SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
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.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
566536 10 8
- --------------------------------------------------------------------------------
(CUSIP Number)
John A. Fischer
903 North Third Street, Suite 300
Minneapolis, Minnesota 55401
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 2, 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 6 Pages)
NY2:\909598\02\JH%M02!.DOC\47650.0013
<PAGE>
<TABLE>
<CAPTION>
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CUSIP No. 566536 10 8 13D Page 2 of 6 Pages
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<S> <C>
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1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
MARSHALL MAREX L.P.
IRS NO. 41-1964768
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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*
OO
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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
384,614 shares
--------- ----------------------------------------------------------------
8 SHARED VOTING POWER
0
--------- ----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
384,614 shares
--------- ----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ---------- -------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
384,614 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)
5.65%
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14 TYPE OF REPORTING PERSON*
LP
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<PAGE>
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CUSIP No. 566536 10 8 13D Page 3 of 6 Pages
- -------------------------------------------------------- --------------------------------------
- ---------- -------------------------------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
MARSHALL FINANCIAL GROUP, INC.
IRS NO. 41-1624808
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* |_| (a)
|_| (b)
- ---------- -------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------- -------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
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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 MINNESOTA
- --------------------------------------------------- --------- ----------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH 7 SOLE VOTING POWER
REPORTING PERSON WITH
384,614 shares
--------- ----------------------------------------------------------------
8 SHARED VOTING POWER
0
--------- ----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
384,614 shares
--------- ----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ---------- -------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
384,614 shares
- ---------- -------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- ---------- -------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.65%
- ---------- -------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
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</TABLE>
<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 Marshall Marex L.P., a Delaware limited
partnership ("MM") and its general partner, Marshall Financial Group, Inc.
("MFG"), a Minnesota corporation, whose principal business is merchant banking
activities specializing in acquisitions, financial restructurings and providing
operating management. The principal offices of MM and MFG are located at 903
North Third Street, Suite 300, Minneapolis, Minnesota 55401. The executive
officers and directors are as follows:
Dennis M. Mathisen, Chairman of the Board of Directors, President and Chief
Executive Officer, MFG, 7283 Mission Hills Drive, Las Vegas, Nevada 89113.
John A. Fischer, Director and Executive Vice President, MFG, 903 North Third
Street, Suite 300, Minneapolis, Minnesota 55401.
Both Mr. Mathisen and Mr. Fischer are U.S citizens. During the last five years,
neither MFG nor MM nor either of their 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, MM and other purchasers named therein, MM
purchased 50,000 shares of the Issuer's Preferred Stock (the "Preferred Shares")
for an aggregate of $5 million in cash. MM used contributions from its partners
to purchase the Preferred Shares, which are immediately convertible into 384,614
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 A 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.
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<PAGE>
ITEM 4. PURPOSE OF TRANSACTION.
MM acquired the Preferred Shares as an investment. MM 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. MM may also determine to dispose of
some or all of its beneficial holdings of the Issuer's securities. MM 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, MM owns of record and beneficially 50,000 shares of
the Issuer's Preferred Stock. MM and MFG, as the general partner of MM, may be
deemed to beneficially own the 384,614 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.
To the best knowledge of MM and MFG, no other party named in Item 2 owns any of
the Issuer's Common Stock.
(b) MM has the sole power to vote and the sole power to dispose of the shares of
Common Stock owned by it. As the general partner of MM, MFG may also be deemed
to have 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 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, MM is a party to the Securities Purchase Agreement, pursuant
to which MM acquired 50,000 shares of the Issuer's Preferred Stock. The Issuer
sold an aggregate of 420,000 shares of Preferred Stock under the Securities
Purchase Agreement. 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.
5
<PAGE>
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit A - Securities Purchase Agreement, dated as of March 2, 2000, by
and between the Issuer, MM and the other purchasers named
therein.
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 9, 2000
----------------
(Date)
MARSHALL MAREX L.P.
By: Marshall Financial Group, Inc.
By: /s/ John A. Fischer
----------------------------------
Name: John A. Fischer
Title: Executive Vice President
MARSHALL FINANCIAL GROUP, INC.,
as General Partner of Marshall Marex L.P.
By: /s/ John A. Fischer
----------------------------------
Name: John A. Fischer
Title: Executive Vice President
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<PAGE>
EXHIBIT INDEX
-------------
Exhibit A - Securities Purchase Agreement, dated as of March 2, 2000, by
and between the Issuer, MM and the other purchasers named
therein.
Exhibit A
================================================================================
SECURITIES PURCHASE AGREEMENT
among
MAREX.COM, INC.
and
THE PURCHASERS LISTED ON SCHEDULE I
Dated as of March 2, 2000
================================================================================
<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.
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(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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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
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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
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<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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<PAGE>
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.
-------------
(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
25
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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:
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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
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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:
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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.
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<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
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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.
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[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:
