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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(A)
MAREX.COM, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class of Securities)
566536 10 8
- --------------------------------------------------------------------------------
(CUSIP Number)
Mary P. McConnell
Genmar Holdings, Inc.
100 South Fifth Street, Suite 2400
Minneapolis, Minnesota 55402
(612) 337-1800
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 26, 2000
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box: |_|
Note. Schedule filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 Pages)
NY2:\907935\03\JGKF03!.DOC\47650.0013
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CUSIP No. 566536 10 8 13D Page 2 of 7 Pages
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1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
GENMAR HOLDINGS, INC.
IRS NO. 41-1778106
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* |_| (a)
|_| (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
|_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
- --------------------------------------------------- --------- ---------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH 7 SOLE VOTING POWER
REPORTING PERSON WITH
1,595,927(1) shares
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8 SHARED VOTING POWER
0
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9 SOLE DISPOSITIVE POWER
1,595,927(1) shares
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10 SHARED DISPOSITIVE POWER
0
- ---------- ------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
1,595,927(1) shares
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- ---------- ------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.90%
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14 TYPE OF REPORTING PERSON*
CO
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1 Excludes warrants to purchase an additional 1,514,367 shares, which are to be
issued to Genmar upon the occurrence of certain events.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the Common Stock, par value $.01 per share (the
"Common Stock"), of Marex.com, Inc., a Florida corporation (the "Issuer"),
including the shares of Common Stock into which shares of the Issuer's Series A1
Convertible Preferred Stock, par value $.01 per share (the "Preferred Stock"),
are convertible. The Issuer's principal executive office is located at 2701
South Bayshore Drive, 5th Floor, Miami, Florida 33133.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed on behalf of Genmar Holdings, Inc., a Delaware
corporation ("Genmar"), whose principal business is the manufacture and sale of
recreational power boats. Genmar's principal office is located at 100 South
Fifth Street, Suite 2400, Minneapolis, Minnesota 55402. All of Genmar's
executive officers and directors are U.S citizens. Their names, business
addresses and principal occupations are listed on Exhibit A hereto.
During the last five years, neither Genmar nor any of its directors or executive
officers has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or been party to a civil proceeding of a
judicial or administrative body of competent jurisdiction that resulted in a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the terms of a Securities Purchase Agreement, dated as of March 2,
2000, by and between the Issuer, Genmar and other purchasers named therein,
Genmar purchased 20,000 shares of the Issuer's Preferred Stock (the "Preferred
Shares") for an aggregate of $2 million in cash. Genmar used its available
working capital to purchase the Preferred Shares, which are immediately
convertible into 153,846 shares of Common Stock. The shares of Common Stock
underlying the Preferred Shares were registered on the Issuer's Registration
Statement (Registration No. 333-36276) on Form S-3 under the Securities Act of
1933 (the "Registration Statement") on May 4, 2000. A copy of the Securities
Purchase Agreement is attached hereto as Exhibit B and incorporated by reference
in its entirety. The descriptions set forth in this statement are qualified in
their entirety by reference to the Securities Purchase Agreement as attached
hereto. Reference is also made to the Registration Statement, a copy of which is
on file with the Securities and Exchange Commission.
In addition, the Issuer and Genmar entered into a Strategic Relationship
Agreement, dated as of April 26, 2000, under which Genmar will utilize certain
electronic commerce systems to be developed and operated by the Issuer. In
connection with the Strategic Relationship Agreement, the Issuer entered into a
Warrant Agreement (the "Warrant Agreement"), dated as of April 26, 2000, under
which the Issuer issued to Genmar warrants (the "Warrants") to purchase up to
1,442,081 shares of the Issuer's Common Stock. The Warrant Agreement, which is
more fully described in Item 5 below, is attached hereto as Exhibit C and
incorporated in its entirety by reference. The descriptions set forth in this
statement are qualified in their entirety by reference to the Warrant Agreement
as attached hereto.
3
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION.
Genmar acquired the Preferred Shares and Warrants for investment purposes to
participate in the future financial growth of the Issuer. Under the Strategic
Relationship Agreement, Genmar will engage the Issuer as Genmar's exclusive
electronic aggregator for the purchase of marine-related material, components
and equipment.
Genmar may purchase additional shares of Common Stock from time to time,
depending on various factors, including, without limitation, the price of the
Common Stock, the Issuer's business prospects and market conditions. Genmar may
also determine to dispose of some or all of its beneficial holdings of the
Issuer's securities. Genmar has no present plans or proposals which relate to or
would result in transactions of the kind described in paragraphs (a) through (j)
of Item 4 of Schedule 13D, but may, at any time or from time to time, review,
reconsider and discuss with the Issuer which would thereafter result in the
adoption of such plans or proposals.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
(a) As of the date hereof, Genmar owns of record and beneficially 20,000 shares
of the Issuer's Preferred Stock, and warrants to purchase up to 1,442,081 shares
of the Issuer's Common Stock. In addition, pursuant to the Warrant Agreement,
Genmar may be issued warrants to purchase an additional 1,514,367 shares of
Common Stock upon the occurrence of certain specified events.
Genmar may be deemed to beneficially own the 153,846 shares of Common Stock into
which the Preferred Shares are currently convertible. Both the number of shares
of Common Stock into which shares of Preferred Stock are convertible and the
conversion price are subject to adjustment. Upon the completion by the Issuer of
an underwritten offering meeting certain criteria, all outstanding shares of
Preferred Stock will convert automatically into shares of Common Stock.
In addition, Genmar may be deemed to beneficially own up to 1,442,081 shares of
Common Stock for which the Warrants are immediately exercisable under the terms
of the Warrant Agreement. As of the date hereof, assuming conversion of the
Preferred Shares and exercise of the immediately exercisable Warrants for
1,442,081 shares of Common Stock, Genmar would hold 19.9% of the Issuer's
currently outstanding Common Stock. Under the Warrant Agreement, Genmar may
exercise the Warrants only if such exercise does not result in Genmar holding in
excess of 19.9% of the Issuer's Common Stock. In addition, under the Warrant
Agreement, Genmar may be issued Warrants for an additional 1,514,367 shares of
Common Stock upon the earlier of (a) conversion of all of the 420,000 shares of
Preferred Stock currently issued and outstanding, (b) consummation of an
underwritten public offering of the Issuer's Common Stock meeting certain
criteria, or (c) April 26, 2001. Each of these three conditions either cannot
occur within 60 days of the date of the event requiring filing of this statement
or is beyond the control of Genmar. Therefore, Genmar may not be deemed to
beneficially own the 1,514,367 shares of Common Stock to which these conditions
apply.
4
<PAGE>
The Warrants expire on the earlier of (a) February 14, 2005, (b) three years
from the consummation of an underwritten public offering of the Issuer's Common
Stock meeting certain criteria and (c) 30 days from the termination of the
Strategic Relationship Agreement. The number of shares of Common Stock
underlying the Warrants and the initial price at which Genmar may exercise the
Warrants shall be adjusted upon the occurrence of certain events in accordance
with a formula. The Warrant Agreement grants to Genmar certain registration
rights with respect to the Common Stock underlying the Warrants.
To the best knowledge of Genmar, no other party named in Item 2 owns any of the
Issuer's Common Stock.
(b) Genmar has the sole power to vote and the sole power to dispose of all
shares of Common Stock beneficially owned by it.
(c) The only transaction in the Issuer's Common Stock that was effected by any
person named in paragraph (a) above during the past 60 days is the acquisition
of the Preferred Shares and Warrants as reported in Item 3 above.
(d) No other person is known to have the right to receive or the power to direct
the receipt of dividends from, or the proceeds of the sale of, the subject
securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
As described above, Genmar is a party to the Securities Purchase Agreement,
pursuant to which Genmar acquired 20,000 shares of the Issuer's Preferred Stock,
and the Warrant Agreement, pursuant to which Genmar has the right to acquire up
to 1,442,081 shares of the Issuer's Common Stock.
Pursuant to the Securities Purchase Agreement, the Issuer sold an aggregate of
420,000 shares of Preferred Stock, including the 20,000 Preferred Shares
acquired by Genmar. Of these 20,000 Preferred Shares, 10,000 shares, and payment
therefor, were delivered on March 2, 2000; the balance was delivered on May 2,
2000. The 10,000 Preferred Shares delivered on each of these dates were
immediately convertible upon issuance. The Securities Purchase Agreement
provides that each purchaser named therein may dispose of the shares of
Preferred Stock held by it only pursuant to an effective registration statement.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit A - List of Executive Officers and Directors
Exhibit B -- Securities Purchase Agreement, dated as of March 2, 2000, by
and between the Issuer, Genmar and the other purchasers named
therein.
Exhibit C - Warrant Agreement, dated as of April 26, 2000, between the Issuer
and Genmar.
5
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true and correct.
May 5, 2000
---------------------
(Date)
GENMAR HOLDINGS, INC.
By:/s/ Roger R. Cloutier II
--------------------------------------
Name: Roger R. Cloutier II
Title: Executive Vice President and Chief
Financial Officer
6
EXHIBIT A
Directors and Executive Officers of Genmar
------------------------------------------
Irvin L. Jacobs, Chairman of Board of Directors, Genmar Holdings, Inc., 100
South Fifth Street, Suite 2400, Minneapolis, Minnesota 55402.
Grant E. Oppegaard, President, Chief Executive Officer and Director, Genmar
Holdings, Inc., 100 South Fifth Street, Suite 2400, Minneapolis, Minnesota
55402.
Roger R. Cloutier II, Executive Vice President, Chief Financial Officer and
Director, Genmar Holdings, Inc., 100 South Fifth Street, Suite 2400,
Minneapolis, Minnesota 55402.
Mary P. McConnell, Senior Vice President, General Counsel and Secretary, Genmar
Holdings, Inc., 100 South Fifth Street, Suite 2400, Minneapolis, Minnesota
55402.
John S. Rosendahl, Senior Vice President - Business Development, Genmar
Holdings, Inc., 100 South Fifth Street, Suite 2400, Minneapolis, Minnesota
55402.
George E. Sullivan, Senior Vice President - Marketing, Genmar Holdings, Inc.,
100 South Fifth Street, Suite 2400, Minneapolis, Minnesota 55402.
David H. Vigdal, Senior Vice President - Operations, Genmar Holdings, Inc., 100
South Fifth Street, Suite 2400, Minneapolis, Minnesota 55402.
Bjorn Ahlstrom, Director, Genmar Holdings, Inc., Independent Consultant, 47 Fox
Hedge Road, Saddle River, New Jersey
Daniel G. DeVos, Director, Genmar Holdings, Inc., Vice President - Corporate
Affairs, Amway Corporation, c/o RDV Corporation, 500 Grand Bank Building, 126
Ottawa Street NW, Grand Rapids, Michigan 49503
Daniel T. Lindsay, Director, Genmar Holdings, Inc., Executive Vice President,
Secretary and Director, Jacobs Management Corporation, 100 South Fifth Street,
Suite 2500, Minneapolis, Minnesota 55402.
William W. Nicholson, Director, Genmar Holdings, Inc., Private Investor and
Independent Consultant, 121 North Postoak Lane, #2105, Houston, Texas 77204
Carl R. Pohlad, Director, Genmar Holdings, Inc., President and Director,
Marquette Bancshares, Inc., 60 South Sixth Street, Suite 3800, Minneapolis,
Minnesota 55402.
James O. Pohlad, Director, Genmar Holdings, Inc., Executive Vice President and
Director, Marquette Bancshares, 60 South Sixth Street, Suite 3800, Minneapolis,
Minnesota 55402.
Jerry L. Tubergen, Director, Genmar Holdings, Inc., President and Chief
Executive Officer, RDV Corporation, 126 Ottawa, N.W., Grand Rapids, Michigan
49503.
7
EXHIBIT B
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SECURITIES PURCHASE AGREEMENT
among
MAREX.COM, INC.
and
THE PURCHASERS LISTED ON SCHEDULE I
Dated as of March 2, 2000
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<PAGE>
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
I.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>
(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.
I.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>
(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
II.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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<PAGE>
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"
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
4
<PAGE>
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
5
<PAGE>
accordance with and in the time periods set forth in the Registration Rights
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
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
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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 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
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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
facility. The Company is not in default under or in violation of any of the
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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
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other governmental authority which have not been satisfied and (ii) no Person,
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 furnishing of
services to or by, providing for rental of real property or personal property to
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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
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transactions contemplated hereby and any statement made by any Purchaser or any
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.
II.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
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Purchaser, either alone or together with its representatives, had and will 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
III.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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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.
III.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.
III.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.
III.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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III.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.
III.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 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
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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.
III.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.
III.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.
III.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.
III.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
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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
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.
III.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.
III.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.
III.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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III.14 INTENTIONALLY OMITTED.
III.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.
III.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.
III.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.
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(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 the number of shares of Common Stock outstanding as
of a date within five business days of the First Closing Date; and
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(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.
IV.1 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
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"group" (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act), other than the Purchasers or any of their Affiliates,
of 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 been amended or modified in any manner
except as specifically set forth therein;
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(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
and personal representatives of the Company, the Purchasers and any such
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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
VI.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.
VI.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>
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
Facsimile: (212) 858-7402
Attention: Vice President, Global Middle Office
27
<PAGE>
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
with a copy to:
28
<PAGE>
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.
VI.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
29
<PAGE>
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.
VI.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.
VI.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.
VI.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.
VI.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.
VI.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.
30
<PAGE>
VI.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.
VI.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.
VI.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.
VI.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.
VI.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
31
<PAGE>
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.
VI.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.
VI.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.
VI.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.
VI.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.
32
<PAGE>
[SIGNATURE PAGES FOLLOW]
33
<PAGE>
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>
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>
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>
LB I GROUP INC.
By: /s/ Steven L. Berkenfeld
------------------------------------
Name: Steven L. Berkenfeld
Title: Senior Vice President
<PAGE>
MARSHALL MAREX L.P.
By: /s/ John A. Fischer
------------------------------------
Name: John A. Fischer
Title: Executive Vice President
<PAGE>
FORD ALLEN FUND-I, L.P.
By: Ford Allen, Inc.
------------------------------------
its general partner
By: /s/ Clifford Grossman
------------------------------------
Name: Clifford Grossman
Title: President
<PAGE>
GENMAR HOLDINGS, INC.
By: /s/ Roger R. Cloutier II
------------------------------------
Name: Roger R. Cloutier II
Title: EVP & CFO
<PAGE>
ASIACOMMERCE LLC
By: /s/ Clive Ng
Name: Clive Ng
Title:
<PAGE>
EXHIBIT C
================================================================================
WARRANT AGREEMENT
BETWEEN
MAREX.COM, INC.
AND
GENMAR HOLDINGS, INC.
DATED AS OF APRIL 26, 2000
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
----
<S> <C>
SECTION 1. Warrant Certificates.........................................................................................1
SECTION 2. Execution of Warrant Certificates............................................................................1
SECTION 3. Registration.................................................................................................2
SECTION 4. Legend; Exchange.............................................................................................2
SECTION 5. Warrants; Exercise of Warrants...............................................................................4
SECTION 6. Payment of Taxes.............................................................................................6
SECTION 7. Mutilated or Missing Warrant Certificates....................................................................6
SECTION 8. Reservation of Warrant Shares; Representations and Warranties; Covenants.....................................6
(a) Reservation of Warrant Shares.........................................................................6
(b) Representations and Warranties of the Company.........................................................7
(c) Representations and Warranties of the Holder..........................................................7
(d) Covenants of the Company..............................................................................8
SECTION 9. Adjustment Provisions........................................................................................8
(a) Stock Dividends.......................................................................................8
(b) Combination of Stock..................................................................................8
(c) Reorganization........................................................................................8
(d) Exercise Price Adjustment.............................................................................9
SECTION 10. No Impairment................................................................................................9
SECTION 11. Fractional Interests.........................................................................................9
SECTION 12. No Rights as Shareholders...................................................................................10
SECTION 13. Registration Rights.........................................................................................10
(a) Demand Registration..................................................................................10
(b) Piggy-Back Registrations.............................................................................11
(c) Registration Procedures..............................................................................12
(d) Indemnification......................................................................................14
(e) Certain Definitions..................................................................................17
(f) Requirements for Participation in Underwritten Offerings.............................................19
SECTION 14. Notices to Company and Holder...............................................................................19
(i)
<PAGE>
PAGE
----
<S> <C> <C>
SECTION 15. Board Observer Rights.......................................................................................19
SECTION 16. Amendments..................................................................................................20
SECTION 17. Successors and Assigns......................................................................................20
SECTION 18. Termination.................................................................................................20
SECTION 19. Governing Law...............................................................................................20
SECTION 20. Benefits of This Agreement..................................................................................21
SECTION 21. Counterparts................................................................................................21
</TABLE>
EXHIBIT A - Form of Warrant Certificate
SCHEDULE I - Partial Tranche B Closing
(ii)
<PAGE>
THIS WARRANT AGREEMENT, dated as of April 26, 2000 (this
"Agreement"), is made by and between Marex.com, Inc., a Florida corporation (the
"Company"), and Genmar Holdings, Inc., a Delaware corporation (the "Holder").
WHEREAS, pursuant to that certain Securities Purchase Agreement,
dated as of March 2, 2000, among the Company, the Holder and certain other
parties (the "Purchase Agreement"), the Holder purchased Series A1 Convertible
Preferred Stock of the Company ("Preferred Stock") and was granted certain
registration rights with respect to such Preferred Stock pursuant to a
Registration Rights Agreement, dated as of March 2, 2000, among the Company and
the parties to the Purchase Agreement (the "Registration Rights Agreement");
WHEREAS, the Company and the Holder have entered into that certain
Strategic Relationship Agreement, dated of even date herewith (the "Strategic
Relationship Agreement"), pursuant to which the Holder will utilize certain
electronic commerce systems developed and operated by the Company;
WHEREAS, in connection with the Strategic Relationship Agreement,
from which the Company derives direct and substantial benefit, the Company
proposes to issue Warrants to the Holder (the "Warrants"), to purchase up to a
maximum of 2,956,448 shares of Common Stock, par value $.01 per share (the
"Common Stock") of the Company, subject to adjustment as provided herein (the
Common Stock issuable on exercise of the Warrants being referred to herein as
the "Warrant Shares") and subject to the terms and conditions herein.
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements, covenants and conditions hereinafter set forth, the parties hereto
mutually agree as follows:
SECTION 1. Warrant Certificates. The certificates evidencing the
Warrants the "Warrant Certificates") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the form set
forth as Exhibit A attached hereto.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates
shall be executed on behalf of the Company by its Chairman of the Board or its
Chief Executive Officer or its President or a Vice President and by its Chief
Financial Officer, Secretary or an Assistant Secretary under its corporate seal.
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the present or any future Chairman of the Board, Chief
Executive Officer, President, Vice President, Chief Financial Officer, Secretary
or Assistant Secretary and may be imprinted or otherwise reproduced on the
Warrant Certificates and for this purpose the Company may adopt and use the
facsimile signature of any person who shall have been Chairman of the Board,
Chief Executive Officer, President, Vice President, Chief Financial Officer,
Secretary or Assistant Secretary, notwithstanding the fact that at the time the
Warrant Certificates shall be delivered or disposed of he or she shall have
ceased to hold such office. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
<PAGE>
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company, and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 3. Registration. The Company shall number and register the
Warrant Certificates in a register (the "Warrant Register") as they are issued.
The Company shall act as the registrar for the Warrants. The Company may deem
and treat the registered holder of the Warrant Certificates as the absolute
owner thereof (notwithstanding any notation of ownership or other writing
thereon to the contrary made by anyone), for all purposes, and the Company shall
not be affected by any notice to the contrary.
SECTION 4. Legend; Exchange.
(a) Unless the Warrant Shares have been registered under the
Securities Act, upon exercise of the Warrants and the issuance of any Warrant
Shares, all Warrant Certificates and certificates representing such securities
shall bear substantially the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, UNLESS THE COMPANY HAS
RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR
TRANSFER DOES NOT INVOLVE A TRANSACTION REQUIRING
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS."
The Warrant 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 Warrant Shares may be sold
pursuant to Rule 144. The Company agrees that it will provide Holder, upon
request, with a certificate or certificates representing the Warrant Shares,
free from such legend at such time as such legend is no longer required
-2-
<PAGE>
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 the Holder, reissue to
Holder such certificate or certificates free of any legend.
(b) Warrant Certificates may be exchanged at the option of the
Holder, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be, upon issuance of the new Warrant Certificates, canceled and
disposed of by the Company.
(c) 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 herein, except as required by law.
(d) As long as the Holder owns the Warrant 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 Holder 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 the Holder owns the Warrant 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
Holder with true and complete copies of all such filings (unless filed by EDGAR,
in which case Company shall only provide written notice of such filing to the
Holder), 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 the Holder may reasonably request, all to
the extent required from time to time to enable the Holder to sell the Warrant
Shares, without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act.
(e) Upon exercise of the Warrants, 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 the Holder,
for the Warrant Shares in such amounts as specified from time to time by the
Holder to the Company in a form acceptable to the Holder (the "Transfer Agent
-3-
<PAGE>
Instructions"). The Company warrants that, except as otherwise required by law,
no instruction other than the Transfer Agent Instructions referred to in this
Section 4(e) (in the case of the Warrant Shares, prior to registration of the
Warrant Shares under the Securities Act) will be given by the Company to its
transfer agent and that the Warrant Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder 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 4(e) will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 4(e), that
the Holder 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.
SECTION 5. Warrants; Exercise of Warrants. The Warrants shall vest
and become exercisable (at an initial exercise price per Warrant Share equal to
$1.83), and Warrant Certificates shall be issued only, in increments as follows:
(a) with respect to 1,442,081 shares of Common Stock,
immediately upon execution of this Agreement by the
Company and Holder; and
(b) with respect to 1,514,367 shares of Common Stock, (i) only
if the Second Closing Date for the Tranche B Shares in the
amount of $22 million (as each term is defined in the
Purchase Agreement) occurs, such event hereinafter
referred to as the "Full Tranche B Closing," and (ii) only
if the Holder participates in such Full Tranche B Closing
in an amount not less than $1,000,000, in accordance with
the provisions of the Purchase Agreement; except that if
the Full Tranche B Closing does not occur but the Company
is able to sell a portion of the Tranche B Shares in
accordance with the terms of the Purchase Agreement, such
event hereinafter referred to as the "Partial Tranche B
Closing," and the Holder participates in such Partial
Tranche B Closing in an amount not less than $1,000,000,
in accordance with the provisions of the Purchase
Agreement, then the 1,514,367 shares of Common Stock
referred to above shall be reduced by that number
indicated in the second column on Schedule I attached
hereto corresponding to the total amount of the Partial
Tranche B Closing; provided, that, if 100% of the
Preferred Stock is converted in accordance with the terms
of the Purchase Agreement, Company shall issue a Warrant
to the Holder with respect to 783,539 shares of Common
Stock upon such conversion and the balance of the Warrant
with respect to 730,828 shares of Common Stock upon the
earlier of (x) the closing of the Company's first
Underwritten Offering (as such term is defined in the
Registration Rights Agreement) or (y) twelve (12) months
from the date of this Agreement; provided, further, that
in the absence of any such conversion of the Preferred
Stock, any Warrants issued pursuant to this Section 5(b)
shall only be issued upon the earlier of (x) the closing
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of the Company's first Underwritten Offering (as such term
is defined in the Registration Rights Agreement) or (y)
twelve (12) months from the date of this Agreement.
The Company shall issue a Warrant Certificate to the Holder only as
described above. Subject to the terms of this Agreement, the Holder shall have
the right, which may be exercised commencing at the opening of business on the
date the Company delivers Warrants to the Holder and until the earlier of (i)
February 14, 2005, (ii) three years from the closing of the Company's first
Underwritten Offering (as such term is defined in the Registration Rights
Agreement) or (iii) thirty (30) days from the date on which the Strategic
Relationship Agreement is terminated for any reason (any of such dates being the
"Expiration Date"), to receive from the Company the number of fully paid and
nonassessable Warrant Shares which the Holder may at the time be entitled to
receive on exercise of such Warrants and payment of the Exercise Price then in
effect for such Warrant Shares; provided that at no time shall the Holder
exercise any Warrants if such exercise will result in the Holder holding in
excess of 19.9% of the outstanding Common Stock of the Company except
simultaneously upon the occurrence of a Change in Control (as such term is
defined in Section 13(e) herein).
Each Warrant not exercised by the Expiration Date shall become void
and all rights thereunder and all rights in respect thereof under this Agreement
shall cease as of such time.
A Warrant may be exercised upon surrender to the Company at its
office designated for such purpose (the address of which is set forth in Section
14 hereof) of the Warrant Certificate (or Warrant Certificates, as the case may
be) to be exercised together with the form of election to exercise attached as
Annex I to the Warrant Certificate attached hereto as Exhibit A, duly filled in
and signed by the Holder, and upon payment to the Company of the exercise price
(the "Exercise Price") which is set forth in the form of Warrant Certificate
attached hereto as Exhibit A, as adjusted as herein provided, for the number of
Warrant Shares in respect of which such Warrants are then exercised. Payment of
the aggregate Exercise Price shall be made in cash or by certified or official
bank check to the order of the Company.
Subject to the provisions of Section 6, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Holder may designate, a stock
certificate or stock certificates for the number of full Warrant Shares issuable
upon the exercise of such Warrants together with cash as provided in Section 11.
Such stock certificate or stock certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a Holder of record of such Warrant Shares as of the date of the surrender of
such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the Holder,
either in full or from time to time in part (provided that Warrants shall be
exercisable in multiples of ten thousand (10,000) Warrants unless all of the
Warrants evidenced by a particular Warrant Certificate are being exercised) and,
in the event that a Warrant Certificate is exercised in respect of fewer than
all of the Warrant Shares issuable on such exercise at any time prior to the
date of expiration of the Warrants, a new Warrant Certificate evidencing the
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<PAGE>
remaining Warrant or Warrants will be issued and delivered pursuant to the
provisions of this Section 5 and of Section 2.
All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the Holder during normal business hours at its office.
SECTION 6. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue of any Warrant Certificates or any certificates for Warrant Shares
in a name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant 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 reasonable satisfaction
of the Company that such tax has been paid.
SECTION 7. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon surrender
of the mutilated Warrant Certificate or upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such Warrant
Certificate, and indemnity, if requested, reasonably satisfactory to the
Company.
SECTION 8. Reservation of Warrant Shares; Representations and
Warranties; Covenants.
(a) Reservation of Warrant Shares. The Company will at all times
reserve a sufficient number of shares of its authorized but unissued Common
Stock to provide for 100% of the full exercise of the outstanding Warrants. 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 Warrant Shares issued
and issuable upon exercise of the Warrant without regard to any limitation on
conversions, the Company will promptly take all corporate action necessary to
authorize and reserve 100% of such shares including, without limitation, calling
a special meeting of stockholders to authorize additional shares to meet the
Company's obligations under this Section 8(a), 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.
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<PAGE>
(b) Representations and Warranties of the Company.
---------------------------------------------
(1) Organization; Powers. The Company (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite corporate power and authority to own its
property and assets and to carry on its business as now conducted, (iii) is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where the failure so to qualify
could not reasonably be expected to result in any material adverse change in, or
the occurrence of any event which would be likely to have a material adverse
effect on, the business, financial condition, operations, assets, prospects or
results of operations of the Company ("Material Adverse Effect") and (iv) has
the power and authority to execute, deliver and perform its obligations under
this Agreement and the Warrant Certificate and each other agreement or
instrument contemplated hereby or thereby.
(2) Capitalization. As of March 2, 2000, (i) the Company's
authorized capital stock consisted of 25,000,000 shares of Common Stock and
1,000,000 shares of preferred stock, 420,000 of which were designated as shares
of Series A1 Preferred Stock and the remainder of which were undesignated; (ii)
the Company had a total of 6,423,806 shares of Common Stock issued and
outstanding and no shares of Preferred Stock were issued and outstanding; and
(iii) the Company had outstanding in total options to purchase an aggregate of
2,531,700 shares of Common Stock and warrants to purchase an aggregate of
409,971 shares of Common Stock. As of the date hereof, (i) the Company's
authorized capital stock consists of 25,000,000 shares of Common Stock and
1,000,000 shares of preferred stock, 430,000 of which have been designated as
shares of Series A1 Preferred Stock and the remainder of which are undesignated;
(ii) the Company has a total of 6,423,806 shares of Common Stock and 210,000
shares of Preferred Stock issued and outstanding; and (iii) the Company has
outstanding in total options to purchase an aggregate of 2,701,200 shares of
Common Stock and warrants to purchase an aggregate of 409,971 shares of Common
Stock.
(c) Representations and Warranties of the Holder.
--------------------------------------------
(1) Organization; Powers. The Holder (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and (ii) has the power and authority to execute, deliver and
perform its obligations under this Agreement.
(2) Due Authorization and Enforceability. This Agreement (i) has
been or will be duly authorized, executed and delivered by the Holder, and (ii)
constitute or will constitute valid and binding obligations of the Holder
enforceable against the Holder in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforceability of creditors'
rights generally and by general principles of equity (whether arising under a
proceeding at law or in equity).
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<PAGE>
(3) Investment Intent. The Holder represents and warrants to the
Company that it is an "accredited investor" within the meaning of Regulation
501(a) under the Securities Act and the Warrants to be acquired by it pursuant
to this Agreement are being, and the Warrant Shares will be, acquired for its
own account and without a view to, or for resale in connection with, any
distribution thereof or any interest therein; provided, however, that by making
the representations herein, the Holder does not agree to hold the Warrant or the
Warrant Shares for any minimum or other specific term and reserves the right to
dispose of the Warrant and the Warrant Shares at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.
(d) Covenants of the Company. The Company covenants that all Warrant
Shares which may be issued upon exercise of Warrants will, upon issue, be fully
paid, nonassessable, free of preemptive rights and free from all taxes, liens,
charges and security interests other than those attributable to the Holder.
SECTION 9. Adjustment Provisions. Subject to the provisions of this
Section 9, the Exercise Price and the number of Warrant Shares issuable upon
exercise of the Warrants in effect from time to time shall be subject to
adjustment, as follows:
(a) Stock Dividends. If at any time after the date hereof (i) the
Company shall declare or pay a stock dividend payable in shares of Common Stock
or (ii) the number of shares of Common Stock shall have been increased by a
subdivision or split-up of shares of Common Stock, then the number of Warrant
Shares to be delivered upon exercise of the Warrants shall be increased so that
the Holder will be entitled to receive the number of Warrant Shares that the
Holder would have owned had the Warrants been exercised immediately prior to
such dividend payment, subdivision or split-up, and the Exercise Price shall be
adjusted as provided for in subsection (d) of this Section 9.
(b) Combination of Stock. If the number of shares of Common Stock
outstanding at any time after the date of the issuance of the Warrants shall
have been decreased by a combination or reverse split of the outstanding shares
of Common Stock, then the number of Warrant Shares to be delivered upon exercise
of the Warrants will be decreased so that the Holder thereafter shall be
entitled to receive the number of Warrant Shares that the Holder would have
owned had the Warrants been exercised immediately prior to such combination or
reverse split, and the Exercise Price shall be adjusted as provided for in
subsection (d) of this Section 9.
(c) Reorganization. If any capital reorganization of the Company, or
any reclassification of its common stock, or any consolidation of the Company
with or merger of the Company with or into any other person or any sale, lease
or other transfer of all or substantially all of the assets of the Company to
any other person, shall be effected, then, upon exercise of the Warrants the
Holder shall have the right to receive the kind and amount of cash, stock, other
securities or assets receivable upon such reorganization, reclassification,
consolidation, merger or sale, lease or other transfer by a holder of the number
of shares of Common Stock that the Holder would have been entitled to receive
upon exercise of the Warrants had they been exercised immediately before such
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<PAGE>
reorganization, reclassification, consolidation, merger or sale, lease or other
transfer. Concurrently with the consummation of any such transaction, the
corporation formed by or surviving any such consolidation or merger if other
than the Company, or the person to which such sale or conveyance shall have been
made, shall enter into a supplemental Warrant Agreement with the Holder so
providing and further providing for adjustments which shall be nearly as
equivalent as may be practical to the adjustments provided for in this Section
9.
(d) Exercise Price Adjustment. (i) Whenever the number of Warrant
Shares purchasable upon the exercise of the Warrant(s) is adjusted as provided
pursuant to this Section 9, the Exercise Price payable upon the exercise of the
Warrant(s) shall be adjusted by multiplying such Exercise Price immediately
prior to such adjustment by a fraction, of which the numerator shall be the
number of Warrant Shares purchasable upon the exercise of the Warrant(s)
immediately prior to such adjustment, and of which the denominator shall be the
number of Warrant Shares purchasable immediately thereafter; provided, however,
that the Exercise Price for each Warrant Share shall in no event be less than
the par value of such Warrant Share.
(ii) Whenever the Exercise Price is adjusted pursuant to this Section
9 the Company shall promptly deliver to the Holder a notice setting forth the
Exercise Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Such notice shall be signed by the Chairman,
Chief Executive Officer, President or Chief Financial Officer of the Company.
SECTION 10. No Impairment. The Company will not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants, but will at all times in reasonable good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder against impairment. Without limiting the generality of the foregoing, the
Company (i) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock on the exercise of the Warrants from time
to time outstanding and (ii) will not take any action which results in any
adjustment of the Exercise Price if the total number of Warrant Shares issuable
after the action upon the exercise of all of the Warrants would exceed the total
number of shares of Common Stock then authorized by the Company's certificate of
incorporation and available for the purposes of issue upon such exercise.
SECTION 11. Fractional Interests. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If any fraction
of a Warrant Share would be issuable on the exercise of any Warrants (or
specified portion thereof), the Company shall pay an amount in cash equal to the
Per Share Market Value on the last trading day immediately preceding the date
the Warrant is presented for exercise, multiplied by such fraction.
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<PAGE>
SECTION 12. No Rights as Shareholders. Nothing contained in this
Agreement or in any of the Warrant Certificates shall be construed as conferring
upon the Holder the right to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as a
shareholder of the Company.
SECTION 13. Registration Rights.
(a) Demand Registration.
-------------------
(1) Request for Registration. At any time after six (6) months
from the date of this Agreement, the Holder may make a written request for
registration under the Securities Act ("Demand Registration") of all or part of
its Registrable Securities; provided that the Company shall not be obligated to
effect more than two (2) Demand Registrations in respect of the Registrable
Securities or any registration statement during any period in which any other
registration statement (other than on Form S-4 or S-8 promulgated under the
Securities Act or any substitute form that may be adopted by the SEC) has been
filed and not withdrawn or has been declared effective within the prior 180 days
and provided, further that Company shall have the right to file such
registration statement on Form S-3 (or any successor form) if available and if
not available, on any other form (other than on Form S-4 or S-8 promulgated
under the Securities Act or any substitute form that may be adopted by the SEC)
prescribed by the SEC. Such request for a Demand Registration will specify the
aggregate amount of Registrable Securities proposed to be sold, the intended
method of disposition thereof and the form of registration statement selected by
the Holder. Company shall use its reasonable efforts to promptly effect the
registration of such Registrable Securities under the Securities Act, and
Company shall use its reasonable efforts to keep such registration statement
continuously effective until the date that is eighteen months from date such
registration is declared effective by the SEC or such earlier date when all
Registrable Securities covered by such registration statement have been sold or
may be sold pursuant to Rule 144(k) under the Securities Act. Notwithstanding
the foregoing, no Demand Registration shall be required to be effected with
respect to any Registrable Securities that are then eligible for resale pursuant
to Rule 144(k) under the Securities Act.
If the Company is requested to effect a Demand Registration and the
Company furnishes to the Holders of Registrable Securities requesting such
registration a copy of a resolution of the Company's Board of Directors
certified by the Company's Secretary stating that in the good faith judgment of
the Board it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed on or before the date such filing
would otherwise be required hereunder, the Company shall have the right to defer
such filing for a period of not more than 180 days after receipt of the request
for such registration from the Holder or Holders of Registrable Securities
requesting such registration; provided, however that Company may exercise such
right no more than one (1) time in any twelve-month period.
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Company shall pay all Registration Expenses in connection with the
registration of Registrable Securities pursuant to a Demand Registration,
provided that the Holder shall pay any additional expenses incurred by Company
if Company is required to file the registration statement on a form other than
Form S-3 (or any successor form).
(2) Effective Registration. A registration will not count as a
Demand Registration until it has become effective under the Securities Act
(unless such registration is withdrawn at the request of the Holder).
(b) Piggy-Back Registrations. Except as provided herein if, at any
time when there is not an effective Registration Statement covering the
Registrable Securities, the Company shall determine to prepare and file with the
Commission a registration statement pursuant to an Underwritten Offering (as
such term is defined in the Registration Rights Agreement) 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 the Holder written
notice of such determination and, if within ten (10) days after receipt of such
notice, the Holder shall so request in writing, (which request shall specify the
Registrable Securities intended to be disposed of by the Holder), 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 the 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 this section), 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 13(b) 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 the Holder requests to be registered;
provided, that the Holder shall not have the piggy-back rights described in this
Section 13(b) in connection with the Company's registration of the Preferred
Stock pursuant to the Initial Registration Statement (as such term is defined in
the Registration Rights Agreement) and provided, further that the Company shall
not be required to register any of the Registrable Securities pursuant to this
Section 13(b) 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 statement, then if the Company
after consultation with the underwriter's representative should reasonably
determine that the inclusion of such Registrable Securities would materially
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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 Holder, then (x)
the number of Registrable Securities of the Holder included in such registration
statement shall be reduced pro rata to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount recommended
by such management underwriter or underwriters (based upon the number of
Registrable Securities requested to be included in the registration) or (y) none
of the Registrable Securities of the Holder 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
Holder than the fraction of similar reductions imposed on such other Persons
(other than Company).
Company shall pay all Registration Expenses in connection with the
registration of Registrable Securities.
(c) Registration Procedures.
-----------------------
In connection with the Company's registrations obligations hereunder,
the Company shall:
(1) prepare and file with the SEC a registration statement with
respect to such securities, make all required filings with the National
Association of Securities Dealers, Inc. ("NASD") and use reasonable efforts to
cause such registration statement to become effective;
(2) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;
(3) furnish to counsel (if any) of the Holder copies of all
documents proposed to be filed with the SEC in connection with such
registration, which documents will be subject to the review of such counsel;
(4) furnish to each seller of such securities such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies
of the prospectus included in such registration statement (including such
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such seller may
reasonably request in order to facilitate the disposition of the securities
owned by such seller;
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(5) use reasonable efforts to register or qualify such securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as each seller shall reasonably request in writing,
and do any and all other acts and things which may be necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to take any action which
would subject it to general service of process in any such jurisdiction where it
is not then so subject;
(6) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, (i) of the happening of any
event 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 any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, or (ii) if the Company is in possession of material information that
it deems advisable not to disclose in a registration statement, and at the
request of any such seller prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to purchasers of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(7) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months, but not more than eighteen (18) months,
beginning with the first month after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act; and
(8) use reasonable efforts to list such securities on any
securities exchange on which the Common Stock is then listed, if such securities
are not already so listed and if such listing is then permitted under the rules
of such exchange, and to provide a transfer agent and registrar for such
Registrable Securities not later than the effective date of such registration
statement.
The Company may require each seller of any securities as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such seller agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Subject to the last sentence of this paragraph, the Company may by
written notice require that the Holder immediately cease sales of Registrable
Securities (for a period not to exceed twenty (20) consecutive days in any one
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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.
(d) Indemnification
(1) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
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 Holder, each Person who controls 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 any 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 Holder furnished in writing to the Company by 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 Holder
or Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by Holder expressly for use in such
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
Holder 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
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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 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 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 13(c)(4) of this Agreement. The Company shall notify
Holder 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.
(2) Indemnification by Holder. Holder shall 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 any
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 Holder to the Company
specifically for inclusion in such registration statement or such prospectus and
that such information was reasonably relied upon by the Company for use in such
registration statement, such prospectus or such form of prospectus or to the
extent that such information relates to Holder or Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by Holder expressly for use in such registration statement, such
prospectus or such form of prospectus; provided, however, that the indemnity
agreement contained in this Section 13(d)(2) shall not apply to amounts paid in
settlement of any Losses if such settlement is effected without the prior
written consent of Holder. In no event shall the liability of the Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by Holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
(3) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(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
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<PAGE>
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).
(4) Contribution. If a claim for indemnification under Section
13(d)(1) or 13(d)(2) 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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<PAGE>
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 13(d)(3), 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 Holder be required to contribute an
amount under this Section 13(d)(4) in excess of the net proceeds received by
Holder upon sale of the Registrable Securities pursuant to any 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 13(d)(4) 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.
(e) Certain Definitions.
-------------------
(1) The term "Change of Control" shall mean the occurrence of any
of (i) any acquisition or series of related acquisitions after the date hereof
by any Person or "group" (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act), of in excess of 50% of the voting power of 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 or (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.
(2) The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(3) The term "National Market" shall mean the NASDAQ National
Market, the NASDAQ SmallCap Market, the New York Stock Exchange and the American
Stock Exchange.
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<PAGE>
(4) The term "Per Share Market Value" shall mean on any
particular date (i) the closing bid price per share of the Common Stock on such
date on (a) the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. (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 the Company's Board of Directors in good faith.
(5) The term "Person" shall mean 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.
(6) The term "Proceeding" shall mean an action, claim, suit,
arbitration, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.
(7) The term "Registrable Securities" shall mean the Warrant
Shares and shall include any shares of the Company's capital stock issued with
respect to the Warrant Shares as a result of any stock split, stock dividend,
recapitalization or otherwise. As to any particular Registrable Securities, once
issued, such securities shall cease to be Registrable Securities when (A) they
have been registered under the Securities Act, a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (B) they shall have been sold or distributed,
or, in the opinion of counsel to the Company, may be sold or distributed, to the
public pursuant to Rule 144(k) (or any successor provisions) under the
Securities Act, (C) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered to the transferee and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any similar
state law then in force, or (D) they shall have ceased to be outstanding.
(8) The term "Registration Expenses" shall mean all expenses
incident to the Company's performance of or compliance with Section 13,
including, 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
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<PAGE>
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 Holder shall
pay any underwriting discounts or commissions and any transfer or similar taxes
in connection with the sale of Registrable Securities.
(9) The term "Securities Act" shall mean the Securities Act of
1933, as amended.
(f) Requirements for Participation in Underwritten Offerings. The
Holder may not participate in any underwritten offering pursuant to a
registration hereunder unless the Holder agrees to sell its securities on the
basis provided in any underwriting arrangements approved by the Holder.
SECTION 14. Notices to Company and Holder. Any notice or demand
authorized by this Agreement to be given or made by the Holder or on the Company
shall be deemed to have been delivered (i) upon receipt, when delivered
personally, (ii) upon receipt, when sent by facsimile (if received on or before
5:00 p.m. Eastern Time where such notice is received) or (iii) the first
Business Day (defined as any day except Saturday, Sunday or any day which shall
be a legal holiday or a day on which banking institutions in the State of
Florida generally are authorized or required by law or other government action
to close) following such delivery, provided that 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, addressed to the office of the Company expressly designated by the
Company at its office for purposes of this Agreement (until the Holder is
otherwise notified in accordance with this Section 14 by the Company), as
follows:
Marex.com, Inc.
2701 South Bayshore Drive, 5th Floor
Miami, Florida 33131
Attn: Kenbian Ng
Any notice pursuant to this Agreement to be given by the Company to the Holder
shall be deemed to have been delivered when delivered in accordance with any of
subparagraphs (i), (ii) and (iii) above, addressed to the Holder at the address
appearing on the Warrant Register (until the Company is otherwise notified in
accordance with this Section 14 by the Holder).
SECTION 15. Board Observer Rights. At any time prior to the
Expiration Date, Holder shall have the right to appoint one (1) representative,
subject to the approval of the Company (which approval shall not be unreasonably
withheld), to attend each meeting of the Board of Directors of Company (the
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"Holder Board Observer"). The Holder Board Observer shall not be entitled to
vote in any such meeting. Company shall send to the Holder Board Observer the
notice of the time and place of each meeting of the Board in the same manner and
at the same time as it shall send such notice to its directors. Company shall
also provide to the Holder Board Observer copies of all notices, reports,
minutes and consents at the time and in the manner as they are provided to its
directors. The Holder Board Observer shall have no right to (a) participate in
discussions of the Board or receive information which the Board in good faith
determines to be attorney-client privileged communications, (b) participate in
Board discussions regarding, or receive information concerning, confidential
terms (such as prices, quantities or other confidential sales terms) of
Company's relationships with competitors of Holder or any of its subsidiaries or
(c) participate in Board discussions regarding Company's commercial relationship
with Holder or any of its subsidiaries. The Holder Board Observer shall have no
duties, responsibilities or liability by virtue of attendance at any Board
meetings or the failure to attend the same (except as required under applicable
law).
SECTION 16. Amendments. This Agreement and any term hereof may be
changed, waived, discharged, supplemented, or terminated only by an instrument
in writing signed by the party against which enforcement of such change, waiver,
discharge, supplement or termination is sought.
SECTION 17. Successors and Assigns. All the covenants and provisions
of this Agreement by or for the benefit of the parties hereto shall bind and
inure to the benefit of their respective successors and assigns hereunder.
SECTION 18. Termination. This Agreement shall terminate upon the
earlier of (i) February 14, 2005, (ii) three years from the closing of the
Company's first Underwritten Offering or (iii) thirty (30) days from the date on
which the Strategic Relationship Agreement is terminated for any reason.
Notwithstanding any provision of this Agreement, if the Strategic Relationship
Agreement shall be terminated for any reason, the Company shall no longer be
obligated to issue any additional Warrant Certificates to Holder and any rights
of Holder entitling it to additional Warrants and Warrant Certificates shall
cease. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date if all Warrants have been exercised; provided, however, that (i)
Sections 13(d), 14 and 19 shall survive the termination of this Agreement and
(ii) the rights granted to the Holder pursuant to Sections 13(a) and 13(b)
hereof shall survive the termination of this Agreement for a period of two years
from the date upon which all Warrants have been exercised, but in no event later
than February 14, 2005.
SECTION 19. Governing Law. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF NEW YORK (BUT WITHOUT REGARD TO ANY
CONFLICTS OF LAW PROVISIONS THEREOF WHICH WOULD REQUIRE THE APPLICATION OF THE
LAW OF ANY OTHER JURISDICTION).
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<PAGE>
SECTION 20. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered Holder any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company and each registered Holder.
SECTION 21. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page Follows]
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<PAGE>
[SIGNATURE PAGE OF WARRANT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
MAREX.COM
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
GENMAR HOLDINGS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER
DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
No. _____
Issue Date:
Void After:
For ____ shares of Common Stock
WARRANT CERTIFICATE
MAREX.COM, INC.
This Warrant Certificate certifies that Genmar Holdings, Inc. or
registered assigns, is the registered holder of ________ Warrants (the
"Warrants") expiring upon the earlier of (i) February 14, 2005, (ii) three years
from the closing of the Company's first Underwritten Offering or (iii) thirty
(30) days from the date on which the Strategic Relationship Agreement is
terminated for any reason (the "Expiration Date") to purchase Common Stock, $.01
par value (the "Common Stock"), of Marex.com, Inc., a Florida corporation (the
"Company"). The Warrants are issued or will be issued pursuant to a Warrant
Agreement dated as of April 26, 2000 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the Holder of the Warrants. Capitalized
terms used herein shall have the meanings specified in the Warrant Agreement. A
copy of the Warrant Agreement may be obtained by the Holder hereof upon written
request to the Company.
Each Warrant entitles the holder upon exercise to receive from the
Company on or before the Expiration Date, one (1) fully paid and nonassessable
share of Common Stock (a "Warrant Share") at an initial exercise price (the
"Exercise Price") per Warrant Share equal to $1.83, payable in lawful money of
the United States of America upon surrender of this Warrant Certificate and
<PAGE>
payment of the Exercise Price at the office of the Company designated for such
purpose, but only subject to the conditions set forth herein and in the Warrant
Agreement.
In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the Holder hereof or his assignee a
new Warrant Certificate evidencing the number of Warrants not exercised.
The Exercise Price and the number of Warrant Shares issuable upon
exercise are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after the Expiration Date.
Reference is hereby made to the further provisions of the Warrant
Agreement and such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, Marex.com, Inc. has caused this Warrant
Certificate to be signed by its Chairman of the Board, Chief Executive Officer,
President or Vice President and by its Chief Financial Officer, Secretary or
Assistant Secretary, each by a facsimile of his signature, and has caused a
facsimile of its corporate seal to be affixed hereunto or imprinted hereon.
Dated: April 26, 2000 MAREX.COM, INC.
-------------------------
By: /s/ David A. Schwedel
-------------------------------------
Name: David A. Schwedel
-----------------------------------
Title: CEO and President
----------------------------------
By: /s/ Roger R. Cloutier II
-------------------------------------
Name: Roger R. Cloutier II
-----------------------------------
Title: EVP and CFO
----------------------------------
A-2
<PAGE>
ANNEX I
TO WARRANT CERTIFICATE
FORM OF ELECTION TO EXERCISE
(TO BE EXECUTED UPON EXERCISE OF WARRANT)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of
_______________ in the amount of $________ in accordance with the terms hereof.
The undersigned requests that a certificate for such shares be
registered in the name of ____________________, whose address is
__________________________________ and that such shares be delivered to
__________________________________ whose address is
__________________________________.
If said number of shares is less than all of the shares of Common
Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered in
the name of ____________________ whose address is
______________________________________________, and that such Warrant
Certificate be delivered to ___________________________________________________
whose address is ________________________________________________.
Signature:
Date:
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A-3
