EXHIBIT 10.22
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
August 28, 2000, by and among TCPI, Inc., a Florida corporation, with
headquarters located at 3341 S.W. 15th Street, Pompano, Florida (the "Company"),
and the Buyers listed on Schedule I attached hereto(individually, a "Buyer" or
collectively "Buyers" ).
WITNESSETH:
WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation D") and/or Regulation
S as promulgated by the U.S. Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Buyer(s),
as provided herein, and the Buyer(s) shall purchase One Million Five Hundred
Thousand Dollars ($1,500,000) of convertible debentures (the "Convertible
Debentures"), which shall be convertible into shares of the Company's Common
Stock, (the "Common Stock") (as converted, the "Conversion Shares"), for a total
purchase price of One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Purchase Price") in the respective amounts set forth opposite each Buyer(s)
name on Schedule I ( the "Subscription Amount"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement") pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws; and
WHEREAS, the Convertible Debentures are being offered through The May
Davis Group, Inc. (the "Placement Agents"), as the Company's exclusive placement
agents for the offering and
WHEREAS, the aggregate proceeds of the sale of the Convertible
Debentures contemplated hereby shall be held in escrow pursuant to the terms of
an escrow agreement substantially in the form of the Escrow Agreement attached
hereto as Exhibit B.
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Buyer(s)hereby agree
as follows:
1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.
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(a) Purchase of Convertible Debentures. Subject to the
satisfaction (or waiver) of the terms and conditions of this Agreement,
each Buyer agrees, severally and not jointly, to purchase
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at Closing (as defined herein below) and the Company agrees to sell and
issue to each Buyer, severally and not jointly, at Closing, Convertible
Debentures in amounts corresponding with the Subscription Amount set
forth opposite each Buyer's name on Schedule I hereto. Upon execution
hereof by a Buyer, the Buyer shall wire transfer the Subscription
Amount set forth opposite his name on Schedule I in same-day funds or a
check payable to "First Union National Bank, as Escrow Agent for TCPI,
Inc / The May Davis Group, Inc.", which Subscription Amount shall be
held in escrow pursuant to the terms of the Escrow Agreement (as
hereinafter defined) and disbursed in accordance therewith.
Notwithstanding the foregoing, a Buyer may withdraw his Subscription
Amount and terminate this Agreement as to such Buyer at any time after
the execution hereof and prior to Closing (as hereinafter defined).
(b) Warrants. The Buyer(s) shall receive warrants to purchase
Shares of Common Stock equal to 20% of the number of the initial
Conversion Shares determined as of the Closing Date, with an exercise
price equal of $1.50. The Warrants shall have cashless exercise
provisions. The term of the Warrants shall be three (3) years. The
shares of Common Stock issuable upon exercise of the Warrants shall
have registration rights as described in the Registration Rights
Agreement, it being understood that, if the SEC requires removal of the
Warrants from any registration statement in which the Warrants have a
right by contract to be included, the removal of the Warrants shall not
constitute a breach of contract by the Company, and the Company will
use best efforts to include the Warrants (or underlying shares) in a
registration statement in a manner acceptable to the SEC. Except as set
forth in the immediately preceding sentence, it is specifically
understood by the Company that the Company must register the Shares
underlying the Warrants for the Agent in the same registration
statement described in the Registration Rights Agreements between the
Company and purchasers and contemplated by the Purchase Agreement. The
Warrants shall be delivered by the Company to the Buyer simultaneous
with and contingent upon a Closing.
(c) Closing Date. The closing of the purchase and sale of the
Convertible Debentures (the "Closing") shall take place
contemporaneously with the execution of this Agreement ("Closing Date")
following the date hereof, subject to notification of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7
below (or such later date as is mutually agreed to by the Company and
the Buyers). The Closing shall occur on the Closing Date at the offices
of Butler Gonzalez LLP 1000 Stuyvesant Avenue, Suite 6, Union, NJ 07083
(or such other place as is mutually agreed to by the Company and the
Buyers). The parties acknowledge that there may be a series of Closing.
(d) Escrow Arrangements; Form of Payment. Upon execution
hereof by Buyer(s) and pending Closing, the aggregate proceeds of the
sale of the Convertible Debentures to Buyer(s) pursuant hereto, less
the fees and expenses of the Placement Agents, shall be deposited in a
non-interest bearing escrow account with First Union National Bank, as
escrow agent ("Escrow Agent"), pursuant to the terms of an escrow
agreement between the Company, the Placement Agents and the Escrow
Agent in the form attached hereto as Exhibit B (the "Escrow
Agreement"). Subject to the satisfaction of the terms and conditions of
this Agreement, on the Closing Date, (i) the Escrow Agent shall deliver
to the Company in accordance with the terms of the Escrow Agreement
such aggregate gross proceeds for the Convertible Debentures to be
issued and sold to such Buyer(s) at the Closing, by wire transfer of
immediately available funds
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in accordance with the Company's written wire instructions, and (ii)
the Company shall deliver to each Buyer, Convertible Debentures which
such Buyer(s) is purchasing in amounts indicated opposite such Buyer's
name on Schedule I, duly executed on behalf of the Company.
2. BUYER'S REPRESENTATIONS AND WARRANTEES.
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Each Buyer represents and warrants, severally and not jointly,
that:
(a) Investment Purpose. Each Buyer is acquiring the
Convertible Debentures and, upon conversion of Convertible Debentures,
the Buyer will acquire the Conversion Shares then issuable, for its own
account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided,
however, that by making the representations herein, such Buyer reserves
the right to dispose of Conversion Shares at any time in accordance
with or pursuant to an effective registration statement covering such
Conversion Shares or an available exemption under the 1933 Act.
(b) Accredited Investor Status. Each Buyer is an "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on Exemptions. Each Buyer understands that the
Convertible Debentures and the Conversion Shares are being offered and
sold to it in reliance on specific exemptions from the registration
requirements of United States Federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth
herein in order to determine the availability of such exemptions and
the eligibility of such Buyer to acquire such securities.
(d) Information. Such Buyer and its advisors (and his or, its
counsel), if any, have been furnished with all materials relating to
the business, finances and operations of the Company and information he
deemed material to making an informed investment decision regarding his
purchase of the Convertible Debentures and the Conversion Shares, which
have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company and
its management. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to
rely on the Company's representations and warranties contained in
Section 3 below. Such Buyer understands that its investment in the
Convertible Debentures and the Conversion Shares involves a high degree
of risk. Buyer is in a position regarding the Company, which, based
upon employment, family relationship or economic bargaining power,
enabled and enables Buyer to obtain information from the Company in
order to evaluate the merits and risks of this investment. Such Buyer
has sought such accounting, legal and tax advice, as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Convertible Debentures and the Conversion Shares.
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(e) No Governmental Review. Such Buyer understands that no
United States Federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Convertible Debentures or the Conversion Shares, or
the fairness or suitability of the investment in the Convertible
Debentures or the Conversion Shares, nor have such authorities passed
upon or endorsed the merits of the offering of the Convertible
Debentures or the Conversion Shares.
(f) Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Convertible
Debentures, the Conversion Shares and the Warrants have not been and
are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered there under, or (B) such Buyer shall
have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration requirements; (ii) any sale of
such securities made in reliance on Rule 144 under the 1933 Act (or a
successor rule thereto) ("Rule 144") may be made only in accordance
with the terms of Rule 144 and further, if Rule 144 is not applicable,
any resale of such securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules
and regulations of the SEC there under; and (iii) neither the Company
nor any other person is under any obligation to register such
securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption there under. The Company
reserves the right to place stop transfer instructions against the
shares and certificates for the Conversion Shares and Warrant Shares.
(g) Legends. Such Buyer understands that the certificates,
Warrants or other instruments representing the stock certificates
representing the Conversion Shares shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Conversion
Shares upon which it is stamped, if, unless otherwise
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required by state securities laws, (i) in connection with a sale
transaction, provided the Conversion Shares are registered under the
1933 Act or (ii) in connection with a sale transaction, such holder
provides the Company with an opinion of counsel, in form acceptable to
the Company and its counsel, to the effect that a public sale,
assignment or transfer of the Conversion Shares may be made without
registration under the 1933 Act.
(h) Authorization, Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer
and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, except as such enforceability may be limited
by general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar
laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(i) Receipt of Documents. Such Buyer and his or its counsel
has received and read in their entirety: (i) this Agreement and each
representation, warranty and covenant set forth herein, the
Registration Rights Agreement, and the Escrow Agreement; (ii) all due
diligence and other information necessary to verify the accuracy and
completeness in all material respects of such representations,
warranties and covenants; (iii) the Company's Form 10-Q for the fiscal
quarter ended June 30, 2000; and (v) answers to all questions the Buyer
submitted to the Company regarding an investment in the Company; and
the Buyer has relied on the information contained therein and has not
been furnished any other documents, literature, memorandum or
prospectus.
(j) Due Formation of Corporate and Other Buyers. If the
Buyer(s) is a corporation, trust, partnership or other entity that is
not an individual person, it has been formed and validly exists and has
not been organized for the specific purpose of purchasing the
Convertible Debentures and is not prohibited from doing so.
(k) Due Authorization of Fiduciary Buyers. If the Buyer(s) is
purchasing the Convertible Debentures in a fiduciary capacity for
another person or entity, including without limitation a corporation,
partnership, trust or any other entity, the Buyer(s) has been duly
authorized and empowered to execute this Agreement and such other
person fulfills all the requirements for purchase of the Convertible
Debentures and agrees to be bound by the obligations, representations,
warranties, and covenants contained herein. Upon request of the
Company, the Buyer(s) will provide true, complete and current copies of
all relevant documents creating the Buyers, authorizing its investment
in the Company and/or evidencing the satisfaction of the foregoing.
(l) Further Representations by Foreign Buyers. If Buyer(s) is
not a U.S. Person (as defined), such Buyer hereby represents that such
Buyer(s) is satisfied as to full observance of the laws of such Buyer's
jurisdiction in connection with any invitation to subscribe for the
securities or any use of this Agreement, including: (i) the legal
requirements of such Buyer's jurisdiction for the purchase of the
securities, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any,
which may be relevant to the purchase, holding, redemption, sale, or
transfer of the securities. Such Buyer's subscription and payment for,
and such Buyer's continued beneficial ownership of, the securities will
not violate any applicable securities or other
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laws of such Buyer's jurisdiction. The term "U.S. Person" as used
herein shall mean any person who is a citizen or resident of the United
States, or any state, territory or possession thereof, including but
not limited to any estate of any such person, or any corporation,
partnership, trust or other entity created or existing under the laws
thereof, or any entity controlled or owned by any of the foregoing.
(m) No Legal Advice From the Company. The Buyer(s) acknowledge
that it had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his or its own legal
counsel and investment and tax advisors. The Buyer is relying solely on
such counsel and advisors and not on any statements or representations
of the Company or any of its representatives or agents for legal, tax
or investment advice with respect to this investment, the transactions
contemplated by this Agreement or the securities laws of any
jurisdiction.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the Buyer (s) that
except as otherwise specified in the Company's filings with the SEC or
in this Agreement:
(a) Organization and Qualification. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each
of the Company and its subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(b) Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Registration
Rights Agreement and any related agreements, and to issue the
Convertible Debentures and the Conversion Shares, the Warrants (as
defined herein below), or shares of Common Stock issuable upon exercise
of the Warrants (the "Warrant Shares") in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement,
the Registration Rights Agreement and any related agreements by the
Company and the consummation by it of the transactions contemplated
hereby and thereby, including without limitation the issuance of the
Convertible Debentures, the Conversion Shares and the Warrants and the
reservation for issuance and the issuance of the Conversion Shares and
the Warrant Shares issuable upon conversion or exercise thereof, have
been duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement and the
Registration Rights Agreement and any related agreements have been duly
executed and delivered by the Company, (iv) this Agreement, the
Registration Rights Agreement and any related agreements 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 general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies.
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(c) Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of Common
Stock, par value $0.001 per share, and 25,000,000 shares of Preferred
Stock, $0.001 per share of which as of June 6, 2000, 30,423,196 shares
of Common Stock and 2,000 shares of Preferred Stock were issued and
outstanding. All of such outstanding shares have been validly issued
and are fully paid and nonassessable. Except as disclosed in Schedule
3(c), no shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted
by the Company. Except as disclosed in Schedule 3(c), as of the date of
this Agreement, (i) 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, 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, any shares of capital stock of the Company
or any of its subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no 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 1933 Act (except pursuant
to the Registration Rights Agreements). There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Convertible Debentures, the Conversion
Shares, the Warrants, or the Warrant Shares as described in this
Agreement. The Company has furnished to the Buyer true and correct
copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "Certificate of Incorporation"), and
the Company's By-laws, as in effect on the date hereof (the "By-laws"),
and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect
thereto other than stock options issued to employees and consultants.
(d) Issuance of Securities. The Convertible Debentures are
duly authorized and, upon issuance in accordance with the terms hereof,
shall be duly issued, fully paid and nonassessable, are free from all
taxes, liens and charges with respect to the issue thereof. The
Conversion Shares issuable upon conversion of the Convertible
Debentures have been duly authorized and reserved for issuance. Upon
conversion or exercise in accordance with the Convertible Debentures or
the terms of the Warrants and receipt of payment therefore (in the case
of the Warrant Shares), the Conversion Shares and the Warrant Shares
will be duly issued, fully paid and nonassessable.
(e) No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated
hereby will not (i) result in a material violation of the Certificate
of Incorporation, any certificate of designations of any outstanding
series of preferred stock of the Company or By-laws or (ii) conflict
with or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a material violation of any law,
rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of
The Nasdaq Stock Market Inc.'s National Market on which the
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Common Stock is quoted) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of
its subsidiaries is bound or affected. Except as disclosed in Schedule
3(e), neither the Company nor its subsidiaries is in violation of any
term of or in default under its Certificate of Incorporation or By-laws
or their organizational charter or by-laws, respectively, or any
material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business
of the Company and its subsidiaries is not being conducted, and shall
not be conducted in violation of any material law, ordinance,
regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and
any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof. Except as disclosed in
Schedule 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the
date hereof. The Company and its subsidiaries are unaware of any facts
or circumstance, which might give rise to any of the foregoing.
(f) SEC Documents: Financial Statements. The Company has filed
all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC under of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing filed prior to
the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to as the "SEC
Documents"). The Company has delivered to the Buyers or their
representatives, or made available through the SEC's website at
http://www.sec.gov., true and complete copies of the SEC Documents. As
of their respective dates, the financial statements of the Company
disclosed in the SEC Documents (the "Financial Statements") complied as
to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in
the case of un-audited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company
as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of un-audited
statements, to normal year-end audit adjustments). No other information
provided by or on behalf of the Company to the Buyer which is not
included in the SEC Documents, including, without limitation,
information referred to in Section 2(d) and (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 the
light of the circumstances under which they were made, not misleading.
(g) 10(b)-5. As of the date filed, the SEC Documents do not
include any untrue statements of material fact, nor do they omit to
state any material fact required to be stated therein necessary to make
the statements made, in light of the circumstances under which they
were made, not misleading.
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(h) Absence of Certain Changes. As of July 26, 2000 except as
disclosed in Schedules to this Agreement and the SEC Documents, there
has been no material adverse change and no material adverse development
in the business, properties, operations, financial condition, results
of operations or prospects of the Company or its subsidiaries. The
Company has not taken any steps, and does not currently expect to take
any steps, to seek protection pursuant to any bankruptcy law nor does
the Company or its subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy
proceedings.
(i) Absence of Litigation. Except as disclosed in Schedules to
this Agreement there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the
Company, the Common Stock or any of the Company's subsidiaries, wherein
an unfavorable decision, ruling or finding would (i) have a material
adverse effect on the transactions contemplated hereby (ii) adversely
affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any
of the documents contemplated herein, or (iii) except as expressly
disclosed in the SEC Documents, have a material adverse effect on the
business, operations, properties, financial condition or results of
operation of the Company and its subsidiaries taken as a whole.
(j) Acknowledgment Regarding Buyer's Purchase of the
Convertible Debentures. The Company acknowledges and agrees that the
Buyer(s) is acting solely in the capacity of an arm's length purchaser
with respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that the Buyer(s) is not
acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer(s) or any of
their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental
to such Buyer's purchase of the Convertible Debentures or the
Conversion Shares. The Company further represents to the Buyer that the
Company's decision to enter into this Agreement has been based solely
on the independent evaluation by the Company and its representatives.
(k) Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of
the Company or any of its subsidiaries, is any such dispute threatened.
None of the Company's or its subsidiaries' employees is a member of a
union and the Company and its subsidiaries believe that their relations
with their employees are good.
(l) Intellectual Property Rights. The Company and its
subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as disclosed in Schedules to this Agreement and the
SEC Documents , the Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of
trademark, trade name rights, patents, patent rights, copyrights,
inventions, licenses, service names, service marks, service mark
registrations, trade
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secret or other similar rights of others, and, , to the knowledge of
the Company, there is no claim, action or proceeding being made or
brought against, or to the Company's knowledge, being threatened
against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service
names, service marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
(m) Environmental Laws. The Company and its subsidiaries are
(i) 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 material terms and
conditions of any such permit, license or approval.
(n) Title. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all 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, encumbrances and defects except such
as are described in Schedule 3(p), are disclosed in the SEC Documents
or such as 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 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 its subsidiaries.
(o) 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 been refused any insurance coverage sought or
applied for and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage 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 condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole.
(p) Regulatory Permits. Except as disclosed in Schedules to
this Agreement the Company and its subsidiaries possess or have applied
all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.
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<PAGE>
(q) Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
and (iii) the recorded amounts for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(r) No Material Adverse Breaches, etc. Except as set forth in
the SEC Documents, neither the Company nor any of its subsidiaries is
subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of
the Company's officers has or is expected in the future to have a
material adverse effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company
or its subsidiaries. Neither the Company nor any of its subsidiaries is
in breach of any material contract or agreement which breach, in the
judgment of the Company's officers, has or is expected to have a
material adverse effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company
or its subsidiaries.
(s) Tax Status. The Company and each of its subsidiaries has
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 and (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) 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
and has set aside on its books provision 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 by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim.
(t) Certain Transactions. Except as set forth in the SEC
Documents and except for arm's length transactions pursuant to which
the Company makes payments in the ordinary course of business upon
terms no less favorable than the Company could obtain from third
parties and other than the grant of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company (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 or personal property to or from,
or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner.
(u) Fees and Rights of First Refusal. The Company is not
obligated to offer the securities offered hereunder on a right of first
refusal basis or otherwise to any third parties including, but not
limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
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4. COVENANTS.
---------
(a) Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
(b) Form D. The Company agrees to file a Form D with respect
to the Conversion Shares as required under Regulation D and to provide
a copy thereof to each Buyer promptly after such filing. The Company
shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary to qualify the Conversion
Shares for, or obtain exemption the Conversion Shares for, sale to the
Buyers at the Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date.
(c) Reporting Status. Until the earlier of (i) the date as of
which the Buyer(s) (as that term is defined in the Registration Rights
Agreement) may sell all of the Conversion Shares and the Warrant Shares
without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto), or (ii) the date on which (A) the Buyer(s)
shall have sold all the Conversion Shares and (B) none of the
Convertible Debentures or the Warrants are outstanding (the
"Registration Period"), the Company shall file in a timely manner all
reports required to be filed with the SEC pursuant to the 1934 Act and
the regulations of the SEC there under, and the Company shall not
terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations there under
would otherwise permit such termination.
(d) Use of Proceeds. The Company will use the proceeds from
the sale of the Convertible Debentures for acquisitions and general
corporate purposes.
(e) Reservation of Shares. The Company shall take all action
reasonably necessary to at all times have authorized, and reserved for
the purpose of issuance, such number of shares of Common Stock as shall
be necessary to effect the issuance of the Conversion Shares and the
Warrant Shares. If at any time the Company does not have available such
shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all of the Conversion Shares and the exercise
of the Warrant Shares the Company shall call and hold a special meeting
within one hundred and twenty days (120) of such occurrence, for the
sole purpose of increasing the number of shares authorized. The
Company's management shall recommend to the shareholders to vote in
favor of increasing the number of shares of common stock authorized.
Management shall also vote all of its shares in favor of increasing the
number of common shares authorized.
(f) Listings or Quotation. The Company shall promptly secure
the listing or quotation of the Conversion Shares upon each national
securities exchange, automated quotation system or over-the-counter
bulletin board or other market, if any, upon which shares of Common
Stock are then listed or quoted (subject to official notice of
issuance) and shall use it best efforts to maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all
Conversion Shares from time to time issuable under the terms of this
Agreement. The Company shall maintain the Common Stock's authorization
for quotation in the over-the counter market
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<PAGE>
(g) Expenses. Each of the Company and the Buyer(s) shall pay
all costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreement. The costs and expenses
of the Placement Agents and its counsel shall be paid for by the
Company at Closing in accordance with the terms of the Placement Agency
Agreement between the Company and the Placement Agent, dated
simultaneously herewith.
(h) Corporate Existence. So long as any of the Convertible
Debentures remain outstanding, the Company shall not directly or
indirectly consummate any merger, reorganization, restructuring,
consolidation, sale of all or substantially all of the Company's assets
or any similar transaction or related transactions (each such
transaction, a "Sale of the Company") unless, prior to the consummation
of a Sale of the Company, the Company makes appropriate provision to
insure that, upon the consummation of such Sale of the Company, each of
the holders of the Convertible Debentures will thereafter have the
right to acquire and receive such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore acquirable and
receivable upon the conversion of such holder's Convertible Debentures
had such Sale of the Company not taken place. In any such case, the
Company will make appropriate provision with respect to such holders'
rights and interests to insure that the provisions of this Section 4(h)
will thereafter be applicable to the Convertible Debentures.
(i) Transactions With Affiliates. So long as any Convertible
Debentures are outstanding, the Company shall not, and shall cause each
of its subsidiaries not to, enter into, amend, modify or supplement, or
permit any subsidiary to enter into, amend, modify or supplement any
agreement, transaction, commitment, or arrangement with any of its or
any subsidiary's officers, directors, person who were officers or
directors at any time during the previous two years, stockholders who
beneficially own 5% or more of the Common Stock, or affiliates or with
any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual
owns a 5% or more beneficial interest (each a "Related Party"), except
for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any investment in an affiliate of the Company,
(c) any agreement, transaction, commitment, or arrangement on an
arms-length basis on terms no less favorable than terms which would
have been obtainable from a person other than such Related Party, (d)
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 disinterested director with
respect to any such agreement, transaction, commitment, or arrangement.
"Affiliate" for purposes hereof means, with respect to any person or
entity, another person or entity that, directly or indirectly, (i) has
a 5% or more equity interest in that person or entity, (ii) has 10% or
more common ownership with that person or entity, (iii) controls that
person or entity, or (iv) shares common control with that person or
entity. "Control" or "controls" for purposes hereof means that a person
or entity has the power, direct or indirect, to conduct or govern the
policies of another person or entity.
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<PAGE>
(j) Warrant Issuances. Subject to the satisfaction of the
terms and condition of this Agreement, The May Davis Group, Inc., as
the Placement Agent will receive on the Closing Date warrants
("Convertible Warrants") to purchase up to 2,000,000 shares of Common
Stock (the "Convertible Warrant Shares") at an exercise price of $1.50
per share; 1 million Convertible Warrant Shares on the purchase of
$700,000 in Convertible Debentures and 125,000 Convertible Warrant
Shares for each $100,000 Convertible Debentures purchased thereafter.
The Warrants shall be exercisable for a period of five (5) years from
the date of issuance and shall be substantially in the form of the form
of Warrant hereto as Exhibit C. The Company shall have the right to
force conversion of the Convertible Warrants if the common stock of the
Company closes as a bid price of $3.00 or higher for ten (10)
consecutive trading days.
(k) Transfer Agent. The Company covenants and agrees that, in
the event that the Company's agency relationship with the transfer
agent should be terminated for any reason prior to a date which is two
(2) years after the Closing Date, the Company shall immediately appoint
a new transfer agent and shall require that the transfer agent execute
and agree to be bound by the terms of the Irrevocable Instructions to
Transfer Agent.
5. TRANSFER AGENT INSTRUCTIONS.
---------------------------
The Company shall issue irrevocable instructions in the form
attached hereto as Exhibit D to its transfer agent to issue
certificates, registered in the name of the Buyer(s) or its respective
nominee(s), for the Conversion Shares and the Warrant Shares
representing such amounts of Convertible Debentures or Warrants as
specified from time to time by the Buyer(s) to the Company upon
conversion of the Convertible Debentures or the exercise of the
Warrants and payment therefore (the "Irrevocable Transfer Agent
Instructions"). Prior to registration of the Conversion Shares and the
Warrant Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof (in the
case of the Conversion Shares or the Warrant Shares, prior to
registration of such shares under the 1933 Act) will be given by the
Company to its transfer agent and that the Conversion Shares or the
Warrant Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement. Nothing in this Section 5 shall
affect in any way the Buyer's obligations and agreement to comply with
all applicable securities laws upon resale of Conversion Shares or the
Warrant Shares. If the Buyer(s) or Warrant holder provides the Company
with an opinion of counsel, reasonably satisfactory in form, and
substance to the Company, that registration of a resale by the Buyer(s)
of any of the Conversion Shares, or the Warrant Shares is not required
under the 1933 Act, the Company shall permit the transfer, and, in the
case of the Conversion Shares or the Warrant Shares, promptly instruct
its transfer agent to issue one or more certificates in such name and
in such denominations as specified by the Buyer. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer by vitiating the intent and purpose
of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations
under this Section 5 will be inadequate and
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<PAGE>
agrees, in the event of a breach or threatened breach by the Company of
the provisions of this Section 5, that the Buyer(s) shall be entitled,
in addition to all other available remedies, to an 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.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the
Convertible Debentures to the Buyer(s) at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole
discretion:
(a) Each Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(b) The Buyer(s) shall have delivered to the Escrow Agent the
Purchase Price for Convertible Debentures in respective amounts as set
forth next to each Buyer as outlined on Schedule and the Escrow Agent
shall have delivered such funds to the Company by wire transfer of
immediately available U.S. funds pursuant to the wire instructions
provided by the Company.
(c) The representations and warranties of the Buyer(s) shall
be true and correct in all material respects as of the date when made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer(s) shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with
by the Buyer(s) at or prior to the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
------------------------------------------------
The obligation of the Buyer(s) hereunder to purchase the
Convertible Debenture at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions,
provided that these conditions are for the Buyer's sole benefit and may
be waived by the Buyer(s) at any time in its sole discretion:
(a) The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer(s).
(b) The Common Stock shall be authorized for quotation on The
Nasdaq Stock Market, Inc.'s National Market or OTC Bulletin Board,
trading in the Common Stock shall not have been suspended for any
reason and all of the Conversion Shares issuable upon conversion of the
Convertible Debentures shall be approved for listing or quotation on
The Nasdaq Stock Market, Inc.'s OTC Bulletin Board.
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<PAGE>
(c) The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as
of the date when made and as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. The Buyer
shall have received a certificate, executed by the Chief Executive
Officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by
the Buyer including, without limitation an update as of the Closing
Date regarding the representation contained in Section 3(c) above.
(e) The Company shall have executed and delivered to the
Buyer(s) the Convertible Debentures in the respective amounts set forth
opposite each Buyer(s) name on Schedule I.
(f) As of the Closing Date, the Company shall have reserved
out of its authorized and unissued Common Stock, solely for the purpose
of effecting the conversion of the Convertible Debentures and
permitting the exercise of the Warrants, such shares of Common Stock to
effect the conversion of all of the Conversion Shares and the exercise
of all the Warrants then outstanding.
(g) The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
8. INDEMNIFICATION.
---------------
(a) In consideration of the Buyer's execution and delivery of
this Agreement and acquiring the Convertible Debentures and the
Conversion Shares hereunder, and in addition to all of the Company's
other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Buyer(s) and each other holder
of the Convertible Debentures and the Conversion Shares, and all of
their officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the " Buyer
Indemnitees") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such
Buyer Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and
disbursements (the "Indemnified Liabilities"), incurred by the Buyer
Indemnitees or any of them as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement, the Convertible
Debentures or the Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby, (b)
any breach of any covenant, agreement or obligation of the Company
contained in this Agreement, the Certificate of Designations, or the
Registration Rights Agreement or any other certificate, instrument or
document contemplated hereby or thereby, or (c) any cause of action,
suit or claim brought or made against such Indemnitee and arising out
of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or
agreement executed pursuant hereto by any of the Indemnities, any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Convertible
Debentures or the status of the Buyer or holder of the
16
<PAGE>
Convertible Debentures, the Conversion Shares, as an Buyer in the
Company. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
(b) In consideration of the Company's execution and delivery
of this Agreement, and in addition to all of the Buyer's other
obligations under this Agreement, the Buyer shall defend, protect,
indemnify and hold harmless the Company and all of it's officers,
directors, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this
Agreement) (collectively, the Company Indemnitees") from and against
any and all Indemnified Liabilities incurred by the Indemnitees or any
of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by
the Buyer(s) in this Agreement, instrument or document contemplated
hereby or thereby executed by the Buyer, (b) any breach of any
covenant, agreement or obligation of the Buyer(s) contained in this
Agreement, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the
Buyer, or (c) any cause of action, suit or claim brought or made
against such Company Indemnitee based on material misrepresentations or
due to a material breach and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or
any other instrument, document or agreement executed pursuant hereto by
any of the Company Indemnities. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.
9. GOVERNING LAW: MISCELLANEOUS.
----------------------------
(a) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York
without regard to the principles of conflict of laws. The parties
further agree that any action between them shall be heard in New York
City, New York, and expressly consent to the jurisdiction and venue of
the Supreme Court of New York and the United States District Court for
the Southern District of New York for the adjudication of any civil
action asserted pursuant to this Paragraph.
(b) Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which 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 party. In the
event any signature page is delivered by facsimile transmission, the
party using such means of delivery shall cause four (4) additional
original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery hereof
(c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
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<PAGE>
(d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire Agreement, Amendments. This Agreement supersedes
all other prior oral or written agreements between the Buyer(s), the
Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the
instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company
nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
(f) Notices. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company, to:
TCPI, Inc.
3341 S.W. 15th Street
Pompano Beach, FL 33069
Attention: Walter V. Usinowicz,
Chief Financial Officer
Telephone: (954) 979-0400
Facsimile: (954) 979-6125
With a copy to:
Jay E. Eckhaus, Esq.
3341 S.W. 15th Street
Pompano Beach, FL 33069
Telephone:(954) 979-0400
Facsimile: (954) 979-6125
and
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<PAGE>
Teddy D. Klinghoffer, Esq.
Akerman, Senterfitt & Eidson, P.A.
Suntrust International Center, 26th Floor
One S.E. 3rd Avenue
Miami, FL 33131-1714
Telephone: (305) 374-5600
Facsimile: (305) 374-5095
If to the Transfer Agent, to:
OTC Corporate Transfer Services
9 Field Avenue
Hicksville, NY 11801
Telephone: (516) 433-6503
Facsimile: (516) 935-3895
If to the Buyer(s), to its address and facsimile number on
Schedule I, with copies to the Buyer's counsel as set forth on Schedule
I. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
(g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. Neither the Company nor any Buyer shall assign
this Agreement or any rights or obligations hereunder without the prior
written consent of the other party hereto.
(h) 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.
(i) Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and the
Buyers contained in Section 2, the agreements and covenants set forth
in Sections 4, 5 and 9, and the indemnification provisions set forth in
Section 8, shall survive the Closing for a period of one (1) year
following the date on which the Convertible Debentures are converted in
full. The representations and warranties set forth in Section 3 shall
survive for a period of one (1) year from the date of closing. The
Buyer(s) shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
(j) Publicity. The Company and the Buyer(s) shall have the
right to approve, before issuance any press release or any other public
statement with respect to the transactions contemplated hereby made by
any party; provided, however, that the Company shall be entitled,
without the prior approval of the Buyer(s), to issue any press release
or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations (the Buyer(s)
shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and Buyer(s)
shall be provided with a copy thereof upon release thereof).
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<PAGE>
(k) 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 party 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.
(1) Termination. In the event that the Closing shall not have
occurred with respect to the Buyers on or before ten (10) business days
from the date hereof due to the Company's or the Buyer's failure to
satisfy the conditions set forth in Sections 6 and 7 above (and the
non-breaching party's failure to waive such unsatisfied condition(s)),
the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated pursuant to
this Section 9(l), the Company shall remain obligated to reimburse the
Buyer(s) for the expenses described in Section 4(h) above.
(m) Finder. The Company acknowledges that it has engaged The
May Davis Group, Inc., as placement agent in connection with the sale
of the Convertible Debentures. The Company shall be responsible for the
payment of any placement agent fees, as specified in the Placement
Agency Agreement dated August 28, 2000, (which includes cash and
warrants to The May Davis Group, Inc., to purchase Common Stock)
relating to or arising out of the transactions contemplated hereby and
from the proceeds thereof.
(n) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will
be applied against any party.
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
ATTEST: TCPI, INC.
/s/Jay E. Eckhaus By: /s/ Walter V. Usinowicz, Jr.
-------------------- -----------------------------------
Name: Jay E. Eckhaus Name: Walter V. Usinowicz, Jr.
Title: Secretary Title: Chief Financial Officer
By: /s/
-----------------------------------
Name:
Title:
20
