------------------------------------
--------------------------------------------
Name and Address of Person to whom Shares of
Common Stock are to be Issued
--------------------------------------------
Signature
--------------------------------------------
Name
--------------------------------------------
Address
<PAGE> 1
EXHIBIT 4.2
================================================================================
SECURITIES PURCHASE AGREEMENT
among
MAREX.COM, INC.
and
THE PURCHASERS LISTED ON SCHEDULE I
Dated as of March 2, 2000
================================================================================
<PAGE> 2
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is dated
as of March 2, 2000, among Marex.com, Inc., a Florida corporation (the
"COMPANY"), and the various purchasers identified and listed on SCHEDULE I
hereto (each referred to herein as a "PURCHASER" and, collectively, the
"PURCHASERS").
WHEREAS, the Company and the Purchasers are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D as promulgated by the
United States Securities and Exchange Commission (the "COMMISSION") under
Section 4(2) of the Securities Act of 1933, as amended (the "SECURITIES ACT");
and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, in the aggregate up to 430,000
shares of the Company's Series A1 Convertible Preferred Stock, par value $.01
per share (the "PREFERRED STOCK"), which shall have the respective rights,
preferences and privileges set forth in the Certificate of Designation (the
"CERTIFICATE OF DESIGNATION"), in the form of EXHIBIT A annexed hereto; and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement in the form of EXHIBIT B annexed hereto (the "REGISTRATION
RIGHTS AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
NOW, THEREFORE, in consideration of the promises and mutual
covenants and agreements hereinafter contained, the Company and the Purchasers
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE PREFERRED STOCK
1.1 PURCHASE AND SALE.
(a) PURCHASE AND SALE ON FIRST CLOSING DATE. On the First
Closing Date (as defined below), subject to the terms and conditions set forth
herein, the Company shall issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, shall purchase from the Company, the number of shares
of Preferred Stock set forth next to such Purchaser's name on SCHEDULE I (First
Closing) hereto (the "TRANCHE A SHARES") for the purchase price set forth next
to such Purchaser's name on SCHEDULE I hereto. The Certificate of Designation
shall be approved by the Purchasers and the Company's Board of Directors and
shall be filed on or prior to the First Closing Date by the Company with the
Secretary of State of the State of Florida.
<PAGE> 3
(b) PURCHASE AND SALE ON SECOND CLOSING DATE. On the Second
Closing Date (as defined below), subject to the terms and conditions set forth
herein, the Company shall issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, shall purchase from the Company, the number of shares
of Preferred Stock set forth next to such Purchaser's name on SCHEDULE I (Second
Closing) hereto (the "TRANCHE B SHARES") for the purchase price set forth next
to such Purchaser's name on SCHEDULE I hereto.
1.2 CLOSING.
(a) THE FIRST CLOSING. The closing of the purchase and sale of
the Tranche A Shares (the "FIRST CLOSING") shall take place at the offices of
Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590 Madison Avenue, New York, New
York 10022, or by transmission by facsimile and/or overnight courier,
immediately following the execution hereof, or such later date or different
location as the parties shall agree, but not prior to the date that the
conditions set forth in Section 4.1 have been satisfied or waived by the
appropriate party (the "FIRST CLOSING DATE"). At the First Closing:
(i) Each Purchaser shall deliver, as directed by the Company,
its portion of the purchase price as set forth next to its name on
SCHEDULE I in United States dollars in immediately available funds to
an account or accounts designated in writing by the Company;
(ii) The Company shall deliver to each Purchaser a
certificate(s) representing the number of Tranche A Shares purchased by
such Purchaser as set forth on SCHEDULE I hereto; and
(iii) The parties shall execute and deliver each of the
documents referred to in Section 4.1.
(b) THE SECOND CLOSING. Subject to the terms and conditions
set forth in Section 4.2 and elsewhere in this Agreement, the purchase and sale
of the Tranche B Shares (the "SECOND CLOSING") shall take place on the earlier
to occur of (i) the date that the Common Stock of the Company is listed for
trading on the NASDAQ SmallCap or National Market or (ii) the date which is 60
days from the First Closing Date (the "SECOND CLOSING DATE"); PROVIDED, that in
no case shall the Second Closing take place if the conditions listed in Section
4.2 have not been satisfied or waived by the appropriate party. At the Second
Closing:
(i) Each Purchaser shall deliver, as directed by the Company,
its portion of the purchase price as set forth next to its name on
SCHEDULE I in United States dollars in immediately available funds to
an account or accounts designated in writing by the Company;
(ii) The Company shall deliver to each Purchaser a
certificate(s) representing the number of Tranche B Shares purchased by
such Purchaser as set forth on SCHEDULE I hereto; and
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<PAGE> 4
(iii) The parties shall execute and deliver each of the
documents referred to in Section 4.2.
(c) COMPANY'S DAMAGES. In the event that the conditions set
forth in Section 4.2 have been satisfied or waived but any Purchaser shall not
have delivered to the Company the purchase price for such Purchaser's Tranche B
Shares on or prior to the third (3rd) Business Day after the Second Closing
Date, in addition to any other remedies available to the Company, the Conversion
Price (as defined in the Certificate of Designation) with respect to such
Purchaser's Tranche A Shares shall be automatically increased, with no action
required on the part of the Company (other than a Company notice to such
Purchaser with respect to such adjustment), from $13.00 per share to $16.00 per
share (subject to adjustment for any stock splits, stock combinations or similar
transactions).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to each of
the Purchasers:
(a) ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Florida, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. Except as set forth on SCHEDULE 2.1(A), the Company has no
subsidiaries (collectively, the "SUBSIDIARIES"). Each of the Subsidiaries (which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns the majority of such entity's capital stock or holds an
equivalent equity or similar interest) is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the full corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
would not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of any of this Agreement or the Transaction Documents
(as defined in Section 2.1(b)) or any of the transactions contemplated hereby or
thereby, (y) have or result in a material adverse effect on the business,
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole or (z) impair the Company's ability to perform
fully on a timely basis its obligations under any Transaction Document (any of
(x), (y) or (z), being a "MATERIAL ADVERSE EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Certificate of Designation and the
Registration Rights Agreement (collectively, the "TRANSACTION DOCUMENTS"), and
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otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement and each of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no
further action is required by the Company, its Board of Directors or its
stockholders in connection therewith. This Agreement and each of the Transaction
Documents have been duly executed by the Company and, when delivered in
accordance with the terms hereof or thereof, will constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application, and
except that rights to indemnification and contribution may be limited by federal
or state securities laws or public policy relating thereto.
(c) CAPITALIZATION. As of the date hereof, the authorized and
issued capital stock of the Company and its Subsidiaries and the ownership
thereof is as set forth in SCHEDULE 2.1(C). All of such outstanding shares of
capital stock have been, or upon issuance will be, duly authorized and validly
issued, fully paid and nonassessable and were issued in accordance with the
registration or qualification provisions of the Securities Act, or pursuant to
valid exemptions therefrom. Except as disclosed in SCHEDULE 2.1(C), (i) no
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens, claims or encumbrances suffered or permitted
by the Company, nor is any holder of the Common Stock entitled to preemptive or
similar rights arising out of any agreement or understanding with the Company by
virtue of any Transaction Document, (ii) there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
or exercisable for, or giving any Person (as defined below) any right to
subscribe for or acquire, any shares of capital stock of the Company or any of
its Subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable or exercisable for, any shares of capital stock of the Company or
any of its Subsidiaries, (iii) there are no outstanding debt securities of the
Company or any of its Subsidiaries, (iv) there are no contracts, commitments,
understandings, agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except the Registration Rights Agreement), (v) there are no
outstanding securities of the Company or any of its Subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings, agreements or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the shares of Preferred Stock or upon the conversion of the Preferred Stock,
(vii) the Company does not have any stock appreciation rights or "phantom stock"
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plans or agreements, or any similar plan or agreement and (viii) except as
specifically disclosed in the SEC Documents (as defined in Section 2.1(k)
hereof), no Person or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")) or has the right to acquire by agreement with or
by obligation binding upon the Company beneficial ownership of in excess of 5%
of the Company's Common Stock, par value $0.01 per share (the "COMMON STOCK").
As used herein, "PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
(d) AUTHORIZATION, VALIDITY AND ISSUANCE OF SHARES. Prior to
the Closing Date the Certificate of Designation has been filed with the
Secretary of State of the State of Florida. The shares of Common Stock issuable
upon conversion of the Preferred Stock (the "UNDERLYING SHARES") are and will at
all times hereafter continue to be duly authorized and reserved for issuance and
the shares of Common Stock issued upon conversion of the Preferred Stock (the
"CONVERSION SHARES") will be validly issued, fully paid and non-assessable, free
and clear of all liens, claims, encumbrances, other than rights created by the
Transaction Documents and liens, claims and encumbrances created by the
Purchasers (collectively, "LIENS") and will not be subject to any preemptive or
similar rights.
(e) NO CONFLICTS. The execution, delivery and performance of
this Agreement and each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including the issuance of the Conversion Shares) do not and will not (i)
conflict with or violate any provision of the Company's Amended and Restated
Articles of Incorporation as amended and in effect on the date hereof (the
"ARTICLES OF INCORPORATION"), the Company's Bylaws, as in effect on the date
hereof (the "Bylaws"), or other organizational documents of the Company or any
of its Subsidiaries, (ii) subject to obtaining the consents referred to in
Section 2.1(f), conflict with, or constitute a breach or a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to other Persons any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, license or instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any of its Subsidiaries is a party or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
any of its Subsidiaries is subject (including federal and state securities laws
and regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to the
Company or any of its Subsidiaries, or by which any material property or asset
of the Company or any of its Subsidiaries is bound or affected which could
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
(f) CONSENTS AND APPROVALS. Except as specifically set forth
on SCHEDULE 2.1(F), neither the Company nor any of its Subsidiaries is required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority, regulatory or self regulatory agency, or other
Person in connection with the execution, delivery and performance by the Company
of this Agreement or any of the Transaction Documents, other than (i) the filing
of a registration statement with the Commission, which shall be filed in
accordance with and in the time periods set forth in the Registration Rights
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Agreement, (ii) any filings, notices or registrations under applicable state
securities laws and (iii) the approval of the Company's Board of Directors and
the filings of the Certificate of Designation with the Secretary of State of the
State of Florida, which filing and approval shall be effected on or prior to the
Closing Date (together with the consents, waivers, authorizations, orders,
notices and filings referred to on SCHEDULE 2.1(f), the "REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically set forth
on SCHEDULE 2.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties or assets before or by any
court, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) or any arbitrator, which (i) adversely affects
or challenges the legality, validity or enforceability of any of this Agreement
or any of the Transaction Documents, (ii) could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect or (iii) if
adversely decided, could reasonably be expected to have a material adverse
effect on the issuance or conversion of the Preferred Stock or the Conversion
Shares, or the consummation of the transactions contemplated by this Agreement
and the Transaction Documents.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any of
its Subsidiaries is (i) in default under or in violation of any indenture, loan
or other credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties or assets is bound, (ii) to its
knowledge, in violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court, arbitrator or governmental
authority applicable to it or any law, statute, ordinance, rule or regulation of
any governmental authority to which it is subject or (iii) in violation of any
of the provisions of its Articles of Incorporation, Bylaws or other charter
documents such that any right of a holder of the Preferred Stock would be
affected. The business of the Company and its Subsidiaries is not being
conducted, and shall not be conducted, in violation of any law, statute,
ordinance, rule or regulation of any governmental authority, except where such
violations have not resulted or would not reasonably result, individually or in
the aggregate, in a Material Adverse Effect.
(i) DISCLOSURE; ABSENCE OF CERTAIN CHANGES. None of this
Agreement, the Schedules to this Agreement, the Transaction Documents, the SEC
Documents or any other written or formally presented information, report,
financial statement, exhibit, schedule or document furnished by or on behalf of
the Company in connection with the negotiation of the transactions contemplated
hereby contained, contains, or will contain at the time it was or is so
furnished, any untrue statement of a material fact or omitted, omits or will
omit at such time to state any material fact necessary in order to make the
statements made herein and therein, in light of the circumstances under which
they were made, not misleading. Except as disclosed on SCHEDULE 2.1(i) or in SEC
Documents filed since September 30, 1999, (i) no event has occurred that is not
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reflected in the Company's financial statements which has or reasonably could be
expected to have a Material Adverse Effect or (ii) which would be required to be
disclosed by the Company under applicable securities laws on a registration
statement (including by way of incorporation by reference) filed with the
Commission relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly disclosed.
(j) PRIVATE OFFERING; SOLICITATION. The Company and, to the
knowledge of the Company, all Persons acting on its behalf have not (i) made,
directly or indirectly, and will not make, offers or sales of any securities or
solicited any offers to buy any security under circumstances that would require
registration of the Preferred Stock, the Conversion Shares or the issuance of
such securities under the Securities Act, (ii) distributed any offering
materials in connection with the offering and sale of the Preferred Stock other
than the SEC Documents, the Schedules to this Agreement, any amendments and any
supplements thereto, or (iii) solicited any offer to buy or sell the Preferred
Stock by means of any form of general solicitation or advertising (as those
terms are used in Rule 502(c) of Regulation D under the Exchange Act) in a
manner which would require registration under the Securities Act. The offer,
issuance and sale of the Preferred Stock and the Conversion Shares to the
Purchasers will not be integrated with any other offer, sale and issuance of the
Company's securities (past or current) in violation of the Securities Act or any
regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed, quoted or designated or for purposes of
any stockholder approval provision applicable to the Company or its securities.
Subject to the accuracy and completeness of the representations and warranties
of the respective Purchasers contained in Section 2.2 hereof, the offer,
issuance and sale by the Company to the Purchasers of the Preferred Stock and
the Underlying Shares is exempt from the registration requirements of the
Securities Act.
(k) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Common Stock of
the Company is registered pursuant to Section 12(g) of the Exchange Act. The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act, including pursuant to Section 13, 14 or 15(d)
thereof (the foregoing materials and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein being collectively referred to
herein as the "SEC DOCUMENTS"), on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Documents prior to
the expiration of any such extension. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Documents, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All agreements to which the Company or any of its Subsidiaries is a
party or to which the property or assets of the Company or any of its
Subsidiaries are subject and which are required to be filed as exhibits to the
SEC Documents have been filed as exhibits to the SEC Documents as required and
neither the Company nor any of its Subsidiaries nor, to the Company's knowledge,
any other party is in breach of any such agreement. As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
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requirements and the published rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Company as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial year-end audit adjustments. No other
information provided by or on behalf of the Company to the Purchasers which is
not included in the SEC Documents, including, without limitation, information
referred to in Section 2.1(i) of this Agreement, contains any untrue statement
of a material fact or omits to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which they are
or were made, not misleading.
(l) INVESTMENT COMPANY. The Company is not, and is not
controlled by or under common control with an Affiliate of an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
As used herein, "AFFILIATE" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common control
with such Person.
(m) BROKER'S FEES. No fees or commissions or similar payments
with respect to the transactions contemplated by this Agreement or the
Transaction Documents have been paid or will be payable by the Company to any
broker, financial advisor, finder, investment banker or bank, other than as set
forth in SCHEDULE 2.1(m). The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section 2.1(m) that may be due in
connection with the transactions contemplated by this Agreement and the
Transaction Documents.
(n) FINANCIAL STATEMENTS. The Company has delivered to the
Purchasers the balance sheet of the Company as of September 30, 1999 and the
related statement of income, changes in stockholders' equity, and cash flow for
the period then ended. Such financial statements and notes fairly present the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of the Company as of September 30, 1999 and for the
periods referred to in such financial statements, in accordance with United
States generally accepted accounting principals ("GAAP"), and the financial
statements referred to in this Section reflect the consistent application of
such accounting principles throughout the period involved except as may be
otherwise specified in such financial statements or the notes thereto. Except as
set forth on SCHEDULE 2.1(n) hereof, no financial statements of any Person other
than the Company are required by GAAP to be included in the consolidated
financial statements of the Company.
(o) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The
principal market on which the Common Stock is currently traded is the OTC
Bulletin Board of the National Association of Securities Dealers, Inc. (the
"OTCBB"). Except as disclosed on SCHEDULE 2.1(o), the Company has not, since the
initial listing of its Common Stock on the OTCBB, received notice (written or
oral) from the OTCBB to the effect that the Company is not in compliance with
the listing or maintenance requirements of such exchange, market or trading
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facility. The Company is not in default under or in violation of any of the
listing or quotation requirements of the OTCBB as in effect on the date hereof
and the Company is not aware of any facts which could reasonably lead to
delisting or suspension of the Common Stock by the OTCBB. After giving effect to
the transactions contemplated by this Agreement and the Transaction Documents,
the Company believes it will be in compliance with all such listing and
maintenance requirements.
(p) INTELLECTUAL PROPERTY RIGHTS. The Company and each of its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trademark applications, trade names and service marks, whether or not
registered, and all patents, patent applications, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and intellectual
property rights (collectively, "INTELLECTUAL PROPERTY RIGHTS") which are
necessary for use in connection with their respective businesses as now
conducted and as described in the SEC Documents. Except as set forth on SCHEDULE
2.1(p), none of the Intellectual Property Rights of the Company or any of its
Subsidiaries has expired or terminated, or is expected to expire or terminate
within two (2) years from the date of this Agreement. Neither the Company nor
any of its Subsidiaries has received any notice (written or oral) indicating
that it has infringed or is infringing on any of the Intellectual Property
Rights of any other Person and, except as set forth on SCHEDULE 2.1(p), there is
no claim, action or proceeding which has been made or brought or alleged
against, or to the knowledge of the Company and its Subsidiaries, is being made,
brought or threatened against, the Company or any of its Subsidiaries regarding
the infringement of any of the Intellectual Property Rights of the Company or
any of its Subsidiaries, and the Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing, except
where any of the foregoing would not have a Material Adverse Effect. The Company
and its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their Intellectual Property Rights.
(q) TAX STATUS; FIRPTA. Except as set forth on SCHEDULE
2.1(q), the Company and each of its Subsidiaries have made or filed all federal
and state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith (which are set forth on
SCHEDULE 2.1(q) hereof), and have set aside on their books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due from the Company or any of its
Subsidiaries by the taxing authority of any jurisdiction, and the officers of
the Company know of no basis for any such claim. The Company is not a "United
States real property holding corporation" within the meaning of Section
847(c)(2) of the Internal Revenue Code of 1986, as amended.
(r) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as
described on SCHEDULE 2.1(r) hereto, (i) the Company has not granted or agreed
to grant to any Person any rights (including "piggy-back" registration rights)
to have any securities of the Company registered with the Commission or any
other governmental authority which have not been satisfied and (ii) no Person,
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including, but not limited to, current or former stockholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any Transaction Document.
(s) TITLE. Except as disclosed on SCHEDULE 2.1(s), the Company
and each of its Subsidiaries have good and marketable title in fee simple to all
real property and personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
Liens, except for Liens that do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and its Subsidiaries. Any real property and facilities held under
lease by the Company and its Subsidiaries are held by them under valid,
subsisting and, to the best knowledge of the Company and its Subsidiaries,
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and the Subsidiaries.
(t) PERMITS. The Company and each of its Subsidiaries possess
all certificates, authorizations, licenses, easements, consents, approvals,
orders and permits necessary to own, lease and operate their respective
properties and to conduct their respective businesses as currently conducted
except where the failure to possess such permits would not, individually or in
the aggregate, have a Material Adverse Effect ("MATERIAL PERMITS"), and there is
no claim, action or proceeding pending, or, to the knowledge of the Company or
its Subsidiaries, threatened, relating to the revocation, modification,
suspension or cancellation of any Material Permit. Neither the Company nor any
of the Subsidiaries is in conflict with, in default under or in violation of any
Material Permit.
(u) INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverages as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business, at a cost that
would not materially and adversely affect the business, operations, properties,
assets, liabilities, prospects, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole.
(v) INTERNAL ACCOUNTING CONTROLS. The Company has retained
Arthur Andersen LLP as the Company's auditors.
(w) TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 2.1(w), and other than the granting of stock options and documents
disclosed on SCHEDULE 2.1(c), none of the officers, directors or employees of
the Company is presently a party to any transaction with the Company or any of
its Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
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furnishing of services to or by, providing for rental of real property or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
Person in which any officer, director or any such employee has a substantial
interest or is an officer, director, trustee or partner.
(x) APPLICATION TO TAKEOVER PROTECTION. None of the
transactions contemplated by this Agreement and the Transaction Documents,
including the conversion of the Preferred Stock, will trigger any poison pill
provisions of any of the Company's stockholders' rights or similar agreements.
(y) ENVIRONMENTAL LAWS. Except as set forth on SCHEDULE
2.1(Y), the Company and its Subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permits, licenses or
other approvals except where the failure to comply with any of the foregoing
would not result in a Material Adverse Effect.
(z) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the course of
its actions for, or on behalf of, the Company or any of its Subsidiaries (i)
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity, (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (iii) violated (or is in violation of) any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
(aa)FORM S-3 ELIGIBILITY. The Company is eligible to register
securities (including the Underlying Shares) for resale with the Commission
under Form S-3 (or appropriate successor form) promulgated under the Securities
Act.
(bb)ACKNOWLEDGMENT OF DILUTION. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares upon conversion of the Preferred Stock. The
Company further acknowledges that its obligation to issue the Conversion Shares
upon conversion of the Preferred Stock in accordance with this Agreement and the
Certificate of Designation is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.
(cc)ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF THE
PREFERRED STOCK. The Company acknowledges and agrees that the Purchasers are
acting solely in the capacity of arm's length purchasers with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any statement made by any Purchaser or any
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of their respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is not advice or a recommendation and
is merely incidental to the Purchasers' purchase of the Preferred Stock. The
Company further represents to each Purchaser that the Company's decision to
enter into this Agreement has been based solely on the independent evaluation of
the Company and its representatives.
(dd)SOLVENCY. Except as set forth on SCHEDULE 2.1(DD), the
Company did not receive a qualified opinion from its auditors with respect to
its most recent fiscal year end and does not anticipate or know of any basis
upon which its auditors might issue a qualified opinion in respect of its
current fiscal year.
(ee)OTHER AGREEMENTS. The Company has not, directly or
indirectly, made any agreements with any Purchasers relating to the terms and
conditions of the transactions contemplated by this Agreement and the
Transaction Documents except as set forth in this Agreement and the Transaction
Documents.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to the
Company (as to itself) as follows:
(a) ORGANIZATION; AUTHORITY. Such Purchaser is a corporation
or a limited duration company or a limited liability company or limited
partnership duly formed, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, organization or formation with the
requisite power and authority, corporate or otherwise, to enter into and to
consummate the transactions contemplated hereby and by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The
purchase by such Purchaser of the Preferred Stock has been duly authorized by
all necessary action on the part of such Purchaser. This Agreement and the
Registration Rights Agreement have been duly executed and delivered by such
Purchaser and constitute the valid and legally binding obligations of such
Purchaser, enforceable against such Purchaser in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application, and except that rights to
indemnification and contribution may be limited by federal or state securities
laws or public policy relating thereto.
(b) INVESTMENT INTENT. Such Purchaser is acquiring the
Preferred Stock for its own account and not with a present view for distributing
or reselling the Preferred Stock, the Conversion Shares or any part thereof or
interest therein in violation of the Securities Act; PROVIDED, HOWEVER, that by
making the representations herein, such Purchaser does not agree to hold any of
the Preferred Stock or the Conversion Shares for any minimum or other specific
term and reserves the right to dispose of the Preferred Stock and the Conversion
Shares at any time in accordance with or pursuant to a registration statement or
an exemption under the Securities Act.
(c) PURCHASER STATUS. At the time such Purchaser was offered
the Preferred Stock, and at the Closing Date, (i) it was and will be an
"accredited investor" as defined in Rule 501 under the Securities Act and (ii)
such Purchaser, either alone or together with its representatives, had and will
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have such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Preferred Stock.
(d) RELIANCE. Such Purchaser understands and acknowledges that
(i) the Preferred Stock is being offered and sold to such Purchaser without
registration under the Securities Act in a private placement that is exempt from
the registration provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder and (ii) the availability
of such exemption depends in part on, and the Company will rely upon the
accuracy and truthfulness of, the representations set forth in this Section 2.2
and such Purchaser hereby consents to such reliance.
(e) INFORMATION. Such Purchaser and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Preferred Stock which have been requested by such Purchaser or its advisors.
Such Purchaser and its advisors, if any, have been afforded the opportunity to
ask questions of the Company. Neither such inquiries nor any other due diligence
investigation conducted by such Purchaser or any of its advisors or
representatives shall modify, amend or affect Purchaser's right to rely on the
Company's representations and warranties contained in Section 2.1 above or
representations and warranties of the Company contained in any other Transaction
Document. Such Purchaser understands that its investment in the Preferred Stock
involves a significant degree of risk.
(f) GOVERNMENTAL REVIEW. Such Purchaser understands that no
United States federal or state agency or any other government or governmental
agency or authority has passed upon or made any recommendation or endorsement of
the Preferred Stock.
(g) RESIDENCY. Such Purchaser is a resident of the
jurisdiction set forth immediately below such Purchaser's name on SCHEDULE II
hereto.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2. The Company
further acknowledges that the Purchasers, collectively, are not acting as a
group pursuant to Rule 13-d of the Exchange Act.
ARTICLE III
OTHER AGREEMENTS
3.1 TRANSFER RESTRICTIONS; LEGEND.
(a) TRANSFER RESTRICTIONS. If any Purchaser should decide to
dispose of the Preferred Stock or the Conversion Shares held by it, such
Purchaser understands and agrees that it may do so only pursuant to an effective
registration statement under the Securities Act, pursuant to an available
exemption from the registration requirements of the Securities Act or Rule 144
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promulgated under the Securities Act ("RULE 144") or to the Company. In
connection with any transfer or disposition of any Preferred Stock or Conversion
Shares other than pursuant to an effective registration statement, Rule 144 or
to the Company, the Company may require the transferor thereof to provide to the
Company a written opinion of counsel experienced in the area of United States
securities laws selected by the transferor, the form and substance of which
opinion shall be customary for opinions of counsel in comparable transactions,
to the effect that such transfer or disposition does not require registration of
such transferred securities under the Securities Act; PROVIDED, HOWEVER, that if
the Preferred Stock or Conversion Shares may be sold pursuant to Rule 144(k), no
written opinion of counsel shall be required from the Purchaser if such
Purchaser provides reasonable assurances that such security can be sold pursuant
to Rule 144(k). Notwithstanding the foregoing, the Company hereby consents to
and agrees to register any transfer by any Purchaser to an Affiliate of such
Purchaser, PROVIDED that the transferee certifies to the Company that it is an
"accredited investor" as defined in Rule 501(a) under the Securities Act. Any
such transferee shall also agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Transaction Documents. In addition, if a Purchaser provides the Company with an
opinion of counsel, the form and substance of which opinion shall be customary
for opinions of counsel in comparable transactions, to the effect that a public
sale, assignment or transfer of the Preferred Stock and the Conversion Shares
may be made without registration under the Securities Act, or the Purchaser
provides the Company with reasonable assurances that the Preferred Stock and the
Conversion Shares can be sold pursuant to Rule 144(k), the Company shall permit
the transfer. Notwithstanding the foregoing or anything else contained herein to
the contrary, the Preferred Stock and the Conversion Shares may be pledged as
collateral in connection with a bona fide margin account or other lending
arrangement.
(b) LEGEND. Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Preferred Stock
and the Conversion Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT.
The Conversion Shares shall not contain the legend set forth
above (or any other legend) (i) at any time while a registration statement is
effective under the Securities Act covering such security, (ii) if, in the
written opinion of counsel to the Company experienced in the area of United
States securities laws, such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) or (iii) if such
Conversion Shares may be sold pursuant to Rule 144. The Company agrees that it
will provide each Purchaser, upon request, with a certificate or certificates
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<PAGE> 16
representing the Conversion Shares, free from such legend at such time as such
legend is no longer required hereunder. If such certificate or certificates had
previously been issued with such a legend or any other legend, the Company
shall, upon request and delivery of such certificate or certificates to the
Company by such Purchaser, reissue to such Purchaser such certificate or
certificates free of any legend.
3.2 STOP TRANSFER INSTRUCTION. The Company may not make any notation
on its records or give instructions to any transfer agent of the Company which
enlarge the restrictions on transfer set forth in Section 3.1, except as
required by law.
3.3 FURNISHING OF INFORMATION. As long as any Purchaser owns the
Preferred Stock or the Conversion Shares, if the Company is not required to file
reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare
and furnish to the Purchasers (but not to such Purchaser's transferees, if any)
and make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. As long as
any Purchaser owns the Preferred Stock or the Conversion Shares during any time
when the Company is required to register its Common Stock under Section 12(b) or
Section 12(g) of the Exchange Act or to file reports pursuant to Section 13, 14,
or 15(d) of the Exchange Act, then the Company will cause the Common Stock to
continue at all times to be registered under Section 12(b) or Section 12(g) of
the Exchange Act, will timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13, 14 or 15(d) of the
Exchange Act and promptly furnish, but in no event later than two (2) business
days after the filing thereof with the Commission, the Purchasers with true and
complete copies of all such filings (unless filed by EDGAR), and will not take
any action or file any document (whether or not permitted by the Exchange Act or
the rules thereunder) to terminate or suspend such reporting and filing
obligations and will make and keep public information available, as those terms
are defined in Rule 144. The Company further covenants that it will take such
further action as any holder of the Preferred Stock or the Conversion Shares may
reasonably request, all to the extent required from time to time to enable such
Person to sell the Preferred Stock or the Conversion Shares, without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act. Upon the request of
any such Person, the Company shall deliver to such Person a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
3.4 BLUE SKY LAWS. In accordance with the Registration Rights
Agreement, the Company shall (a) qualify the Conversion Shares under the
securities or "blue sky" laws of such jurisdictions as the Purchasers may
request (or to obtain an exemption from such qualification), (b) provide
evidence of any such action so taken to each Purchaser on or prior to the
Effectiveness Date (as defined in the Registration Rights Agreement) and (c)
continue such qualification at all times through the resale of all Conversion
Shares.
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3.5 INTEGRATION. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Preferred Stock or the Conversion Shares in a manner that
would require the registration under the Securities Act of the sale to any
Purchaser of the Preferred Stock or the Conversion Shares or cause the offering
of such securities to be integrated with any other offering of securities by the
Company for the purpose of any stockholder approval provision applicable to the
Company or its securities.
3.6 REGISTRATION AND RESERVATION OF CONVERSION SHARES.
(a) The Company shall, as promptly as possible after the
filing of its 1999 annual report on Form 10-K, prepare and file with the NASDAQ
SmallCap Market, or any other nationally recognized exchange or market quotation
system, a share listing application for the listing of the Company's Common
Stock (including the Underlying Shares), (ii) take all commercially reasonably
steps necessary to cause the Common Stock (including the Underlying Shares) to
be approved for listing or quotation on such market or quotation system as soon
as possible thereafter, (iii) if so listed, take all commercially reasonably
steps necessary to maintain, so long as any Purchaser owns shares of (or shares
convertible into) Common Stock, such listing of all such Underlying Shares and
(iv) provide to the Purchasers evidence of such listing. Neither the Company nor
any of its Subsidiaries shall take any action that may result in the delisting
or suspension of the Common Stock on any other national securities exchange or
automated quotation system on which the shares are then listed. The Company
shall promptly provide to each Purchaser (but not to any transferee of the
Purchasers) copies of any notices it receives from any national securities
exchange or automated quotation system on which the shares are then listed
regarding the continued eligibility of the Common Stock for listing on such
exchange or quotation system, so long as such notice does not include material,
non-public information. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 3.6(a).
(b) REGISTRATION OF SHARES. The number of shares of Common
Stock initially included in the Initial Registration Statement (as defined in
the Registration Rights Agreement) shall be determined pursuant to Section 2(a)
of the Registration Rights Agreement.
(c) RESERVATION OF SHARES. The Company at all times shall
reserve a sufficient number of shares of its authorized but unissued Common
Stock to provide for 100% of the full conversion of the outstanding Preferred
Stock. Shares of Common Stock reserved for issuance upon conversion of the
Preferred Stock shall be allocated pro rata to each of the Purchasers in
accordance with the amount of Preferred Stock issued and delivered to such
Purchaser at the Closing. If at any time the number of shares of Common Stock
authorized and reserved for issuance is insufficient to cover 100% of the number
of Conversion Shares issued and issuable upon conversion of the Preferred Stock
(based on the Conversion Price (as defined in the Certificate of Designation) of
the Preferred Stock in effect from time to time) without regard to any
limitation on conversions, the Company will promptly take all corporate action
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<PAGE> 18
necessary to authorize and reserve 100% of such shares pursuant to Section 3(b)
of the Registration Rights Agreement, including, without limitation, calling a
special meeting of stockholders to authorize additional shares to meet the
Company's obligations under this Section 3.6(c), in the case of an insufficient
number of authorized shares, and using its commercially reasonable efforts to
obtain stockholder approval of an increase in such authorized number of shares.
3.7 NOTICE OF BREACHES AND VIOLATIONS; PURCHASER DEFAULT.
(a) NOTICE OF BREACH. The Company and each Purchaser shall
give prompt written notice to each other of any breach by it of any
representation, warranty or other agreement contained in this Agreement or in
the Transaction Documents, as well as any events or occurrences arising after
the date hereof and prior to the Closing Date, which would reasonably be likely
to cause any representation or warranty or other agreement of such party, as the
case may be, contained herein to be incorrect or breached as of the Closing
Date; PROVIDED such notice will not constitute material non-public information.
However, no disclosure by any party pursuant to this Section 3.7 shall be deemed
to cure any breach of any representation, warranty or other agreement contained
herein or in the Transaction Documents.
(b) NOTICE OF VIOLATION. Notwithstanding the generality of
Section 3.7(a), the Company shall promptly notify (PROVIDED such notification
will not constitute material non-public information) each Purchaser of any
notice or claim (written or oral) that it receives from any lender of the
Company or any of its Subsidiaries to the effect that the consummation of the
transactions contemplated hereby and by the Transaction Documents violates or
would violate any written agreement or understanding between such lender and the
Company or any of its Subsidiaries, and the Company shall promptly furnish by
facsimile to the Purchasers a copy of any written statement in support of or
relating to such claim or notice.
(c) PURCHASER DEFAULT. The default by any Purchaser of any of
its obligations, representations or warranties under this Agreement or the
Transaction Documents shall not be imputed to, and shall have no effect upon,
any other Purchaser or affect the Company's obligations under this Agreement or
any Transaction Document to any non-defaulting Purchaser.
3.8 FORM D. The Company agrees to file a Form D with respect to the
Preferred Stock as required by Rule 506 under Regulation D and to provide a copy
thereof to each Purchaser promptly after such filing.
3.9 USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Preferred Stock for working capital, expansion of its business and
general corporate purposes.
3.10 TRANSACTIONS WITH AFFILIATES. So long as any shares of Preferred
Stock or any Conversion Shares are held by any Purchaser, the Company shall not,
and shall cause each of its Subsidiaries not to, enter into, amend, modify or
supplement, or permit any of its Subsidiaries to enter into, amend, modify or
supplement, any agreement, transaction, commitment or arrangement with any of
its or any Subsidiary's officers, directors or persons who were officers or
directors at any time during the previous two (2) years, stockholders who
beneficially own 5% or more of the Common Stock, or Affiliates or any individual
related by blood, marriage or adoption to any such individual or with any Person
in which any such Person owns a 5% or more beneficial interest (each, a "RELATED
PARTY"), except for (a) customary employment arrangements and benefit programs
on reasonable terms, (b) any agreement, transaction, commitment or arrangement
on an arm's length basis on terms no less favorable than terms which would have
been obtainable from a Person other than such Related Party or (c) any
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agreement, transaction, commitment or arrangement which is approved by a
majority of the disinterested directors of the Company. For purposes hereof, any
director who is also an officer of the Company or any Subsidiary of the Company
shall not be a disinterested director with respect to any such agreement,
transaction, commitment or arrangement. For purposes hereof, "Affiliate" means,
with respect to any Person, another Person that, directly or indirectly, (i) has
a 5% or more equity interest in that Person, (ii) has 5% or more common
ownership with that Person, (iii) controls that Person or (iv) shares common
control with that Person. "CONTROL" or "CONTROLS" for purposes of this Section
only means that a Person has the power, direct or indirect, to conduct or govern
the policies of another Person, whether through the ownership of voting
securities, by contract or otherwise.
3.11 TRANSFER AGENT INSTRUCTIONS. At the Closing, the Company shall
issue instructions to its transfer agent (and shall issue to any subsequent
transfer agent as required), to issue certificates, registered in the name of
each such Purchaser or its respective nominee(s), for the Conversion Shares in
such amounts as specified from time to time by each Purchaser to the Company in
a form acceptable to such Purchasers (the "TRANSFER AGENT INSTRUCTIONS"). The
Company warrants that, except as otherwise required by law, no instruction other
than the Transfer Agent Instructions referred to in this Section 3.11, and stop
transfer instructions to give effect to Section 3.1 hereof (in the case of the
Conversion Shares, prior to registration of the Conversion Shares under the
Securities Act) will be given by the Company to its transfer agent and that the
Preferred Stock or the Conversion Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement and the Transaction Documents. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Purchasers
by violating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 3.11 will be inadequate and agrees, in the event
of a beach or threatened breach by the Company of the provisions of this Section
3.11, that the Purchasers shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer without the necessity of showing economic loss
and without any bond or other security being required.
3.12 ORDINARY COURSE BROKERAGE AND TRADING. Subject to compliance
with all applicable securities laws and the OTCBB and any agreements between the
Company and such Purchaser, no Purchaser shall be prohibited from engaging in
its ordinary course brokerage and trading activities in respect of the Common
Stock; PROVIDED, that the personnel engaged in such activities shall not then
be in possession of material non-public information with respect to the Company.
3.13 COMMERCIALLY REASONABLE EFFORTS. Each of the parties hereto
shall use its commercially reasonable efforts to satisfy each of the conditions
to be satisfied by it as provided in Article IV of this Agreement.
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3.14 INTENTIONALLY OMITTED.
3.15 PRESS RELEASE; FILING OF FORM 8-K. Subject to the provisions of
Section 6.10 hereof, prior to the opening of the OTCBB on March 7, 2000, the
Company shall file a press release in form and substance acceptable to the
Purchasers. On or before the third (3rd) business day following the First
Closing Date or Second Closing Date, as applicable, the Company shall file a
Form 8-K with the Commission describing the terms of the transaction
contemplated by this Agreement and the Transaction Documents in the form
required by the Exchange Act.
3.16 SENIORITY; EXCLUSIVITY. No class of equity securities of the
Company shall rank senior to the Preferred Stock in dividend payment or in right
of payment, whether upon liquidation, dissolution, winding up or otherwise. So
long as any Preferred Stock issued hereunder remains outstanding, the Company
shall not exchange, redeem or convert any of the Company's capital stock for
indebtedness, including convertible debt, of the Company. So long as any
Preferred Stock issued hereunder remains outstanding, the Company shall not
issue and sell any shares of its Series A1 Preferred Stock without the prior
written consent of the Purchasers then holding a majority of the Preferred Stock
issued hereunder.
3.17 MATERIAL INFORMATION. The Company covenants that any information
provided by the Company to the Purchasers and their agents or counsel which
could be deemed to constitute material non-public information will cease to be
material non-public information (either through disclosure by the Company or
otherwise) by June 30, 2000.
ARTICLE IV
CONDITIONS
4.1 FIRST CLOSING.
(a) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
SELL THE PREFERRED STOCK AT THE FIRST CLOSING. The obligation of the Company to
sell the Preferred Stock at the First Closing is subject to the satisfaction or
waiver (with prior written notice to each Purchaser) by the Company, on the
First Closing Date, of each of the following conditions:
(i) ACCURACY OF THE PURCHASERS' REPRESENTATIONS AND
WARRANTIES. The representations and warranties of each Purchaser set
forth in this Agreement shall be true and correct in all material
respects as of the date when made (except for representations and
warranties that speak as of a specific date) and as of the First
Closing Date;
(ii) PERFORMANCE BY THE PURCHASERS. Each Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement and the
Transaction Documents to be performed, satisfied or complied with by
such Purchaser at or prior to the First Closing Date (including payment
of such Purchaser's purchase price); and
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(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated, endorsed or threatened or shall be pending by or before
any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by
this Agreement or the Transaction Documents.
(b) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS
TO PURCHASE THE PREFERRED STOCK AT THE FIRST CLOSING. The obligation of each
Purchaser to acquire and pay for the Preferred Stock at the First Closing is
subject to the satisfaction or waiver (with prior written notice to the Company
and each other Purchaser) by such Purchaser, on the First Closing Date, of each
of the following conditions:
(i) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company set forth in this
Agreement and in each of the Transaction Documents shall be true and
correct in all respects as of the date when made (except for
representations and warranties that speak as of a specific date) and as
of the First Closing Date;
(ii) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement and the
Transaction Documents to be performed, satisfied or complied with by
the Company at or prior to the First Closing Date;
(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated, endorsed or threatened or shall be pending by or before
any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by
this Agreement and the Transaction Documents;
(iv) LISTING OF COMMON STOCK. The Common Stock shall be listed
or quoted for trading on the OTCBB;
(v) REQUIRED APPROVALS. All Required Approvals shall have been
obtained and copies thereof delivered to such Purchaser;
(vi) SHARES OF COMMON STOCK. The Company shall have duly
reserved the number of Underlying Shares required by this Agreement and
the Transaction Documents to be reserved for issuance upon conversion
of the Preferred Stock;
(vii) TRANSFER AGENT INSTRUCTIONS. The Transfer Agent
Instructions, in a form acceptable to the Purchasers, shall have been
delivered to and acknowledged in writing by the Company's transfer
agent with a copy forwarded to each Purchaser; and
(viii) RESOLUTIONS. The Board of Directors of the Company
shall have adopted resolutions consistent with Section 2.1(b) and in a
form reasonably acceptable to each Purchaser (the "Resolutions").
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(c) DOCUMENTS AND CERTIFICATES. At the First Closing, the
Company shall have delivered to the Purchasers the following in form and
substance reasonably satisfactory to the Purchasers:
(i) OPINION. An opinion of the Company's legal counsel,
substantially in the form attached hereto as EXHIBIT C, dated as of the
First Closing Date;
(ii) CERTIFICATE. A certificate or certificates representing
the number of shares of Preferred Stock purchased by such Purchaser at
the First Closing as set forth next to such Purchaser's name on
SCHEDULE I (First Closing) hereto, registered in the name of such
Purchaser, each in form satisfactory to the Purchaser;
(iii) REGISTRATION RIGHTS. The Company shall have executed and
delivered the Registration Rights Agreement, substantially in the form
of EXHIBIT B hereto;
(iv) OFFICER'S CERTIFICATE. An Officer's Certificate dated the
First Closing Date and signed by an executive officer of the Company
confirming the accuracy of the Company's representations, warranties
and covenants as of the First Closing Date and confirming the
compliance by the Company with the conditions precedent set forth in
this Section 4.1 as of the First Closing Date;
(v) SECRETARY'S CERTIFICATE. A Secretary's Certificate dated
the First Closing Date and signed by the Secretary or Assistant
Secretary of the Company certifying that (A) attached thereto is a true
and complete copy of the Articles of Incorporation of the Company, as
in effect on the First Closing Date, (B) attached thereto is a true and
complete copy of the Bylaws of the Company, as in effect on the First
Closing Date and (C) attached thereto is a true and complete copy of
the Resolutions duly adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement
and of the Transaction Documents, and that such Resolutions have not
been modified, rescinded or revoked;
(vi) ARTICLES OF INCORPORATION. The Company shall have
delivered to each of the Purchasers a copy of a certificate evidencing
the incorporation and good standing of the Company and each Subsidiary,
in such corporation's state of incorporation issued by the Secretary of
State of such state of incorporation as of a date within ten (10) days
of the First Closing Date. The Company shall have delivered to each of
the Purchasers a copy of its Amended and Restated Articles of
Incorporation as certified by the Secretary of State of the State of
Florida within ten (10) days of the First Closing Date;
(vii) CERTIFICATE OF DESIGNATION. The Certificate of
Designation shall have been duly approved by the Company's Board of
Directors and filed with the Secretary of State of the State of
Florida, and the Company shall have delivered a copy thereof to the
Purchaser certified as filed by the office of the Secretary of State of
the State of Florida;
(viii) TRANSFER AGENT LETTER. The Company shall have delivered
to each Purchaser a letter from the Company's transfer agent certifying
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the number of shares of Common Stock outstanding as of a date within
five business days of the First Closing Date; and
(ix) OTHER DOCUMENTS. The Company shall have delivered to each
Purchaser such other documents relating to the transactions
contemplated by the Transaction Documents as the Purchasers or their
counsel may reasonably request.
4.2 SECOND CLOSING.
(a) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
SELL THE PREFERRED STOCK AT THE SECOND CLOSING. The obligation of the Company to
sell the Preferred Stock hereunder is subject to the satisfaction or waiver
(with prior written notice to each Purchaser) by the Company, at or before the
Second Closing Date, of each of the following conditions:
(i) ACCURACY OF THE PURCHASERS' REPRESENTATIONS AND
WARRANTIES. The representations and warranties of each Purchaser set
forth in this Agreement shall be true and correct in all material
respects as of the date when made (except for representations and
warranties that speak as of a specific date) and as of the Second
Closing Date;
(ii) PERFORMANCE BY THE PURCHASERS. Each Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement and the
Transaction Documents to be performed, satisfied or complied with by
such Purchaser at or prior to the Second Closing Date (including
payment of such Purchaser's purchase price); and
(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated, endorsed or threatened or shall be pending by or before
any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by
this Agreement or the Transaction Documents.
(b) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS
TO PURCHASE THE PREFERRED STOCK AT THE SECOND CLOSING. The obligation of each
Purchaser hereunder to acquire and pay for the Preferred Stock at the Second
Closing is subject to the satisfaction or waiver (with prior written notice to
the Company and each other Purchaser) by such Purchaser, on or before the Second
Closing Date, of each of the following conditions:
(i) FIRST CLOSING. The First Closing shall have
occurred;
(ii) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company set forth in this
Agreement and in each of the Transaction Documents shall be true and
correct in all respects as of the date when made (except for
representations and warranties that speak as of a specific date) and as
of the Second Closing Date;
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(iii) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement and the
Transaction Documents to be performed, satisfied or complied with by
the Company at or prior to the Second Closing Date;
(iv) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated, endorsed or threatened or shall be pending by or before
any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by
this Agreement and the Transaction Documents;
(v) NO SUSPENSIONS OF TRADING IN COMMON STOCK. The trading in
the Common Stock shall not have been suspended at any time after the
First Closing Date by the Commission or by the OTCBB or other national
market or quotation system on which the Common Stock is then listed for
a period of more than three (3) consecutive business days (except for
any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company);
(vi) LISTING OF COMMON STOCK. The Common Stock (including the
Conversion Shares underlying the Tranche A Shares) shall be listed for
trading on the OTCBB, the NASDAQ SmallCap Market, the NASDAQ National
Market, the New York Stock Exchange or the American Stock Exchange, and
the Company shall have obtained the approval from such market for the
listing, if applicable, of the number of shares of Common Stock
underlying the Preferred Stock as of the Second Closing Date;
(vii) REQUIRED APPROVALS. All Required Approvals shall have
been obtained and copies thereof delivered to such Purchaser;
(viii) SHARES OF COMMON STOCK. The Company shall have duly
reserved the number of Underlying Shares required by this Agreement and
the Transaction Documents to be reserved for issuance upon conversion
of the Preferred Stock;
(ix) REGISTRATION STATEMENTS FOR UNDERLYING SHARES OF
PREFERRED STOCK ISSUED AT THE FIRST CLOSING. The registration statement
with respect to the Underlying Shares of the Preferred Stock sold at
the First Closing shall have been filed with the Securities and
Exchange Commission; PROVIDED, HOWEVER, that if the Second Closing
occurs on a date which is earlier than sixty (60) days from the First
Closing Date this condition shall be waived by the Purchasers and the
Company shall covenant to file such registration statement within sixty
(60) days from the First Closing Date;
(x) MANAGEMENT. There shall have been no changes in the
position or responsibilities of the Chief Executive Officer of the
Company;
(xi) CHANGE OF CONTROL. No Change of Control shall have
occurred between the date hereof and the Second Closing Date. As used
herein, "Change of Control" means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act), other than the Purchasers or any of their Affiliates, of
23
<PAGE> 25
in excess of 40% of the voting securities of the Company, (ii) a
replacement of more than one-half of the members of the Company's Board
of Directors that is not approved by a majority of those individuals
who are members of the Board of Directors on the date hereof, or their
duly elected successors who are directors immediately prior to such
transaction, in one or a series of related transactions, (iii) the
merger of the Company with or into another Person, unless following
such transaction, the holders of the Company's securities continue to
hold at least a majority of such securities following such transaction,
(iv) the consolidation or sale of all or substantially all of the
assets of the Company in one or a series of related transactions or (v)
the execution by the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the events set
forth above in clauses (i), (ii), (iii) or (iv);
(xii) NO CHARTER AMENDMENTS. The Company shall have not
amended its Bylaws or Articles of Incorporation in any manner that
adversely affects the Purchasers, and the Company shall not have
amended or altered its Certificate of Designation in any manner; and
(xiii) CLOSING BID PRICE. The closing bid price of the
Company's Common Stock shall be equal to or greater than $13.00 per
share on the Second Closing Date, subject to adjustment for any stock
splits or other similar transactions.
(c) DOCUMENTS AND CERTIFICATES. At the Second Closing, the
Company shall have delivered to the Purchasers the following in form and
substance reasonably satisfactory to the Purchasers:
(i) OPINION. An opinion of the Company's legal counsel,
substantially in the form attached hereto as EXHIBIT C, dated as of the
Second Closing Date;
(ii) SECURITY. A certificate or certificates representing the
number of shares of Preferred Stock purchased by such Purchaser as set
forth next to such Purchaser's name on SCHEDULE I (Second Closing)
hereto, registered in the name of such Purchaser, each in form
satisfactory to the Purchaser;
(iii) OFFICER'S CERTIFICATE. An Officer's Certificate dated
the Second Closing Date and signed by an executive officer of the
Company confirming the accuracy of the Company's representations,
warranties and covenants as of the Second Closing Date and confirming
the compliance by the Company with the conditions precedent set forth
in this Section 4.1 as of the Second Closing Date;
(iv) SECRETARY'S CERTIFICATE. A Secretary's Certificate dated
the Second Closing Date and signed by the Secretary or Assistant
Secretary of the Company certifying that the Articles of Incorporation,
Bylaws and Resolutions adopted by the Board of Directors with respect
to the First Closing have not been rescinded or revoked, and have not
24
<PAGE> 26
been amended or modified in any manner except as specifically set forth
therein;
(v) TRANSFER AGENT LETTER. The Company shall have delivered to
each Purchaser a letter from the Company's transfer agent certifying
the number of shares of Common Stock outstanding as of a date within
five days of the Second Closing Date; and
(vi) DOCUMENTS. The Company shall have delivered to each
Purchaser such other documents relating to the transactions
contemplated by the Transaction Documents as the Purchasers or their
counsel may reasonably request.
ARTICLE V
INDEMNIFICATION
5.1 INDEMNIFICATION.
(a) INDEMNIFICATION. In addition to all of the Company's other
obligations under this Agreement and the Transaction Documents, the Company
shall defend, protect, indemnify and hold harmless each Purchaser, its
Affiliates and their successors and assigns (in accordance with the provisions
of Section 6.5 hereof), each other holder of the Conversion Shares and all of
their stockholders, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons' agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
proceedings, costs (as incurred), penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Indemnitee is
a party to the action for which indemnification hereunder is sought), and
including interest, penalties and attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any breach of any representation or warranty
made by the Company in this Agreement or in any of the Transaction Documents, or
any other certificate, instrument or document contemplated hereby or thereby,
(ii) any breach of any covenant, agreement or obligation of the Company
contained in this Agreement or any of the Transaction Documents, or any other
certificate, instrument or document contemplated hereby or thereby or (iii) any
cause of action, suit or claim brought or made or threatened, other than by the
Company, against such Indemnitee and arising out of or resulting from (A) the
execution, delivery, registration, performance or enforcement of this Agreement
or any of the Transaction Documents, (B) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Preferred Stock or (C) solely the status of such Purchasers or
holder of the Preferred Stock or the Conversion Shares as an investor in the
Company. The indemnification obligations of the Company under this paragraph
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any Affiliate of the
Purchasers and partners, directors, agents, employees and controlling Persons
(if any), as the case may be, of the Purchasers and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
25
<PAGE> 27
and personal representatives of the Company, the Purchasers and any such
Affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates, partners, directors, agents, employees or
controlling Persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the consummation of this Agreement or any of the Transaction
Documents except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Company result from the gross negligence or willful
misconduct of such Purchaser or Person in connection with the transactions
contemplated by this Agreement and the Transaction Documents. Notwithstanding
anything to the contrary set forth herein, each of the Purchasers, severally and
not jointly, agrees to indemnify the Company for any Indemnified Losses incurred
by the Company which (i) is caused by a breach by such Purchaser of any of its
representations and warranties set forth in Section 2.2 hereof and (ii) results
in a violation by the Company of any federal securities laws applicable to it.
To the extent that the foregoing undertakings 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.
(b) INDEMNIFICATION PAYMENTS. All fees and expenses (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such actions, causes of action, suits,
claims or other proceedings in a manner not inconsistent with this Section) of
the Indemnitees shall be paid to the Indemnitees as incurred, within ten (10)
business days of written notice thereof to the Company, which notice shall be
delivered no more frequently than on a monthly basis (regardless of whether it
is ultimately determined that an Indemnitee is not entitled to indemnification
hereunder; PROVIDED, that the Company may require such Indemnitee to undertake
to reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnitee is not entitled to indemnification hereunder).
ARTICLE VI
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules hereto and the Transaction Documents, contains the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
6.2 NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally, (ii) upon receipt, when sent by facsimile, provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party (if received by or before 5:30 p.m. Eastern
Time where such notice is received) or the first (1st) business day following
such delivery (if received after 5:30 p.m. Eastern Time where such notice is
received) or (iii) one (1) business day after deposit with a nationally
recognized overnight courier, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
26
<PAGE> 28
If to the Company:
Marex.com, Inc.
2701 S. Bayshore Drive
Fifth Floor
Coconut Grove, Florida 33133
Telephone: (305) 285-2003
Facsimile: (305) 285-0001
Attention: Kenbian Ng, Chief Financial Officer
with a copy to:
Greenberg Traurig, P.A.
1221 Brickell Ave.
Miami, Florida 33131
Telephone: (305) 579-0500
Facsimile (305) 579-0717
Attention: Sheida R. Sahandy, Esq.
If to Brown Simpson Strategic Growth Fund L.P. or Brown Simpson
Strategic Growth Fund, Ltd., to:
Brown Simpson Asset Management, LLC
152 West 57th Street, 40th Floor
New York, New York 10029
Telephone: (212) 247-8200
Facsimile: (212) 247-1329
Attention: Peter D. Greene
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
Attention: James E. Kaye, Esq
If to Royal Bank of Canada to:
c/o RBC Dominion Securities
One Liberty Plaza - 2nd Floor
165 Broadway
New York, New York 10006-1404
27
<PAGE> 29
Facsimile: (212) 858-7402
Attention: Vice President, Global Middle Office
and to: Roger Blissett
Telephone: (212) 858-7119
Facsimile: (212) 858-7468
If to LB I Group Inc. to:
c/o Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Telephone: (212) 526-6957
Facsimile: (212) 526-2199
Attention: Steve Weinstein
If to Genmar Holdings, Inc. to:
Genmar Holdings, Inc.
100 South 5th Street, Suite 2400
Minneapolis, MN 55402
Telephone: (612) 339-7900
Facsimile: (612) 337-1931
Attention: Roger Cloutier II
with a copy to:
Mary P. McConnell,
Senior Vice President and General Counsel
Telephone: (612) 339-7900
Facsimile: (612) 337-1931
If to Marshall Marex L.P. to:
Marshall Marex L.P.
901 North Third Street
Minnesota, Minneapolis 55401
Telephone: (612) 338-1807
Facsimile: (612) 338-2409
Attention: Dennis Mathisen
Marshall Financial Group
28
<PAGE> 30
with a copy to:
Dorsey & Whitney
Pillsbury Center South
220 South 6th Street
Minneapolis, Minnesota 55402
Telephone: (612) 340-2722
Facsimile: (612) 340-8738
Attention: Bill Payne
If to Ford Allen Fund-I, L.P. to:
Ford Allen Fund-I, L.P.
c/o Ford Allen, Inc.
550 Brickell Ave., Penthouse II
Miami, Florida 33131
Telephone: (305) 379-6300
Facsimile: (305) 379-6309
Attention: Clifford Grossman
with a copy to:
Greenberg Traurig, P.A.
1221 Brickell Ave.
Miami, Florida 33131
Telephone: (305) 579-0500
Facsimile: (305) 579-0717
Attention: Sheida R. Sahandy, Esq.
If to Asiacommerce LLC to:
9 West Halkin Street
London, England SW1X 8JL
Facsimile: 011-44-171-235-2878
Attention: Clive Ng
Each party shall provide written notice to the other parties of any change in
address or facsimile number in accordance with the provisions hereof.
6.3 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and each of the Purchasers or, in the case of a waiver, by
the party against whom a waiver of any such provision is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter. The Company shall not
offer or pay any consideration to a Purchaser for consenting to such an
amendment or waiver unless the same consideration is offered to each Purchaser
and the same consideration is paid to each Purchaser which consents to such
amendment or waiver.
6.4 HEADINGS. The table of contents, titles and headings contained
herein are for convenience only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
29
<PAGE> 31
6.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
prior to the Second Closing Date without the prior written consent of each of
the Purchasers. No Purchaser may assign this Agreement or any rights or
obligations hereunder (except to an Affiliate thereof) prior to the Second
Closing Date without the prior written consent of the Company. This provision
shall not limit a Purchaser's right to transfer securities in accordance with
all of the terms of this Agreement or the Transaction Documents.
6.6 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
6.7 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or that
such suit, action or proceeding is improper. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by
law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
6.8 SURVIVAL. The representations and warranties of the Company and
the Purchasers contained in Sections 2.1 and 2.2, the agreements and covenants
set forth in Article III, and the indemnification provisions set forth in
Article V, shall survive the Closing and any conversion of the Preferred Stock
regardless of any investigation made by or on behalf of the Purchasers or by or
on behalf of the Company, except that, in the case of representations and
warranties such survival shall be limited to the period of two (2) years
following the Closing Date on which they were made or deemed to have been made
(other than with respect to any claim by a third party against the party to this
Agreement who seeks to assert a claim based on such representations and
warranties). This Section shall have no effect on the survival of the
indemnification provisions of the Registration Rights Agreement.
6.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
30
<PAGE> 32
6.10 PUBLICITY. The Company and the Purchasers shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and no party shall issue any
such press release or otherwise make any such public statement without the prior
written consent of the other parties, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the disclosing party shall
provide the other parties with prior notice of such public statement. The
Company shall not publicly or otherwise disclose the names of any of the
Purchasers without each such Purchaser's prior written consent. The Purchasers
and their affiliated companies shall not have the right to use in its
advertising, marketing or other similar materials, the Company's logo and
trademarks or all or any parts of the Company's press releases that focus on the
transactions contemplated hereby forming the subject matter of this Agreement or
which make reference to the transactions contemplated hereby without the prior
written consent of the Company for each such advertising run and each renewal
thereof.
6.11 SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
6.12 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each Purchaser
and the Company will be entitled to specific performance of the obligations of
the Company and each Purchaser, respectively, under this Agreement or the
Transaction Documents without the showing of economic loss and without any bond
or other security being required. The Company and each of the Purchasers
(severally and not jointly) agree that monetary damages would not be adequate
compensation for any loss incurred by reason of any breach of its obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
6.13 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at the Closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of Person, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
31
<PAGE> 33
6.14 PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to the Purchasers hereunder or pursuant to the Transaction Documents
or the Purchasers enforce or exercise their rights hereunder or thereunder, and
such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
6.15 FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other parties may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.16 FEES AND EXPENSES. Except as set forth in the Registration Rights
Agreement, each party shall pay the reasonable fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement; PROVIDED, HOWEVER, that the Company
shall pay to Brown Simpson Asset Management only up to an aggregate fee of
$20,000 at the First Closing Date. The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the Preferred Stock
pursuant hereto.
6.17 NOTICE TO FLORIDA PURCHASERS. THE FLORIDA SECURITIES ACT
PROVIDES, WHERE SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA, THAT ANY SALE
MADE PURSUANT TO SUBSECTION 517.061(11) OF THE FLORIDA SECURITIES ACT SHALL BE
VOIDABLE BY SUCH FLORIDA PURCHASER EITHER WITHIN THREE (3) DAYS AFTER THE FIRST
TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER OR AN AGENT OF
THE ISSUER, OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS
COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
[SIGNATURE PAGES FOLLOW]
32
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
MAREX.COM, INC.
By: /s/ David A. Schwedel
-----------------------------------
Name: David A. Schwedel
Title: CEO & President
<PAGE> 35
BROWN SIMPSON STRATEGIC
GROWTH FUND, LTD.
By: Brown Simpson Asset Management, LLC
By: /s/ Peter Greene
---------------------------------------
Name: Peter Greene
Title: Managing Principal
BROWN SIMPSON STRATEGIC
GROWTH FUND, L.P.
By: Brown Simpson Capital, LLC
its general partner
By: /s/ Peter Greene
---------------------------------------
Name: Peter Greene
Title: Managing Principal
<PAGE> 36
ROYAL BANK OF CANADA
By its Agent
RBC Dominion Securities Corporation
By: /s/ Mark A. Standish
-------------------------------------
Name: Mark A. Stamdish
Title: Managing Director
By: /s/ Roger A. Blissett
-------------------------------------
Name: Roger A. Blissett
Title: Vice President, Deputy
General Counsel
<PAGE> 37
LB I GROUP INC.
By: /s/ Steven L. Berkenfeld
------------------------------
Name: Steven L. Berkenfeld
Title: Senior Vice President
<PAGE> 38
MARSHALL MAREX L.P.
By: /s/ John A. Fischer
-----------------------------
Name: John A. Fischer
Title: Executive Vice President
<PAGE> 39
FORD ALLEN FUND-I, L.P.
By: Ford Allen, Inc.
-----------------------------------
its general partner
By: /s/ Clifford Grossman
-----------------------------------
Name: Clifford Grossman
Title: President
<PAGE> 40
GENMAR HOLDINGS, INC.
By: /s/ Roger R. Cloutier, II
----------------------------------
Name: Roger R. Cloutier, II
Title: EVP & CFO
<PAGE> 41
ASIACOMMERCE LLC
By: /s/ Clive Ng
Name: Clive Ng
Title:
<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of March 2, 2000, among Marex.com, Inc., a Florida
corporation (the "COMPANY"), and the parties who have executed this Agreement
and whose names appear as the purchasers on SCHEDULE I hereto (each such
purchaser listed on SCHEDULE I hereto is sometimes individually referred to
herein as a "PURCHASER", and all such purchasers are sometimes collectively
referred to herein as the "PURCHASERS").
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"PURCHASE AGREEMENT").
The Company and the Purchasers hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "CONTROL", when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "AFFILIATED", CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York generally are authorized or required by law or other
government action to close.
"CERTIFICATE OF DESIGNATION" means the Certificate of
Designation of the Company with respect to the Securities.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's Common Stock, par value
$0.01 per share.
"EFFECTIVENESS DATE" means the earlier of (i) the 5th Business
Day after the Company has received notice (written or oral) from the Commission
that the Commission staff will not be reviewing the Registration Statement or
has no further comments on the Registration Statement or (ii) the date that the
Commission declares the Registration Statement Effective.
<PAGE> 2
"EFFECTIVENESS PERIOD" has the meaning set forth in Section
2(a) hereof.
"EVENT" has the meaning set forth in Section 2(b) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FILING DATE" means the date on which the Initial Registration
Statement is filed.
"FILING DEADLINE" means that date that is sixty (60) days
after the First Closing Date.
"FIRST CLOSING DATE" shall mean the First Closing Date as
defined in the Purchase Agreement.
"HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"INDEMNIFIED PARTY" has the meaning set forth in Section 5(c)
hereof.
"INDEMNIFYING PARTY" has the meaning set forth in Section 5(c)
hereof.
"INITIAL REGISTRATION STATEMENT" has the meaning set forth in
Section 2(a) hereof.
"LOSSES" has the meaning set forth in Section 5(a) hereof.
"MAJORITY HOLDERS" means the Holders of at least sixty (60%)
percent of the Registrable Securities.
"NATIONAL MARKET" means the NASDAQ National Market, the NASDAQ
SmallCap Market, the New York Stock Exchange and the American Stock Exchange.
"OTCBB" means the OTC Bulletin Board of the National
Association of Securities Dealers, Inc.
"PERSON" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"PROCEEDING" means an action, claim, suit, arbitration,
investigation or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
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respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"REGISTRABLE SECURITIES" means the shares of Common Stock
issued or issuable upon conversion of or with respect to the Securities, and
shall include any shares of the Company's capital stock issued with respect to
the Securities as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise.
"REGISTRATION DELAY PAYMENT" has the meaning set forth in
Section 2(b) hereof.
"REGISTRATION STATEMENT" means the Initial Registration
Statement and any additional registration statements contemplated by Sections
6(d) hereof, including (in each case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference in
such registration statement.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SECURITIES" means the Company's Series A1 Convertible
Preferred Stock issuable pursuant to the Purchase Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" means a
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement, whether on a firm commitment or best efforts basis.
2. REGISTRATION REQUIREMENTS.
(a) FILING AND EFFECTIVENESS OBLIGATIONS. On or prior to the
Filing Deadline, the Company shall prepare and file with the Commission a
Registration Statement (the "INITIAL REGISTRATION STATEMENT") which shall cover
all Registrable Securities for an offering to be made on a continuous basis
pursuant to a "Shelf" registration statement under Rule 415. The Initial
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Registration Statement shall be on Form S-3 or other similar form (or any
successor form). The Company shall (i) use its reasonable best efforts to cause
the Initial Registration Statement to be declared effective under the Securities
Act as promptly as possible after the Filing Date and (ii) keep the Initial
Registration Statement continuously effective under the Securities Act (subject
to Section 3(n)) from the Effectiveness Date until the date which is three (3)
years after the Effectiveness Date or such earlier date when all of the Holders'
Registrable Securities covered by the Initial Registration Statement have been
sold or may be sold without volume restrictions pursuant to Rule 144 (the
"EFFECTIVENESS PERIOD"). The number of shares of Common Stock initially included
in the Initial Registration Statement shall be no less than 100% of the sum of
the number of shares of Common Stock that are then issuable upon conversion of
the Securities (based on the Conversion Price (as defined in the Certificate of
Designation) as would then be in effect at such time).
(b) PENALTIES. If (i) the Initial Registration Statement
covering all the applicable Registrable Securities required to be filed by the
Company pursuant to this Agreement is not filed with the Commission on or before
the Filing Deadline, (ii) the Company fails to respond, in a commercially
reasonable manner, to any comments made by the Commission with respect to the
Initial Registration Statement within ten (10) Business Days following the
receipt thereof or (iii) on any day after a Registration Statement has been
declared effective by the Commission (A) sales of all the Registrable Securities
required to be included on a Registration Statement cannot be made pursuant to
the Registration Statement (including, without limitation, because of a failure
to keep the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement, or to
register sufficient shares of Common Stock, but excluding any "black-out
periods" permitted pursuant to Section 3(n) hereof) or (B) the Common Stock is
not listed or included for quotation on the OTCBB or, subsequent to the day that
the Common Stock is first listed or included for quotation on a National Market,
a National Market (each such event specified in (i), (ii) and (iii) above, an
"EVENT"), then, as partial relief for the damages to any Holder by reason of any
such delay in or reduction of its ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall pay to each Holder, upon the occurrence of each
such violation, an amount (a "REGISTRATION DELAY PAYMENT") equal to the product
of (a) the purchase price of such Holder's Securities (as set forth in SCHEDULE
I to the Purchase Agreement), (b) (.015) and (c) the number of months (rounded
up to the nearest whole month in the event of partial months) that such Event
has occurred and is continuing. The Company shall pay such Registration Delay
Payments to each Holder in cash on the last Business Day of each month during
which an Event has occurred and is continuing; PROVIDED, HOWEVER, that if such
Event arises by or is a result of anything other than a refusal or failure to
act by the Company), the Registration Delay Payment shall be the product of (a)
the purchase price of such Holder's Securities (as set forth in SCHEDULE I to
the Purchase Agreement), (b) (.00417) and (c) the number of months (rounded up
to the nearest whole month in the event of partial months) that such Event has
occurred and is continuing. In the event the Company fails to make a
Registration Delay Payment within ten (10) Business Days of the date such
Registration Delay Payment is due, such Registration Delay Payment shall bear
interest at the rate of 1.0% per month (rounded up to the nearest whole month in
the event of partial months) until paid in full.
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3. REGISTRATION PROCEDURES.
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) PREPARATION OF REGISTRATION STATEMENT. Prepare and file
with the Commission, on or prior to the Filing Deadline, the Initial
Registration Statement (which shall include a Plan of Distribution substantially
in the form of EXHIBIT A annexed hereto), and cause the Initial Registration
Statement to become effective and remain effective as provided herein. The
sections of any Registration Statement covering information with respect to the
Holders, the Holders' beneficial ownership of securities of the Company or the
Holders' intended method of disposition of Registrable Securities shall conform
to the information provided to the Company by each of the Holders. The Company
shall respond as promptly as possible, but in no event later than ten (10)
Business Days, to any comments received from the Commission with respect to the
Initial Registration Statement or any amendment thereto and as promptly as
possible provide the Holders true and complete copies of all correspondence from
and to the Commission relating to the Initial Registration Statement
(b) AMENDMENTS. Prepare and file with the Commission such
amendments and supplements to the Initial Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep such
Registration Statement continuously effective for the Effectiveness Period. In
the event the number of shares available under a Registration Statement filed
pursuant to this Agreement is insufficient to cover 100% of the Registrable
Securities issued or issuable upon conversion of the Securities, the Company
shall amend such Registration Statement, or file a new Registration Statement
(on the short form available therefor, if applicable), or both, so as to cover
100% of the Registrable Securities (based on the Conversion Price of the
Securities and other relevant factors on which the Company reasonably elects to
rely), in each case as soon as practicable, but in any event within twenty (20)
Business Days after the necessity therefor arises. The Company shall use its
reasonable best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof.
(c) NOTIFICATIONS. Notify the Holders of Registrable
Securities (i) (A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed,
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement and (C) when such Registration Statement or
post-effective amendment has become effective, (ii) of any request by the
Commission or any other federal or state governmental authority for amendments
or supplements to a Registration Statement or Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any Proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
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from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose (v) of the happening of any event (of which the Company has knowledge)
as a result of which the Prospectus included in such 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 or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing and (vi) of the beginning and end of a black-out
period pursuant to Section 3(n).
(d) CONFIRMATION OF EFFECTIVENESS. Within two (2) Business
Days after a Registration Statement which covers applicable Registrable
Securities is ordered effective by the Commission, the Company shall deliver,
and shall cause legal counsel for the Company to deliver, to the transfer agent
for such Registrable Securities (with copies to the Holders whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the Commission in the form
attached hereto as EXHIBIT B.
(e) COPIES OF REGISTRATION STATEMENT. Furnish to each Holder,
without charge, at least one conformed copy of each Registration Statement and
each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by such Holder (including those
incorporated by reference) promptly after the filing of such documents with the
Commission.
(f) COPIES OF PROSPECTUS. Promptly deliver to each Holder,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of Prospectus) and each amendment or supplement thereto as such Holder may
reasonably request; and the Company hereby consents to the use of such
Prospectus and the most current amendment or supplement thereto (if any) by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto unless otherwise prohibited by the terms of this Agreement.
(g) BLUE SKY. Prior to any public offering of Registrable
Securities, use its reasonable efforts to register or qualify or cooperate with
the selling Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; PROVIDED, HOWEVER, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.
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(h) LISTING. Cause all Registrable Securities relating to a
Registration Statement to be listed on the National Market on which the Common
Stock of the Company is then listed or quoted as and when required pursuant to
the Purchase Agreement.
(i) INTENTIONALLY OMITTED.
(j) DUE DILIGENCE. Make available for inspection by the
selling Holders, any representative of such Holders, any underwriter
participating in any disposition of Registrable Securities, and any attorney or
accountant retained by such selling Holders or underwriters, at the offices
where normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors, agents and employees of the
Company and its subsidiaries to supply all information in each case reasonably
requested by any such Holder, representative, underwriter, attorney or
accountant in connection with such Registration Statement (it being understood
that the Company may condition such availability upon the receipt of
confidentiality agreements from all such Persons in a form reasonably requested
by the Company).
(k) EARNINGS STATEMENT. The Company will make generally
available to its security holders an earnings statement, which need not be
audited, covering a twelve month period commencing after the Effective Date of
the Registration Statement, and ending not later than 15 months thereafter, as
soon as reasonably practicable after the end of such period, which earnings
statement shall satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(l) SUSPENSIONS. Use its reasonable best efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment
(m) INFORMATION. The Company may require each selling Holder
to furnish to the Company information regarding such Holder and the distribution
of such Registrable Securities as is required by law to be disclosed in the
Registration Statement, and the Company may exclude from such registration the
Registrable Securities of any such Holder who unreasonably fails to furnish such
information within a reasonable time after receiving such request.
The Company shall hold in confidence and not make any
disclosure of information concerning a Holder provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by
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disclosure in violation of this Agreement or any other agreement. The Company
agrees that it shall, upon learning that disclosure of such information
concerning a Holder is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Holder prior to
making such disclosure, and allow the Holder, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(c)(vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(e) or 3(f), or until it is advised in
writing by the Company that the use of the applicable Prospectus may be resumed,
and, in either case, has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement.
(n) BLACK-OUT PERIODS. Subject to the last sentence of this
Section 3(n), the Company may by written notice require that the Holders
immediately cease sales of Registrable Securities (for a period not to exceed
twenty (20) consecutive days in any one instance and for a period not to exceed
sixty (60) calendar days in any twelve-month period) pursuant to a Registration
Statement at any time that (i) the Company becomes engaged in a business
activity or negotiation which is not disclosed in a Registration Statement (or
the prospectus included therein) which the Company reasonably believes must be
disclosed therein under applicable law and which the Company desires to keep
confidential for business purposes, (ii) the Company determines that a
particular disclosure so determined to be required to be disclosed therein would
be premature or would adversely affect the Company or its business or prospects
or (iii) the Registration Statement can no longer be used under the existing
rules and regulations promulgated under the Securities Act (each of (i), (ii) or
(iii), a "MATERIAL CONDITION"). The Company shall not be required to disclose to
the Holders which of the reasons specified in (i), (ii) or (iii) above is the
basis for requiring a suspension of sales due to the occurrence of a Material
Condition. The Company will use its commercially reasonable best efforts to
ensure that the use of the Registration Statement (and the prospectus included
therein) may be resumed as soon as it is practicable.
4. REGISTRATION EXPENSES.
All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company,
whether or not pursuant to an Underwritten Offering and whether or not the
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Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to any National Market on which Registrable
Securities are required hereunder to be listed or quoted and (B) in compliance
with state securities or Blue Sky laws, (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
managing underwriters, if any), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In addition,
the Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange, system or
market as required hereunder. The Holders shall pay any underwriting discounts
or commissions and any transfer or similar taxes in connection with the sale of
Registrable Securities.
5. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each such Holder, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all joint or several losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and attorneys' fees) and
expenses (collectively, together with Proceedings by any regulatory or
self-regulatory organization, whether commenced or threatened, "LOSSES"), as
incurred, arising out of or relating to (i) any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary Prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or amendment or supplement thereto, in light of the circumstances
under which they were made) not misleading, except to the extent, but only to
the extent, that such untrue statements or omissions are based solely upon and
in conformity with information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
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in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of prospectus or in any amendment or supplement thereto
(PROVIDED that the Company amended any disclosure with respect to the method of
distribution upon written notice from the Holders that such section of the
Prospectus should be revised in any way) or (ii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of Registrable Securities.
The Company shall not, however, be liable to any Holder for any Losses with
respect to any untrue or alleged untrue statement of material fact or omission
or alleged omission of material fact if such statement or omission was made in a
preliminary Prospectus and such Holder did not receive a copy of the final
Prospectus (or any amendment or supplement thereto) at or prior to the
confirmation of the sale of the Registrable Securities in any case where such
delivery is required by the Securities Act and the untrue or alleged untrue
statement of material fact or omission or alleged omission of material fact
contained in such preliminary Prospectus was corrected in the final Prospectus
(or any amendment or supplement thereto), unless the failure to deliver such
final Prospectus (as amended or supplemented) was a result of noncompliance by
the Company with Section 3(f) of this Agreement. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement.
(b) INDEMNIFICATION BY HOLDERS. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its officers,
directors, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the officers, directors, agents and employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against all
Losses, as incurred, arising solely out of or based solely upon any untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or arising solely out of or based solely
upon any omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company specifically for inclusion
in the Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of prospectus; PROVIDED, HOWEVER, that the indemnity
agreement contained in this Section 5(b) shall not apply to amounts paid in
settlement of any Losses if such settlement is effected without the prior
written consent of such Holder. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
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(an "INDEMNIFIED PARTY"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
PROVIDED, HOWEVER, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Indemnified Parties unless: (i) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (ii) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (iii) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the reasonable expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party, which notice shall be delivered no more frequently than on a
monthly basis (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; PROVIDED, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) CONTRIBUTION. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a court of competent jurisdiction to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
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Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. In no event shall any selling Holder be required to
contribute an amount under this Section 5(d) in excess of the net proceeds
received by such Holder upon sale of the Registrable Securities pursuant to the
Registration Statement giving rise to such contribution obligation.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by the Company or by a
Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any of
its subsidiaries has, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
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<PAGE> 13
Except as disclosed in SCHEDULE 2.1(r) of the Purchase Agreement, neither the
Company nor any of its subsidiaries has previously entered into any agreement
granting any registration rights with respect to any of its securities to any
Person. This Agreement, together with the Purchase Agreement, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
(c) NO PIGGYBACK ON REGISTRATIONS. Except as disclosed on
SCHEDULE 2.1(r) of the Purchase Agreement, neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto) may
include securities of the Company in the Initial Registration Statement and the
Company shall not after the date hereof enter into any agreement providing such
right to any of its security holders.
(d) PIGGY-BACK REGISTRATIONS. Except as provided herein if, at
any time when there is not an effective Registration Statement covering the
Registrable Securities during any period when a Registration Statement is
required to be so effective, the Company shall determine to prepare and file
with the Commission a registration statement pursuant to an Underwritten
Offering relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each Holder of Registrable Securities written notice of such
determination and, if within ten (10) days after receipt of such notice, any
such Holder shall so request in writing, (which request shall specify the
Registrable Securities intended to be disposed of by the Holders), the Company
will use reasonable efforts to effect the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register by the Holder, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered; PROVIDED, that if at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such Holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay expenses in accordance with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities being registered pursuant to
this Section 6(d) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or any
part of such Registrable Securities such Holder requests to be registered;
PROVIDED, HOWEVER, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 6(d) that are eligible for sale
pursuant to Rule 144(k) of the Securities Act. In the case of an Underwritten
Offering, if the managing underwriter(s) or underwriter(s) should reasonably
object to the inclusion of the Registrable Securities in such registration
13
<PAGE> 14
statement, then if the Company after consultation with the underwriter's
representative should reasonably determine that the inclusion of such
Registrable Securities would materially adversely affect the offering
contemplated in such registration statement, and based on such determination
recommends inclusion in such registration statement of fewer Registrable
Securities than proposed to be sold by the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration) or (y) none
of the Registrable Securities of the Holders shall be included in such
registration statement if the Company, after consultation with the
underwriter(s), recommends the inclusion of none of such Registrable Securities;
PROVIDED, HOWEVER, that if securities are being offered for the account of other
Persons as well as the Company, such reduction shall not represent a greater
fraction of the number of Registrable Securities intended to be offered by the
Holders than the fraction of similar reductions imposed on such other Persons
(other than the Company).
(e) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Majority Holders; PROVIDED, HOWEVER, that for the purposes of this
sentence, Registrable Securities that are owned, directly or indirectly, by the
Company, or an Affiliate of the Company are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of a
Holder and that does not directly or indirectly affect the rights of any other
Holders may be given by the Holders to which such waiver or consent relates;
PROVIDED, HOWEVER, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence. Any amendment or waiver effected in accordance
with this Section shall be binding upon each Holder, each future Holder, and the
Company. Upon effectiveness of each such amendment or waiver, the Company shall
promptly give written notice thereof to the Holders who have not previously
consented thereto in writing.
(f) NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally, (ii) upon receipt, when sent by facsimile
(if received by or before 5:00 p.m. Eastern Time where such notice is received)
or the first (1st) Business Day following such delivery (if received after 5:00
p.m. Eastern Time where such notice is received), PROVIDED confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party and such delivery is also made in accordance with clause (iii)
hereof or (iii) one (1) Business Day after deposit with a nationally recognized
overnight courier. The addresses for such communications are (A) if to the
Company, to the address set forth on SCHEDULE I hereto, with copies to Greenberg
Traurig, P.A., 1221 Brickell Avenue, Miami, Florida, 33131, Attention: Sheida R.
Sahandy, Esq., facsimile no. (305) 579-0717 and (B) if to any Purchaser, to its
address set forth on SCHEDULE I hereto, with copies to Akin, Gump, Strauss,
Hauer & Feld, L.L.P., 590 Madison Avenue, New York, New York 10022, Attention:
James E. Kaye, Esq., facsimile no. (212) 872-1002, or to such other address as
may be designated in writing hereafter, in the same manner, by such Person.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
14
<PAGE> 15
assign its rights or obligations hereunder without the prior written consent of
the Majority Holders. Each Holder may assign its rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(i) GOVERNING LAW. The corporate laws of the State of Florida
shall govern all issues concerning the relative rights of the Company and the
Holders as its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law. Each party hereby irrevocably submits
to the nonexclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding any claim that it is not personally subject to the jurisdiction
of any such court, that such Proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.
(j) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(k) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(l) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(m) SHARES HELD BY THE COMPANY AND ITS AFFILIATES. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
15
<PAGE> 16
[SIGNATURE PAGES FOLLOW]
16
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
MAREX.COM, INC.
By: /s/ David A. Schwedel
------------------------------------
Name: David A. Schwedel
Title: CEO & President
<PAGE> 18
BROWN SIMPSON STRATEGIC GROWTH FUND, LTD.
By: Brown Simpson Asset Management, LLC
By: /s/ Peter Greene
------------------------------------
Name: Peter Greene
Title: Managing Principal
BROWN SIMPSON STRATEGIC GROWTH FUND, L.P.
By: Brown Simpson Capital, LLC
its general partner
By: /s/ Peter Greene
------------------------------------
Name: Peter Greene
Title: Managing Principal
<PAGE> 19
ROYAL BANK OF CANADA
By its Agent
RBC Dominion Securities Corporation
By: /s/ Mark A. Standish
------------------------------------
Name: Mark A. Standish
Title: Managing Director
By: /s/ Roger A. Blissett
------------------------------------
Name: Roger A. Blissett
Title: Vice President, Deputy
General Counsel
<PAGE> 20
LB I GROUP INC.
By: /s/ Steven L. Berkenfeld
------------------------------------
Name: Steven L. Berkenfeld
Title: Senior Vice President
<PAGE> 21
MARSHALL MAREX L.P.
By: /s/ John A. Fischer
------------------------------------
Name: John A. Fischer
Title: Executive Vice President
<PAGE> 22
FORD ALLEN FUND-I, L.P.
By: Ford Allen, Inc.
------------------------------------
its general partner
By: /s/ Clifford Grossman
------------------------------------
Name: Clifford Grossman
Title: President
<PAGE> 23
GENMAR HOLDINGS, INC.
By: /s/ Roger R. Cloutier II
------------------------------------
Name: Roger R. Cloutier II
Title: EVP & CFO
<PAGE> 24
ASIACOMMERCE LLC
By: /s/ Clive Ng
Name: Clive Ng
Title:
<PAGE> 25
SCHEDULE I
COMPANY
MAREX.COM, INC.
2701 S. Bayshore Drive
Fifth Floor
Coconut Grove, Florida 33133
Attention: Kenbian Ng
Facsimile: (305) 285-0001
PURCHASERS:
BROWN SIMPSON STRATEGIC GROWTH FUND, L.P.
152 West 57th Street, 40th Floor
New York, New York 10019
Attention: Peter D. Greene
Facsimile: (212) 247-1329
BROWN SIMPSON STRATEGIC GROWTH FUND, LTD.
152 West 57th Street, 40th Floor
New York, New York 10019
Attention: Peter D. Greene
Facsimile: (212) 247-1329
ROYAL BANK OF CANADA
c/o RBC Dominion Securities
One Liberty Plaza - 2nd Floor
165 Broadway
New York, New York 10006-1404
Facsimile: (212) 858-7402
Attention: Vice President, Global Middle Office
and to: Roger Blissett
Facsimile: (212) 858-7468
LBI GROUP INC.
c/o Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Facsimile: (212) 526-2199
Attention: Steve Weinstein
<PAGE> 26
GENMAR HOLDINGS, INC.
100 South 5th Street, Suite 2400
Minneapolis, MN 55402
Facsimile: (612) 337-1931
Attention: Roger Cloutier II
with a copy to:
Mary P. McConnell,
Senior Vice President and General Counsel
Facsimile: (612) 337-1931
MARSHALL MAREX L.P.
901 North Third Street
Minnesota, Minneapolis 55401
Facsimile: (612) 338-2409
Attention: Dennis Mathisen
Marshall Financial Group
with a copy to
Dorsey & Whitney
Pillsbury Center South
220 South 6th Street
Minneapolis, Minnesota 55402
Facsimile: (612) 340-8738
Attention: Bill Payne
FORD ALLEN FUND-I, L.P.
c/o Ford Allen, Inc.
550 Brickell Ave., Penthouse II
Miami, Florida 33131
Facsimile: (305) 379-6309
Attention: Clifford Grossman
with a copy to:
Greenberg Traurig, P.A.
1221 Brickell Ave.
Miami, Florida 33131
Facsimile (305) 579-0717
Attention: Sheida R. Sahandy, Esq.
Asiacommerce LLC
9 West Halkin Street
London, England SW1X 8JL
Facsimile: 011-44-171-235-2878
<PAGE> 27
EXHIBIT A
PLAN OF DISTRIBUTION
Our company is registering the shares of common stock on
behalf of the selling stockholders. All costs, expenses and fees in connection
with the registration of the shares offered by this prospectus will be borne by
our company, other than brokerage commissions and similar selling expenses, if
any, attributable to the sale of shares which will be borne by the selling
stockholders. Sales of shares may be effected by selling stockholders from time
to time in one or more types of transactions (which may include block
transactions) in the over-the-counter market, on a national securities market or
quotation system, in negotiated transactions, through put or call options
transactions relating to the shares, through short sales of shares, or a
combination of such methods of sale, at market prices prevailing at the time of
sale, or at negotiated prices. Such transactions may or may not involve brokers
or dealers. The selling stockholders have advised our company that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities, nor is
there an underwriter or coordinated broker acting in connection with the
proposed sale of shares by the selling stockholders.
The selling stockholders may enter into hedging transactions
with broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of the shares or of securities convertible into or exchangeable for the
shares in the course of hedging positions they assume with selling stockholders.
The selling stockholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealers or other financial institutions of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as amended or supplemented to reflect such
transaction).
The selling stockholders may make these transactions by
selling shares directly to purchasers or to or through broker-dealers, which may
act as agents or principals. Such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from selling stockholders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in
connection with the sale of shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
such broker-dealers or any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The selling stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against certain liabilities, including liabilities arising under
the Securities Act.
<PAGE> 28
Because selling stockholders may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, the
selling stockholders will be subject to the prospectus delivery requirements of
the Securities Act. Our company has informed the selling stockholders that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market.
Selling stockholders also may resell all or a portion of the
shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of Rule 144.
Upon our company being notified by a selling stockholder that
any material arrangement has been entered into with a broker-dealer for the sale
of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
o the name of each such selling stockholder and of the
participating broker-dealer(s);
o the number of shares involved;
o the initial price at which such shares were sold;
o the commissions paid or discounts or concessions allowed
to such broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any
investigation to verify the information set out or
incorporated by reference in this prospectus; and
o other facts material to the transactions.
2
<PAGE> 29
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attention:
Re: MAREX.COM, INC.
Ladies and Gentlemen:
We are counsel to Marex.com, Inc., a Florida corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "Purchase Agreement") entered into by and
among the Company and the purchasers named therein (collectively, the "Holders")
pursuant to which the Company issued to the Holders its Series A1 Convertible
Preferred Stock (the "Securities") convertible into shares of the Company's
common stock, par value $0.01 per share. Pursuant to the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holders
(the "Registration Rights Agreement") pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Securities, under the Securities Act of 1933, as amended
(the "1933 Act"). In connection with the Company's obligations under the
Registration Rights Agreement, on _______________, 2000, the Company filed a
Registration Statement on Form S-3 (File No. 333-_____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names each of the Holders as
a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
cc: [LIST NAMES OF HOLDERS]
<PAGE> 1
Exhibit 99.1
FOR IMMEDIATE RELEASE
March 7, 2000
MAREX.COM COMPLETES FIRST TRANCHE OF A $43 MILLION PRIVATE PLACEMENT
MIAMI, FL - March 7, 2000 - Marex.com (OTCBB:MRXX), the marine industry's
leading business-to-business (B2B) e-commerce company, today announced that it
has closed the first of two tranches in its $43 million private placement.
The Company closed the first tranche of $21 million through the sale of 210,000
shares of convertible preferred stock. The second $22 million tranche will close
upon the earlier of the listing of the Company's common stock on NASDAQ or 60
days following the close of the first tranche, assuming the satisfaction of
certain conditions. The Company will use the proceeds for the expansion of its
business and general corporate purposes.
The investment was led by the Brown Simpson Strategic Growth Funds. Key
investors included LBI Group Inc., an affiliate of Lehman Brothers Holdings
Inc.; Royal Bank of Canada; Ford Allen Fund - I, L.P.; and Genmar Holdings, Inc.
- - the world's largest privately owned manufacturer of motorized recreational
boats.
According to David Schwedel, CEO of Marex.com, this placement will fund the
Company's current business plan. "This financing marks a major milestone for
Marex.com. Each of the investors that participated is sophisticated and
well versed in high technology and Internet investments. The private placement
will continue to allow us to ramp up our business and maintain the aggressive
pace we have been keeping," Schwedel said.
Each convertible preferred share converts to 7.69 shares of common stock at the
option of the holder. The convertible preferred stock will be automatically
converted into common stock upon the occurrence of certain events relating to a
public offering of the Company's common stock or upon certain conditions
relating to the registration of the common stock underlying the convertible
preferred stock. The automatic conversion is also subject to the Company's
common stock trading at certain price levels.
The shares sold in this transaction are restricted and are not registered under
the Securities Act of 1933 and may not be offered or sold in the United States
absent registration or an applicable exemption from such registration
requirements.
About Marex.com
Marex.com, Inc. (OTC BB: MRXX) is the largest B2B e-commerce company serving the
marine industry. Marex.com's products and services go beyond aggregating vendors
and products by providing a central on-line hub that automates transactions,
aggregates information, improves market reach, and provides related services.
This release contains forward-looking statements, which are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
<PAGE> 2
Act of 1995. These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. Those risks include, but are not limited to, the Company's ability
to manage growth, acceptance of the Internet as a means for commerce, market
demand for e-commerce, the Company's ability to recruit and retain qualified
management and employees, the Company's ability to obtain future financing for
the Company's operations, as well as other Risk Factors set forth in Form 10-KSB
on file with the SEC at http://www.sec.gov. All forward-looking statements
should be considered in light of these risks and uncertainties.
CONTACT
Kenbian A. Ng
(305) 285-2003
