| To: ChainSaw who started this subject | 7/3/2001 11:46:50 PM | | From: jmhollen | | | | <PAGE>
CUMMINGS PROPERTIES
STANDARD FORM 8990525-AWT
AMENDMENT TO LEASE # 1
In consideration with a lease currently in effect between the parties at 42
and 43 Cummings Park, Woburn, Massachusetts, executed on August 10, 1999 and
terminating September 14, 2004, and in consideration of the mutual benefits to
be derived herefrom, Cummings Properties, LLC Lessor, and Book Tech, Inc.,
LESSEE, hereby agree to amend said lease as follows:
1. *LESSOR, at LESSEE's sole expense, shall complete alterations and
improvements within the leased premises in accordance with the mutually
agreed upon plan attached hereto. LESSOR shall amortize the agreed charge
of $42,455, plus interest at the rate of 9.75%, for said construction as
additional rent as provided below.
2. * The Security Deposit is hereby increased by $2,000 from $22,000 to a new
total of $24,000. LESSEE shall pay this increase upon LESSEE's execution of
this amendment.
This amendment shall not bind either party in any manner until it has been
executed by both parties. All other terms, conditions and covenants of the
present lease shall continue to apply except that adjusted base rent shall be
increased by $10,761.96 annually, from a total of $133,348.00 to a new annual
total of $144,109.96 or $12,009.16 per month. Annual base rent for purposes of
computing any future escalations thereon shall be $144,109.96. This amendment
shall be effective September 15th 1999 and shall continue through the balance of
the lease and any extensions thereof unless further modified by written
amendment(s).
In Witness Whereof, LESSOR and LESSEE have hereunto set their hands and
common seals this _________________ day of __________________, 1999.
LESSOR: CUMMINGS PROPERTIES, LLC LESSEE: BOOK TECH, INC.
By: By: /S/ MORRIS A. SHEPARD
---------------------------- -----------------------------
Executive Vice President
<PAGE>
CUMMINGS PROPERTIES
STANDARD FORM 12990809-JTH-B
AMENDMENT TO LEASE # 2
In consideration with a lease currently in effect between the parties at 42
and 43 Cummings Park, Woburn, Massachusetts, executed on August 10, 1999 and
terminating September 14, 2004, and in consideration of the mutual benefits to
be derived herefrom, Cummings Properties, LLC Lessor, and Book Tech, Inc.,
LESSEE, hereby agree to amend said lease as follows:
3. *LESSOR, at LESSEE's sole expense, shall complete alterations and
improvements within the leased premises in accordance with the mutually
agreed upon plan Additional Work Authorization dated December 8, 1999
attached hereto. LESSOR shall amortize the agree charge of $3,895, plus
interest at the rate of 9.75%, for said construction as additional rent as
provided below.
This amendment shall not bind either party in any manner until it has been
executed by both parties. All other terms, conditions and covenants of the
present lease shall continue to apply except that adjusted base rent shall be
increased by $1,058.08 annually, from a total of $144,946.92 to a new annual
total of $146,005.00 or $12,167.08 per month. Annual base rent for purposes of
computing any future escalations thereon shall be $146,005.00. This amendment
shall be effective January 1, 2000 and shall continue through the balance of the
lease and any extensions thereof unless further modified by written
amendment(s).
In Witness Whereof, LESSOR and LESSEE have hereunto set their hands and
common seals this 26th day of January, 2000.
LESSOR: CUMMINGS PROPERTIES, LLC LESSEE: BOOK TECH, INC.
By: /s/ illegible signature By: /S/ TED BERNHARDT
----------------------------- --------------------------------
Executive Vice President Duly Authorized
Print Name:
--------------------
<PAGE>
ADDITIONAL WORK AUTHORIZATION
ATLANTIC BOSTON CONSTRUCTION, INC.
200 WEST CUMMINGS PARK, WOBURN, MA 01801
781-935-8000 -- fax 781-935-1990
--------------------------------------------------------------------------------
CUSTOMER NAME DATE ORIGINATOR
Book Tech, Inc. 12/8/99 AWT/JW
--------------------------------------------------------------------------------
STREET CITY CITY Zip Code
42 & 43 Cummings Park Woburn MA 01801
--------------------------------------------------------------------------------
ATTENTION PHONE FAX
Morris A. Shepherd, Ph.D. 718-729-6250
--------------------------------------------------------------------------------
PROVIDE LABOR AND MATERIALS TO EXECUTE THE FOLLOWING SCOPE OF WORK:
1. Install CPL standard 2-ton, A/C only (no heat) roof top Unit (R.T.U.)
dedicated to Server Room. Work includes: removal of ceiling system, as
required; capping of existing ductwork leading from existing HVA/C unit
into Server Room; reactivation of existing ductwork to adjacent Office and
Break Room from existing HVA/C unit; supply and installation of 2-Ton
capacity R.T.U. on existing roof curb, associated branch ductwork and low
ambient temperature kit; extension and flashing of freon and electrical
lines from suite to R.T.U.; and reinstallation of ceiling system.
PRICE: $5,101.00
Credit: $1,116.00
---------
TOTAL PRICE: $3,985.00
---------
o No representation is made as to the suitability of above work for
Customer's use or occupancy.
o Customer to remove furniture end equipment from the work area.
o Customer acknowledges that the above work or revisions from previously
approved plans may cause a delay beyond any prior scheduled completion
date.
o This quote is valid for 30 days from the date of Issue. If space Is
unoccupied on date of Issue, prices may increase after occupancy, Above
work Is to be accomplished during normal working hours or during
prearranged overtime at additional expense. Contract price includes sales
tax.
o Payment is due upon the Customer's execution of this authorization.
o Customer acknowledges that the work described herein shall be considered
nonbuilding standard under the terms of the lease and shall be maintained
by Customer following installation, unless otherwise noted.
ACCEPTED BY: /S/ TED BERNHARDT DATE: 12/8/99
-------------------------------- -----------------------
PRINTED NAME: TITLE:
------------------- -----------------------
--------------------------------------------------------------------------------
FOR OFFICE ONLY Design/Construction Supervisor LESSEE Cert of Insurance
Approval Approval and Endorsement on file
--------------------------------------------------------------------------------
</TEXT>
</DOCUMENT>
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (this "AGREEMENT"), dated as of March 22, 2001 by
and among BOOKTECH.COM, INC., a Nevada corporation with offices located at 42
Cummings Park, Woburn, MA 01801 (the "COMPANY"), and Cornell Capital Partners,
L.P., a New York limited partnership (the "INVESTOR").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Investor shall invest up to $10,000,000 to
purchase the Company's common stock, $.00042 par value per share (the "COMMON
STOCK");
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) under the Securities Act of 1933, as may be amended (the "1933
ACT"), Regulation D, and the rules and regulations promulgated thereunder,
and/or upon such other exemption from the registration requirements of the 1933
Act as may be available with respect to any or all of the investments in Common
Stock to be made hereunder.
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.
NOW THEREFORE, the Company and the Investor hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings specified or indicated, and such meanings shall be
equally applicable to the singular and plural forms of the defined terms.
"1933 ACT" shall mean the Securities Act of 1933, as may be amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as may be amended.
"AFFILIATE" shall have the meaning specified in Section 5(h).
"AGREED UPON PROECEDURES REPORT" shall have the meaning specified in Section
2(l).
"AGREEMENT" shall mean this Investment Agreement.
"BUY-IN" shall have the meaning specified in Section 6.
"BUY-IN ADJUSTMENT AMOUNT" shall have the meaning specified in Section 6.
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<PAGE>
"CLOSING" shall have the meaning specified in Section 2(g).
"CLOSING DATE" shall mean, as defined in Section 2(g), the date which is three
(3) Trading Days following the expiration of the related Purchase Period (or
such other time or later date as is mutually agreed to by the Company and the
Investor).
"COMMON STOCK" shall mean the Common Stock of the Company.
"CONTROL" or "CONTROLS" shall have the meaning specified in Section 5(h).
"COVERING SHARES" shall have the meaning specified in Section 6.
"DOLLAR AMOUNT" shall mean the Dollar Amount of shares of common stock the
Company requests Investor to purchase.
"EFFECTIVE DATE" shall mean the date the SEC declares effective the Registration
Statement covering the transactions described in the Agreement.
"ENVIRONMENTAL LAWS" shall have the meaning specified in Section 4(o).
"ESCROW AGENT" shall mean Butler Gonzalez LLP and First Union National Bank
"ESCROW AGREEMENT" shall mean the Escrow Agreement entered into among the
Company, the Investor and the Escrow Agent in the form attached hereto as
Exhibit "B".
"EXECUTION DATE" shall mean the date all Transaction Documents are executed by
the Company and Investor.
"FLOOR PRICE" shall mean the price that is the lowest price at which the
Investor shall be permitted to sell Shares during an applicable Purchase Period
and shall be equal to 75% of the lowest closing bid price of the Common Stock
during the fifteen (15) trading days immediately preceding the date upon which
the Put Notice is delivered by the Company.
"INDEMNITEES" shall have the meaning specified in Section 10.
"INDEMNIFIED LIABILITIES" shall have the meaning specified in Section 10.
"INEFFECTIVE PERIOD" shall mean any period of time that the Registration
Statement or any Supplemental Registration Statement (as defined in the
Registration Rights Agreement) becomes ineffective or unavailable for use for
the sale or resale, as applicable, of any or all of the Registrable Securities
(as defined in the Registration Rights Agreement) for any reason (or in the
event the prospectus under either of the above is not current and deliverable)
during any time period required under the
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<PAGE>
Registration Rights Agreement.
"MAJOR TRANSACTION" shall have the meaning specified in Section 2(f).
"MATERIAL ADVERSE EFFECT" shall have the meaning specified in Section 4(a).
"MATERIAL FACTS" shall have the meaning specified in Section 2(k).
"MAXIMUM COMMON STOCK ISSUANCE" shall have the meaning specified in Section
2(h).
"MAXIMUM PUT AMOUNT" shall mean the maximum Dollar Amount of a Put Notice
calculated by multiplying the average of the Volume Weighted Average Price for
the forty (40) Trading Days immediately preceding a Put Notice Date, by one and
one-half (1.5).
"OPEN PERIOD" shall mean the period beginning on and including the Trading Day
immediately following the Effective Date and ending on the earlier of (i) the
date which is thirty-six (36) months from the Effective Date and (ii)
termination of the Agreement in accordance with Section 9.
"PAYMENT AMOUNT" shall have the meaning specified in Section 2(m).
"PRINCIPAL MARKET" shall have the meaning specified in Section 2(e).
"PROSPECTUS" shall mean the prospectus, preliminary prospectus and supplemental
prospectus used in connection with the Registration Statement.
"PURCHASE AMOUNT" shall mean the amount being paid by Investor on a particular
Closing Date to purchase the Shares.
"PURCHASE PERIOD" shall mean the period beginning on the Put Notice Date and
ending on and including the date which is ten (10) Trading Days after such Put
Notice Date.
"PURCHASE PRICE" shall mean 91% of the average of the lowest three closing bid
prices of the Company's common stock during the specified Purchase Period.
"PUT NOTICE" shall mean a written notice sent to the Investor by the Company
stating the Dollar Amount of Shares the Company intends to sell to the Investor
pursuant to the terms of the Agreement and stating the current number of the
Company's Shares issued and outstanding on such date.
"PUT NOTICE DATE" shall mean the Trading Day immediately following the day on
which the Investor receives a Put Notice, however a Put Notice shall be deemed
delivered
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<PAGE>
on (x) the Trading Day it is received by facsimile or otherwise by the Investor
if such notice is received prior to 12:00 noon Eastern Time (receipt being
deemed to occur if the Company possess a facsimile confirmation showing
completed transmission by such time), or (y) the immediately succeeding Trading
Day if it is received by facsimile or otherwise after 12:00 noon Eastern Time on
a Trading Day (receipt being documented as described in (x) above). No Put
Notice may be deemed delivered on a day that is not a Trading Day.
"REGISTRABLE SECURITIES" shall have the meaning set forth in the Registration
Rights Agreement.
"REGISTRATION OPINION" shall have the meaning specified in Section 2(k).
"REGISTRATION OPINION DEADLINE" shall mean the date that is between three (3)
and five (5) Trading Days prior to each Put Notice Date.
"REGISTRATION PERIOD" shall have the meaning specified in Section 5(c).
"REGISTRATION RIGHTS AGREEMENT" shall mean the Agreement entered into by the
Company with Investor for the registration of this transaction.
"REGISTRATION STATEMENT" means the registration statement of the Company filed
under the 1933 Act covering this transaction.
"RELATED PARTY" shall have the meaning specified in Section 5(h).
"REPURCHASE EVENT" shall have the meaning specified in Section 2(m).
"REPURCHASE OPTION" shall have the meaning specified in Section 2(m).
"RESOLUTION" shall have the meaning specified in Section 8(f).
"SEC" shall mean the Securities & Exchange Commission.
"SEC DOCUMENTS" shall have the meaning specified in Section 4(f).
"SECURITIES" shall mean the shares of common stock issued pursuant to the terms
of the Agreement.
"SHARES" shall mean the shares of common stock of the Company having a par value
of $.00042 per share.
"SOLD SHARES" shall have the meaning specified in Section 6.
"SUBSIDIARIES" shall have the meaning specified in Section 4(a).
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<PAGE>
"TRADING DAY" shall mean any day on which the Principal Market for the Company's
common stock is open for trading.
"TRANSACTION DOCUMENTS" shall mean the Agreement, Registration Rights Agreement,
and each of the other agreements entered into by the parties hereto in
connection with the Agreement.
"VALUATION EVENT" shall have the meaning specified in Section 2(k).
"VOLUME WEIGHTED AVERAGE PRICE" shall mean the product of (i) the daily trading
volume and (ii) the average trade price of the Company's common stock on the
Principal Market, which volume and average trade price shall be as reported by
Bloomberg Financial Markets ("BLOOMBERG"), or if not available through Bloomberg
because of delisting, then the average of the bid prices of any market makers
for the Company's Common Stock as reported in the "pink sheets" by the National
Quotation Bureau, Inc.
2. PURCHASE AND SALE OF COMMON STOCK
a. Purchase and Sale of Common Stock. Upon the terms and conditions set
forth herein, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company, up to that number of Shares having an aggregate
Purchase Price of $10,000,000.
b. Delivery of Put Notices. Subject to the terms and conditions of the
Transaction Documents, and from time to time during the Open Period the Company
may, in its sole discretion, deliver a Put Notice in substantially the same form
as Exhibit "C" attached hereto to the Investor which states the Dollar Amount of
Shares which the Company intends to sell to the Investor during the Purchase
Period. In addition, the Dollar Amount designated by the Company in a Put Notice
shall be in increments of not less than $75,000 and not more $5,000,000 subject
to a waiver of such minimum and maximum amounts in the Investor's sole
discretion. Once the Put Notice is received by the Investor the Put Notice shall
not be, terminated, withdrawn or otherwise revoked by the Company. During the
Open Period, the Company shall not be entitled to submit a Put Notice during the
three (3) Trading Day period following a Closing Date and a Put Notice may not
be given during a Purchase Period. The Company shall not be entitled to issue a
Put Notice to Investor for more than the Maximum Put Amount. The average Volume
Weighted Average Price for the ten (10) Trading Days immediately preceding both
the Put Notice Date and the expiration of a Purchase Period must be at least
$50,000, unless the Investor in its sole discretion reduces such amount. The
Purchase Price shall be 91% of the average of the lowest three (3) closing bid
prices of the Common Stock during the Purchase Period.
The Floor Price shall be stated in each Put Notice. In the event that
the
5
<PAGE>
Shares are trading at or below the Floor Price during the Purchase Period
immediately preceding the applicable Closing Date, the Investor, in its sole
discretion, shall have the right to decrease the Dollar Amount set forth in that
Put Notice by a pro rata percentage equal to ten percent (10%) for every day
during the ten (10) Trading Day Purchase Period that the average trading price
as reported by Bloomberg is at or below the Floor Price.
Within ten (10) calendar days after the commencement of each calendar
quarter occurring subsequent to the commencement of the Open Period, the Company
undertakes to notify Investor as to its reasonable expectations as to the Dollar
Amount it intends to raise during such calendar quarter, if any, through the
issuance of Put Notices. Such notification shall constitute only the Company's
good faith estimate with respect to such calendar quarter and shall in no way
obligate the Company to raise such amount during such calendar quarter or
otherwise limit its ability to deliver Put Notices during such calendar quarter.
The failure by the Company to comply with this provision can be cured by the
Company's notifying Investor at any time as to its reasonable expectations with
respect to the current calendar quarter.
c. Stock Payment. On the Execution Date, the Company shall issue to
Yorkeville Advisors Management, LLC ("Yorkeville") 250,000 shares of Common
Stock with the restrictive legend set forth in Section 3(g) hereof; provided
however, that such shares shall be subject to a lock up agreement in the form
attached hereto as Exhibit "D".
d. Investor's Obligation to Purchase Shares. Subject to the conditions
set forth in this Agreement, following the Investor's receipt of a validly
delivered Put Notice, the Investor shall be required to purchase from the
Company during the related Purchase Period that number of Shares having an
aggregate Purchase Price equal to the lesser of (i) the Dollar Amount set forth
in the Put Notice (subject to reduction during the Purchase Period as may be
provided pursuant to the terms of this Agreement), and (ii) 20% of the aggregate
Volume Weighted Average Price during the applicable Purchase Period, but only if
said Shares bear no restrictive legend and are not subject to stop transfer
instructions.
e. Conditions to Investor's Obligation to Purchase Shares.
Notwithstanding anything to the contrary in this Agreement, the Company shall
not be entitled to deliver a Put Notice and require the Investor to purchase any
Shares at a Closing (as defined in Section 2(g)) unless each of the following
conditions are satisfied:
(i) a Registration Statement shall have been declared effective
and shall remain effective and available for the resale of all
the Registrable Securities (as defined in the Registration Rights
Agreement) at all times during the Purchase Period;
(ii) at all times during the period beginning on the related Put
Notice Date and ending on and including the related Closing Date,
the Common Stock shall have been listed on The American Stock
Exchange, Inc. ("AMEX")
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<PAGE>
or The New York Stock Exchange, Inc. or designated on the Nasdaq
National Market, The Nasdaq SmallCap Market or the National
Association of Securities Dealer's, Inc. OTC electronic bulletin
board (the "PRINCIPAL MARKET") and shall not have been suspended
from trading thereon for a period of five (5) consecutive Trading
Days during the Open Period and the Company shall not have been
notified of any pending or threatened proceeding or other action
to delist or suspend the Common Stock;
(iii) during the period beginning on the Put Notice Date and
ending on and including the applicable Closing Date, there shall
not have occurred a Major Transaction (as defined in Section
2(f)) or the public announcement of a pending Major Transaction
which has not been abandoned or terminated;
(iv) the Company has complied with its obligations and is
otherwise not in breach of a material provision, or in default
under, this Agreement, the Registration Rights Agreement or any
other agreement executed in connection herewith which has not
been corrected prior to delivery of the Put Notice Date;
(v) no Material Adverse Effect (as defined in Section 4(a)) has
occurred since the Execution Date;
(vi) no injunction shall have been issued, or action commenced by
a governmental authority, prohibiting the purchase or the
issuance of the Common Stock; and
(vii) the issuance of the Common Stock will not violate the
shareholder approval requirements of AMEX.
If any of the events described in clauses (i) through (vii) above
occurs during a Purchase Period, then the Investor shall have no
obligation to purchase the Dollar Amount of Common Stock set
forth in the applicable Put Notice.
f. Major Transaction. For purposes of this Agreement, a "MAJOR
TRANSACTION" shall be deemed to have occurred at the closing of any of the
following events: (i) the consolidation, merger or other business combination of
the Company with or into another person (other than pursuant to a migratory
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company) (ii) the sale or transfer of all or substantially
all of the Company's assets; or (iii) the consummation of a purchase, tender or
exchange offer made to, and accepted by, the holders of more than 30% of the
economic interest in, or the combined voting power of all classes of voting
stock of, the Company. Notwithstanding the above, Major Transaction shall not
include
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<PAGE>
the proposed acquisition by the Company of Campus Custom Publishing, Inc.
g. Mechanics of Purchase of Shares by Investor. Subject to the
satisfaction of the conditions set forth in Sections 2(e), 7 and 8, the closing
of the purchase by the Investor of Shares (a "CLOSING") shall occur on the date
which is three (3) Trading Days following the expiration of the related Purchase
Period (or such other time or later date as is mutually agreed to by the Company
and the Investor) (a "CLOSING DATE"). On or before the Trading Day immediately
preceding each Closing Date, (i) the Company shall deliver to the Escrow Agent
pursuant to the Escrow Agreement certificates representing the Shares to be
issued to the Investor on such date and registered in the name of the Investor,
or in street name as may be requested by Investor, or deposit such Shares into
the account(s) (with the Investor receiving confirmation that the Shares are in
such account(s)) designated by the Investor for the benefit of the Investor and
(ii) the Investor shall deliver to the Escrow Agent the Purchase Price to be
paid for such Shares (after receipt of confirmation of delivery of such Shares),
determined as aforesaid, by wire transfer. In the alternative to physical
delivery of certificates for Common Stock to the Investor, if delivery of the
Shares may be effectuated by electronic book-entry through The Depository Trust
Company ("DTC"), then delivery of the Shares pursuant to such purchase shall,
unless requested otherwise by such Investor (or holder of such Shares), settle
by book-entry transfer through DTC on the Closing Date. The parties agree to
coordinate with DTC to accomplish this objective. The Company and the Investor
shall deliver all documents, instruments and writings required to be delivered
by either of them to the Escrow Agent pursuant to this Agreement or the Escrow
Agreement.
h. Overall Limit on Common Stock Issuable. Notwithstanding anything
contained herein to the contrary, if the Company is listed on the AMEX, the
number of Shares issuable by the Company and purchasable by the Investor
including the shares of Common Stock issuable pursuant to Section 2(c) hereof,
shall not exceed 19.99% of the shares of Common Stock outstanding as of the date
of the applicable Put Notice, subject to appropriate adjustment for stock
splits, stock dividends, combinations or other similar recapitalization
affecting the Common Stock (the "MAXIMUM COMMON STOCK ISSUANCE"), unless the
issuance of Shares in excess of the Maximum Common Stock Issuance shall first be
approved by the Company's shareholders in accordance with applicable law and the
By-laws and Articles of Incorporation of the Company, if such issuance of shares
of Common Stock could cause a delisting on the Principal Market. Without
limiting the generality of the foregoing, such shareholders' approval must duly
authorize the issuance by the Company of shares of Common Stock totaling 19.99%
or more of the shares of Common Stock outstanding on the date hereof. The
parties understand and agree that the Company's failure to seek or obtain such
shareholder approval shall in no way adversely affect the validity and due
authorization of the issuance and sale of Shares hereunder or the Investor's
obligation in accordance with the terms and conditions hereof to purchase a
number of Shares in the aggregate up to the Maximum Common Stock Issuance
limitation, and that such approval pertains only to the applicability of the
Maximum Common Stock Issuance limitation provided in this Section 2(h).
8 |
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| To: ChainSaw who started this subject | 7/3/2001 11:49:36 PM | | From: jmhollen | | | | <PAGE>
i. Valuation Event. For purposes of this Agreement, "VALUATION EVENT"
shall mean an event in which the Company at any time during a "Purchase Period"
takes any of the following actions:
(i) subdivides or combines its Common Stock;
(ii) pays a dividend in Common Stock or makes any other
distribution of its Common Stock, except for dividends paid
with respect to the Preferred Stock;
(iii) issues any options or other rights to subscribe for or
purchase Common Stock and the price per share for which
Common Stock may at any time thereafter be issuable
pursuant to such options or other rights shall be less than
the Bid Price in effect immediately prior to such issuance;
(iv) issues any securities convertible into or exchangeable for
Common Stock and the consideration per share for which
shares of Common Stock may at any time thereafter be
issuable pursuant to the terms of such convertible or
exchangeable securities shall be less than the Bid Price in
effect immediately prior to such issuance;
(v) issues shares of Common Stock otherwise than as provided in
the foregoing subsections (i) through (iv), at a price per
share less, or for other consideration lower, than the Bid
Price in effect immediately prior to such issuance, or
without consideration;
(vi) makes a distribution of its assets or evidences of
indebtedness to the holders of Common Stock as a dividend
in liquidation or by way of return of capital or other than
as a dividend payable out of earnings or surplus legally
available for dividends under applicable law or any
distribution to such holders made in respect of the sale of
all or substantially all of the Company's assets (other
than under the circumstances provided for in the foregoing
subsections (i) through (v); or
(vii) takes any action affecting the number of shares of Common
Stock outstanding, other than an action described in any of
the foregoing subsections (i) through (vi) hereof,
inclusive, which in the opinion of the Company's Board of
Directors, determined in good faith, would have a
materially adverse effect upon the rights of Investor at
the time of a Put Notice is delivered to Investor.
j. If a Valuation Event occurs during a Purchase Period, the Investor,
at its sole option, may either (i) choose a new Purchase Period beginning on the
Trading Day immediately following the occurrence of such Valuation Event, (ii)
use the Purchase Period during which the Valuation Event occurred or (iii)
decline the Put Notice.
k. Registration Opinion. The Company shall cause its independent
counsel to deliver to the Investor, on each Registration Opinion Deadline, an
opinion, (the
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<PAGE>
"REGISTRATION OPINION"), addressed to the Investor stating, inter alia, that no
facts ("MATERIAL FACTS") have come to such counsel's attention that have caused
it to believe that the Registration Statement is subject to an Ineffective
Period or to believe that the Registration Statement, any supplemental
Registration Statement (as each may be amended, if applicable), and any related
prospectuses, contain an untrue statement of material fact or omits a material
fact required to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. If a Registration
Opinion cannot be delivered by the Company's independent counsel to the Investor
on the Registration Opinion Deadline due to the existence of Material Facts or
an Ineffective Period, the Company shall promptly notify the Investor and as
promptly as possible amend each of the Registration Statement and any
supplemental Registration Statements, as applicable, and any related prospectus
or cause such Ineffective Period to terminate, as the case may be, and deliver
such Registration Opinion and updated prospectus as soon as possible thereafter.
If at any time after a Put Notice shall have been delivered to Investor but
before the related Closing Date, the Company acquires knowledge of such Material
Facts or any Ineffective Period occurs, the Company shall promptly notify the
Investor and Investor, at Investor's sole option, shall be entitled to cancel
that entire Put Notice by facsimile notice to the Company on or before the
related Closing Period.
l. Procedure if Material Facts are Reasonably believed to be untrue or
are omitted. In the event after such consultation the Investor or the Investor's
counsel reasonably believes that the Registration Statement contains an untrue
statement or a material fact or omits a material fact required to be stated in
the Registration Statement or necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading,
(i) the Company shall file with the SEC an amendment to the Registration
Statement responsive to such alleged untrue statement or omission and provide
the Investor, as promptly as practicable, with copies of the Registration
Statement and related Prospectus, as so amended, or (ii) if the Company disputes
the existence of any such material misstatement or omission, (x) the Company's
independent counsel shall provide the Investor's counsel with a Registration
Opinion and (y) in the event the dispute relates to the adequacy of financial
disclosure and the Investor shall reasonably request, the Company's independent
auditors shall provide to the Company a letter ("Agreed Upon Procedures Report")
outlining the performance of such "agreed upon procedures" as shall be
reasonably requested by the Investor and the Company shall provide the Investor
with a copy of such letter.
m. Delisting; Suspension. If at any time during the Open Period or
within thirty (30) calendar days after the end of the Open Period, (i) the
Registration Statement, after it has been declared effective, shall not remain
effective and available for sale of all the Registrable Securities, (ii) the
Common Stock shall not be listed on the Principal Market or shall have been
suspended from trading thereon (excluding suspensions of not more than one
trading day resulting from business announcements by the Company) or the Company
shall have been notified of any pending or threatened proceeding or other action
to delist or suspend the Common Stock, (iii) there shall have occurred a Major
Transaction (as defined in Section 2(f)) or the public announcement of a pending
Major
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Transaction which has not been abandoned or terminated, or (iv) the Registration
Statement is no longer effective or stale for a period of more than five (5)
Trading Days as a result of the Company to timely file its financials, the
Investor shall have the right (the "REPURCHASE OPTION"), as partial relief for
the damages to the Investor by reason of the occurrence of the events listed in
clauses (i), (ii), (iii) or (iv)above (which remedy shall not be exclusive of
any other remedies available at law or equity), in its sole discretion, which
right shall be exercised within thirty (30) calendar days of such event or
occurrence (a "REPURCHASE EVENT"), to sell to the Company, and the Company
agrees to buy, promptly upon the exercise of such right by the Investor, but in
any event within ten (10) calendar days of the exercise of such right, and
subject to the limitations imposed by applicable federal and state law, all or
any part of the Shares issued to the Investor within the sixty (60) Trading Days
preceding the Investor's exercise of the Repurchase Option and then held by the
Investor at a price per Share equal to the highest closing price during the
period beginning on the date of the Repurchase Event and ending on and including
the date on which the Investor exercises its Repurchase Option (the "PAYMENT
AMOUNT"). If the Company fails to pay to the Investor the full aggregate Payment
Amount within ten (10) calendar days of the Investor's exercise of the
Repurchase Option hereunder, the Company shall pay to the Investor, on the first
Trading Day following such tenth (10th) calendar day, in addition to and not in
lieu of the Payment Amount payable by the Company to the Investor upon exercise
of the Repurchase Option, an amount equal to 2% of the aggregate Payment Amount
then due and payable to the Investor, in cash by wire transfer, plus compounded
annual interest of 8% on such Payment Amount during the period, beginning on the
day following such tenth calendar day, during which such Payment Amount, or any
portion thereof, is outstanding.
3. INVESTOR'S REPRESENTATIONS AND WARRANTIES.
The Investor and Yorkeville jointly and severally represent and warrant
to the Company that:
a. Investment Purpose. Each of the Investor and Yorkeville is acquiring
the Securities 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, the Investor does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status; Sophisticated Investor. Each of the
Investor and Yorkeville is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the 1933 Act. The Investor and Yorkeville 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 Securities.
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c. Reliance on Exemptions. The Investor and Yorkeville understand that
the Securities 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 the Investor's and Yorkeville's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Investor and Yorkeville set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor and
Yorkeville to acquire such Securities.
d. Information. Each of the Investor and Yorkeville and its advisors,
if any, have been furnished with or have had access to all materials relating to
the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by the Investor
and Yorkeville. The Investor and Yorkeville and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by the Investor, Yorkeville
or its advisors, if any, or its representatives shall modify, amend or affect
the Investor's or Yorkeville's right to rely on the Company's representations
and warranties contained in Section 4 below. The Investor and Yorkeville
understand that its investment in the Securities involves a high degree of risk.
The Investor and Yorkeville have 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 Securities.
e. No Governmental Review. The Investor and Yorkeville understand 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 Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. The Investor and Yorkeville understand that
except as provided in the Registration Rights Agreement: (i) the Securities 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 for resale thereunder and sold, assigned or transferred
in accordance with an effective registration statement, (B) the Investor or
Yorkeville, as the case may be, shall have delivered to the Company an opinion
of counsel, in a reasonably 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, or (C) the Investor or
Yorkeville, as the case may be, provides the Company with assurance reasonably
acceptable to the Company that such Securities can be sold, assigned or
transferred pursuant to Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) ("RULE 144"); (ii) any sale of the Securities made in reliance on
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 the 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
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<PAGE>
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; 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 thereunder. The Investor and Yorkeville agree that the sale of the
Securities will be in compliance with all applicable state and federal
securities laws, rules and regulations and the rules and regulations of the
Principal Market, if applicable.
g. Legends. The Investor and Yorkeville understand that, until such
time as the Securities have been transferred to a person who may trade the
Shares without restriction under the 1933 Act as contemplated by the
Registration Rights Agreement, the certificates representing the Securities,
except as set forth below and in Section 8(r), 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
FOR RESALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FOR THE RESALE OF THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Securities upon which it
is stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale transaction, such holder provides the Company with an opinion of counsel,
in a generally acceptable form, to the effect that a public sale, assignment or
transfer of such Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with assurances reasonably acceptable
to the Company that such Securities can be sold pursuant to Rule 144 without any
restriction as to (A) the number of securities acquired as of a particular date
that can then be immediately sold or (B) manner of sale. Each of the Investor
and Yorkeville covenants that, in connection with any transfer of Securities by
it pursuant to an effective registration statement under the 1933 Act, it will
(i) comply with the applicable prospectus delivery requirements of the 1933 Act,
provided that copies of a current prospectus relating to such effective
registration statement are or have been supplied to the Investor and Yorkeville,
and (ii) comply with the "Plan of Distribution" section of the current
prospectus relating to such effective registration statement.
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<PAGE>
h. Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to 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. Section 9 of the 1934 Act. During the Open Period, the Investor and
Yorkeville will comply with the provisions of Section 9 of the 1934 Act, and the
rules promulgated thereunder, with respect to transactions involving the Common
Stock.
j. No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Investor and the consummation by the Investor of
the transactions contemplated hereby and thereby will not (i) result in a
violation of the Articles of Incorporation or the By-laws or (ii) conflict with,
or constitute a material default (or an event which with notice or lapse of time
or both would become a material default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
contract, indenture mortgage, indebtedness or instrument to which the Investor
or any of its Subsidiaries is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree applicable to the Investor or any of
its Subsidiaries or by which any property or asset of the Investor or any of its
Subsidiaries is bound or affected. The business of the Investor and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, statute, ordinance, rule, order or regulation of any governmental
authority or agency, regulatory or self-regulatory agency, or court, except for
possible violations the sanctions for which either individually or in the
aggregate would not have a Material Adverse Effect.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the Schedules attached hereto, the Company
represents and warrants to the Investor that:
a. Organization and Qualification. The Company and its "SUBSIDIARIES"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns a controlling interest) (a complete list of which
is set forth in Schedule 4(a)) are corporations duly organized and validly
existing in good standing under the laws of the State of Nevada, and have the
requisite corporate power and authorization 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 its ownership of property or 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. As used in this Agreement, "MATERIAL
ADVERSE EFFECT" means any material adverse effect on the business, properties,
assets, operations, results of operations, financial condition or prospects of
the Company and its Subsidiaries, if any,
14
<PAGE>
taken as a whole, or on the transactions contemplated hereby or by the
agreements and instruments to be entered into in connection herewith, or on the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined in Section 1 and 4(b)below).
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 each of the other
agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS"), and to issue the Shares in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation the reservation for issuance and the
issuance of the Shares pursuant to this Agreement, have been duly and validly
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
shareholders, except for any approval required pursuant to the rules and
regulations of the AMEX (iii) the Transaction Documents have been duly and
validly executed and delivered by the Company, and (iv) the Transaction
Documents 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.
c. Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (i) 54,523,810 shares of Common Stock, of which as of
the date hereof, 18,566,667 shares are issued and outstanding, 5,000,000 shares
of Preferred Stock, of which as of the date hereof 3,235,301 shares are issued
and outstanding, and 2,779,737 shares of Common Stock are issuable upon the
exercise of options, Warrants and conversion rights. All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and nonassessable. Except as disclosed in Schedule 4(c) or in SEC Documents (as
defined in Section 4(f) below), (i) no shares of the Company's capital stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company, (ii) there are no outstanding
debt securities, (iii) there are no outstanding shares of capital stock,
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, (iv) 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 the Registration
Rights Agreement), (v) there are no outstanding
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<PAGE>
securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings 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 Securities as described in this Agreement, (vii) the Company does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement and (viii) there is no dispute as to the class of any
shares of the Company's capital stock. The Company has furnished to the
Investor, or the Investor has had access through EDGAR to, true and correct
copies of the Company's Articles of Incorporation, as in effect on the date
hereof (the "ARTICLES 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.
d. Issuance of Shares. At least 16,000,000 Shares issuable pursuant to
this Agreement have been duly authorized and reserved for issuance (subject to
adjustment pursuant to the Company's covenant set forth in Section 5(f) below)
pursuant to this Agreement, subject to approval by the Company's stockholders.
Upon issuance in accordance with this Agreement, the Securities will be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof. In the event the Company cannot register
16,000,000 Shares, due to the remaining number of authorized shares of Common
Stock being insufficient, the Company will use its best efforts to register the
maximum number of shares it can based on the remaining balance of authorized
shares and will use its best efforts to increase the number of its authorized
shares as soon as reasonably practicable.
e. No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the Articles of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company or the
By-laws or (ii) conflict with, or constitute a material default (or an event
which with notice or lapse of time or both would become a material default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, contract, indenture mortgage,
indebtedness or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including United States federal and state securities laws and
regulations and the rules and regulations of the Principal Market or principal
securities exchange or trading market on which the Common Stock is traded or
listed) 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 4(e), neither the Company nor its
Subsidiaries is in violation of any term of, or in default under, the Articles
of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the By-laws or their
organizational charter or
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by-laws, respectively, or any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, except for possible
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations that would not individually or in the aggregate have a Material
Adverse Effect. 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, order or regulation of any governmental authority or agency,
regulatory or self-regulatory agency, or court, except for possible violations
the sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act, the Company is not required to obtain any
consent, authorization, permit or order of, or make any filing or registration
(except the filing of a registration statement) with, any court, governmental
authority or agency, regulatory or self-regulatory agency or other third party
in order for it to execute, deliver or perform any of its obligations under, or
contemplated by, the Transaction Documents in accordance with the terms hereof
or thereof. All consents, authorizations, permits, 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 and are
in full force and effect as of the date hereof. Except as disclosed in Schedule
4(e), the Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company is not, and will not
be, in violation of the listing requirements of the Principal Market as in
effect on the date hereof and on each of the Closing Dates and is not aware of
any facts which would reasonably lead to delisting of the Common Stock by the
Principal Market in the foreseeable future.
f. SEC Documents; Financial Statements. Since February 1999, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the 1933 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 Investor or its
representatives, or they have had access through EDGAR, true and complete copies
of the SEC Documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1933 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. 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 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 unaudited interim
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<PAGE>
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
unaudited statements, to normal year-end audit adjustments). No other written
information provided by or on behalf of the Company to the Investor which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 4(d) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading.
g. Absence of Certain Changes. Except as disclosed in Schedule 4(g) or
the SEC Documents filed at least five (5) days prior to the date hereof, since
June 1, 2000, there has been no change or development in the business,
properties, assets, operations, financial condition, results of operations or
prospects of the Company or its Subsidiaries which has had or reasonably could
have a Material Adverse Effect. 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.
h. Absence of Litigation. Except as set forth in Schedule 4(h), there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of Company or any of its
Subsidiaries, threatened against or affecting the Company, the Common Stock or
any of the Company's Subsidiaries or any of the Company's or the Company's
Subsidiaries' officers or directors in their capacities as such, in which an
adverse decision could have a Material Adverse Effect.
i. Acknowledgment Regarding Investor's Purchase of Shares. The Company
acknowledges and agrees that the Investor is acting solely in the capacity of
arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. The Company further acknowledges
that the Investor is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and any advice given by the
Investor or any of its respective representatives or agents in connection with
the Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Investor's purchase of the Securities. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or Circumstances.
Except for the proposed acquisition of Campus Custom Publishing, Inc., no event,
liability, development or circumstance has occurred or exists, or to its
knowledge is
18
<PAGE>
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective business, properties, assets, prospects, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced.
k. No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.
l. No Integrated Offering. To its knowledge, neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration under the 1933 Act of the Company's sale and issuance of the
Securities to the Investor or cause this offering of Shares to the Investor to
be integrated with prior offerings by the Company for purposes of the 1933 Act
or any applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of the Principal Market, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration under the 1933 Act of the Company's sale and issuance of
the Securities to the Investor or cause the offering of the Securities to be
integrated with other offerings.
m. Employee Relations. Neither the Company nor any of its Subsidiaries
is involved in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened. Neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that relations with their employees are
good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has
notified the Company that such officer intends to leave the Company's employ or
otherwise terminate such officer's employment with the Company.
n. 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 set forth on Schedule 4(n), none of the
Company's trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights necessary to conduct its business as now or as proposed to be
conducted have expired or terminated, or are expected to expire or terminate
within two years from the date of this Agreement. 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
19
<PAGE>
registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on Schedule 4(n), 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.
o. Environmental Laws. 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 permit, license or approval where, in each of the three
foregoing cases, the failure to so comply would have, individually or in the
aggregate, a Material Adverse Effect.
p. 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 4(p) 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 or any of its
Subsidiaries. Any real property and facilities held under lease by the Company
or any of 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.
q. 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 have a Material Adverse Effect.
r. Regulatory Permits. The Company and its Subsidiaries have in full
force and effect all certificates, approvals, authorizations and permits from
the appropriate federal, state, local or foreign regulatory authorities and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective properties and assets and
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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, approval, authorization or permit, except
for such certificates, approvals, authorizations or permits which if not
obtained, or such revocations or modifications which, would not have a Material
Adverse Effect.
s. 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, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
t. No Materially Adverse Contracts, Etc. 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. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
u. Tax Status. The Company and each of its Subsidiaries has made or
filed all United States 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 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.
v. Certain Transactions. Except as set forth on Schedule 4(v) and in
the SEC Documents filed at least five (5) days prior to the date hereof 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 4(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
or personal property to or from,
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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.
w. Dilutive Effect. The Company understands and acknowledges that the
number of shares of Common Stock issuable upon purchases pursuant to this
Agreement will increase in certain circumstances. The Company's executive
officers and directors have studied and fully understand the nature of the
transactions contemplated by this Agreement and recognize that they have a
potential dilutive effect. The board of directors of the Company has concluded,
in its good faith business judgment, that such issuance is in the best interests
of the Company. The Company specifically acknowledges that, subject to such
limitations as are expressly set forth in the Transaction Documents, its
obligation to issue shares of Common Stock upon purchases pursuant to this
Agreement is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other shareholders of the
Company.
5. COVENANTS OF THE COMPANY
a. Best Efforts. The Company shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Section 8 of
this Agreement.
b. Blue Sky. The Company shall, at its sole cost and expense, on or
before each of the Closing Dates, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or obtain
exemption for the Securities for, sale to the Investor at each of the Closings
pursuant to this Agreement under applicable securities or "Blue Sky" laws of
such states of the United States, as specified by Investor, and shall provide
evidence of any such action so taken to the Investor on or prior to the Closing
Date. The Company shall, at its sole cost and expense, make all filings and
reports relating to the offer and sale of the Securities required under the
applicable securities or "Blue Sky" laws of such states of the United States
following each of the Closing Dates.
c. Reporting Status. Until the earlier of (i) the first date which is
after the date this Agreement is terminated pursuant to Section 9 and on which
the Holders (as that term is defined in the Registration Rights Agreement) may
sell all of the Securities acquired pursuant to this Agreement without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which (A) the Holders shall have sold all the
Securities issuable hereunder and (B) this Agreement has been terminated
pursuant to Section 9 (the "REGISTRATION PERIOD"), the Company shall file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as a reporting company under the 1933
Act.
d. Use of Proceeds. The Company will use the proceeds from the sale of
the Shares (excluding amounts paid by the Company for legal fees, finder's fees
and escrow
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fees) for general corporate and working capital purposes.
e. Financial Information. The Company agrees to make available to the
Investor via EDGAR or other electronic means the following to the Investor
during the Registration Period: (i) within five (5) Trading Days after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
Registration Statements or amendments filed pursuant to the 1933 Act; (ii) on
the same day as the release thereof, facsimile copies of all press releases
issued by the Company or any of its Subsidiaries, (iii) copies of any notices
and other information made available or given to the shareholders of the Company
generally, contemporaneously with the making available or giving thereof to the
shareholders and (iv) within two (2) calendar days of filing or delivery
thereof, copies of all documents filed with, and all correspondence sent to, the
Principal Market, any securities exchange or market, or the National Association
of Securities Dealers, INC.
f. Reservation of Shares. Subject to the following sentence, the
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than 16,000,000 shares of Common
Stock to provide for the issuance of the Securities hereunder. In the event that
the Company determines that it does not have a sufficient number of authorized
shares of Common Stock to reserve and keep available for issuance as described
in this Section 5(f), the Company shall use its best efforts to increase the
number of authorized shares of Common Stock by seeking shareholder approval for
the authorization of such additional shares.
g. Listing. The Company shall promptly secure the listing of all of the
Registrable Securities (as defined in the Registration Rights Agreement) upon
the Principal Market and each other national securities exchange and automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's authorization for
quotation on the Principal Market, unless the Investor and the Company agree
otherwise. Neither the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Principal Market (excluding suspensions of not more than
one trading day resulting from business announcements by the Company). The
Company shall promptly provide to the Investor copies of any notices it receives
from the Principal Market regarding the continued eligibility of the Common
Stock for listing on such automated quotation system or securities exchange. The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 5(g).
h. Transactions With Affiliates. 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, persons
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who were officers or directors at any time during the previous two years,
shareholders 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 (i) customary
employment arrangements and benefit programs on reasonable terms, (ii) 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, or (iii) 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. "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 5% 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.
i. Filing of Form 8-K. On or before the date which is fifteen (15)
calendar days after the Execution Date, the Company shall file a Current Report
on Form 8-K with the SEC describing the terms of the transaction contemplated by
the Transaction Documents in the form required by the 1934 Act, if such filing
is required.
j. Corporate Existence. The Company shall use its best efforts to
preserve and continue the corporate existence of the Company.
k. Notice of Certain Events Affecting Registration; Suspension of Right
to Make a Put. The Company shall promptly notify Investor upon the occurrence of
any of the following events in respect of a Registration Statement or related
prospectus in respect of an offering of the Shares: (i) receipt of any request
for additional information by the SEC or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement for
amendments or supplements to the Registration Statement or related prospectus;
(ii) the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that purpose; (iii) receipt
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; (iv) the
happening of any event that makes any statement made in such Registration
Statement or related prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of a Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading,
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<PAGE>
and that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to
Investor any such supplement or amendment to the related prospectus. The Company
shall not deliver to Investor any Put Notice during the continuation of any of
the foregoing events.
l. Reimbursement. If (i) Investor, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Documents, or if Investor is impleaded in any
such action, proceeding or investigation by any person, or (ii) Investor, other
than by reason of its gross negligence or willful misconduct or by reason of its
trading of the Common Stock in a manner that is illegal under the federal
securities laws, becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC against or involving the Company or in
connection with or as a result of the consummation of the transactions
contemplated by the Transaction Documents, or if Investor is impleaded in any
such action, proceeding or investigation by any person, then in any such case,
the Company will reimburse Investor for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith, as such expenses are incurred. The reimbursement obligations of the
Company under this section shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any affiliates of Investor that are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees, attorneys,
accountants, auditors and controlling persons (if any), as the case may be, of
Investor 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, Investor and any such affiliate and any such person.
m. Dilution. The number of Shares issuable pursuant to a Put Notice may
increase substantially in certain circumstances, including, but not necessarily
limited to, the circumstance wherein the trading price of the Common Stock
declines during the period between the Effective Date and the end of the Open
Period. The Company's executive officers and directors have studied and fully
understand the nature of the transactions contemplated by this Agreement and
recognize that they have a potential dilutive effect. The board of directors of
the Company has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue the Shares upon issuance of a Put
Notice is binding upon the Company and enforceable regardless of the dilution
such issuance may have on the ownership interests of other shareholders of the
Company.
6. COVER. If the number of Shares represented by any Put Notices become
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restricted or are no longer freely trading for any reason, and after the
applicable Closing Date, the Investor purchases, in an open market transaction
or otherwise, the Company's Common Stock (the "Covering Shares") in order to
make delivery in satisfaction of a sale of Common Stock by the Investor (the
"Sold Shares"), which delivery such Investor anticipated to make using the
Shares represented by the Put Notice (a "Buy-In"), the Company shall pay to the
Investor, in lieu of the Repurchase Option, the Buy-In Adjustment Amount (as
defined below). The "Buy-In Adjustment Amount" is the amount equal to the
excess, if any, of (a) the Investor's total purchase price (including brokerage
commissions, if any) for the Covering Shares over (b) the net proceeds (after
brokerage commissions, if any) received by the Investor from the sale of the
Sold Shares. The Company shall pay the Buy-In Adjustment Amount to the Investor
in immediately available funds immediately upon demand by the Investor. By way
of illustration and not in limitation of the foregoing, if the Investor
purchases Common Stock having a total purchase price (including brokerage
commissions) of $11,000 to cover a Buy-In with respect to the Common Stock it
sold for net proceeds of $10,000, the Buy-In Adjustment Amount which the Company
will be required to pay to the Investor will be $1,000.
7. CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL.
The obligation hereunder of the Company to issue and sell the Shares to
the Investor is further subject to the satisfaction, at or before each Closing
Date, of each of the following conditions set forth below. These conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
a. The Investor shall have executed each of this Agreement and the
Registration Rights Agreement and delivered the same to the Company on or prior
to the Execution Date.
b. The Investor shall have delivered to the Company the Purchase Price
for the Shares being purchased by the Investor at the Closing (after receipt of
confirmation of delivery of such Shares) by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.
c. The representations and warranties of the Investor shall be true and
correct as of the date when made and as of the applicable Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and the Investor shall have performed, satisfied and complied
with the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Investor at or
prior to such Closing Date.
d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental
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authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.
e. No Valuation Event shall have occurred since the applicable Put
Notice Date.
8. FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE.
The obligation of the Investor hereunder to purchase Shares is subject
to the satisfaction, on or before each Closing Date, of each of the following
conditions set forth below. These conditions are for the Investor's sole benefit
and may be waived by the Investor at any time in its sole discretion.
a. The Company shall have executed each of the Transaction Documents
and delivered the same to the Investor on or prior to the Execution Date.
b. The Common Stock shall be authorized for quotation on the Principal
Market and trading in the Common Stock shall not have been suspended by the
Principal Market or the SEC, at any time beginning on the date hereof and
through and including the respective Closing Date (excluding suspensions of not
more than one Trading Day resulting from business announcements by the Company,
provided that such suspensions occur prior to the Company's delivery of the Put
Notice related to such Closing).
c. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the applicable Closing Date as though
made at that time (except for (i) representations and warranties that speak as
of a specific date and (ii) with respect to the representations made in Sections
4(g), (h) and (j) and the third sentence of Section 4(m) hereof, events which
occur on or after the date of this Agreement and are disclosed in SEC filings
made by the Company at least ten (10) Trading Days prior to the applicable Put
Notice Date) and the Company shall have performed, satisfied and complied with
the covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by the Company on or before such
Closing Date. The Investor shall have received a certificate, executed by the
Chief Executive Officer and Chief Financial Officer of the Company, dated as of
the applicable Closing Date, in the form of Exhibit "E" attached hereto, to the
foregoing effect and as to such other matters as may be reasonably requested by
the Investor including, without limitation, an update as of such Closing Date
regarding the representation contained in Section 4(c) above.
d. Investor shall have received an opinion letter of the Company's
counsel on or before the Execution Date, or a blanket opinion letter covering
all Shares to be issued pursuant to the terms of this Agreement, in the form of
Exhibit "F" attached hereto and if required by the Company's transfer agent any
additional opinion letters after the Effective Date so as to allow for the
issuance of Securities to Investor as may be required pursuant to the
Transaction Documents.
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<PAGE>
e. The Company shall have executed and delivered to the Investor the
certificates representing, or have executed electronic book-entry transfer of,
the Shares (in such denominations as such Investor shall request) being
purchased by the Investor at such Closing.
f. The Board of Directors of the Company shall have adopted resolutions
consistent with Section 4(b)(ii) above and in a form reasonably acceptable to
the Investor (the "RESOLUTIONS") and such Resolutions shall not have been
amended or rescinded prior to such Closing Date.
g. If requested by the Investor, the Investor shall receive a letter of
the type, in the form and with the substance of the letter described in Section
4(s) of the Registration Rights Agreement from the Company's auditors.
h. The Company shall have delivered to the Investor or the Investor has
had access through EDGAR to a copy of its Articles of Incorporation, as amended
and in effect on such Closing Date, certified by the Secretary of State of the
Company's state of incorporation within ten (10) days of such Closing Date.
i. The Company shall have delivered to the Investor a secretary's
certificate, dated as of such Closing Date, in the form of Exhibit "G" attached
hereto, as to (i) the Resolutions described in Section 8(f), (ii) the Articles
of Incorporation and (iii) the Bylaws, each as in effect on such Closing Date.
j. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
k. The Registration Statement shall be effective on each Closing Date
and no stop order suspending the effectiveness of the Registration Statement
shall be in effect or shall be pending or threatened. Furthermore, on each
Closing Date (i) neither the Company nor Investor shall have received notice
that the SEC has issued or intends to issue a stop order with respect to such
Registration Statement or that the SEC otherwise has suspended or withdrawn the
effectiveness of such Registration Statement, either temporarily or permanently,
or intends or has threatened to do so (unless the SEC's concerns have been
addressed and Investor is reasonably satisfied that the SEC no longer is
considering or intends to take such action),and (ii) no other suspension of the
use or withdrawal of the effectiveness of such Registration Statement or related
prospectus shall exist.
l. At the time of each Closing, the Registration Statement (including
information or documents incorporated by reference therein) and any amendments
or supplements thereto shall not contain any untrue statement of a material fact
or omit to
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state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
m. There shall have been no filing of a petition in bankruptcy, either
voluntarily or involuntarily, with respect to the Company and there shall not
have been commenced any proceedings under any bankruptcy or insolvency laws, or
any laws relating to the relief of debtors, readjustment of indebtedness or
reorganization of debtors, and there shall have been no calling of a meeting of
creditors of the Company or appointment of a committee of creditors or
liquidating agents or offering of a composition or extension to creditors by,
for, with or without the consent or acquiescence of the Company.
n. If applicable, the shareholders of the Company shall have approved
the issuance of any Shares in excess of the Maximum Common Stock Issuance in
accordance with Section 2(h).
o. The conditions to such Closing set forth in Section 2(e) shall have
been satisfied on or before such Closing Date.
p. The Company shall have certified to the Investor the number of
shares of Common Stock outstanding as of a date within five (5) Trading Days
prior to such Closing Date.
q. The Company shall have delivered to such Investor such other
documents relating to the transactions contemplated by this Agreement as such
Investor or its counsel may reasonably request upon reasonable advance notice.
9. TERMINATION.
a. Optional Termination. This Agreement may be terminated (i) at any
time by the mutual written consent of the Company and the Investor and (ii) by
either party upon eighteen (18) months' prior written notice to the other party.
The representations, warranties and covenants contained in or incorporated into
this Agreement, insofar as applicable to the transactions consummated hereunder
prior to such termination, shall survive its termination for the period of any
applicable statute of limitations.
b. Termination. In the Investor's sole discretion, this Agreement shall
terminate upon written notice sent by facsimile transmission or overnight
delivery by the Investor to the Company of any of the following events:
(i) when the Investor has purchased an aggregate of $10,000,000 in the
Common Stock of the Company pursuant to this Agreement; provided that
the representations, warranties and covenants contained in this
Agreement insofar as applicable to the transactions consummated
hereunder prior to such termination, shall survive the termination of
this
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Agreement for the period of any applicable statute of limitations,
(ii) on the date which is thirty-six (36) months after the Effective
Date;
(iii) if the Company shall file or consent by answer or otherwise to
the entry of an order for relief or approving a petition for relief,
reorganization or arrangement or any other petition in bankruptcy for
liquidation or to take advantage of any bankruptcy or insolvency law of
any jurisdiction, or shall make an assignment for the benefit of its
creditors, or shall consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers of itself or of
any substantial part of its property, or shall be adjudicated a
bankrupt or insolvent, or shall take corporate action for the purpose
of any of the foregoing, or if a court or governmental authority of
competent jurisdiction shall enter an order appointing a custodian,
receiver, trustee or other officer with similar powers with respect to
the Company or any substantial part of its property or an order for
relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy or insolvency law, or an order for the dissolution,
winding up or liquidation of the Company, or if any such petition shall
be filed against the Company;
(iv) if the Company shall issue or sell any equity securities or
securities convertible into, or exchangeable for, equity securities or
enter into an equity financing facility without the prior written
consent of the Investor (which consent shall not be unreasonably
withheld), except that no such consent shall be required in connection
with (A) the issuance or sale of such securities in connection with the
acquisition of Campus Custom Publishing, Inc., (B) shares issued under
the Company's stock option plan, (C) shares issued to employees,
consultants, advisors or independent contractors in an aggregate amount
of up to 750,000 during any three (3) month period, and (D) the
issuance and sale of such securities pursuant to the terms of a merger,
acquisition, share exchange, strategic alliance or other similar
transaction;
(v) the trading of the Common Stock is suspended by the SEC, the
Principal Market or the NASD for a period of five (5) consecutive
Trading Days;
(vi) the Company shall not have filed with the SEC the initial
Registration Statement with respect to the resale of the Registrable
Securities in accordance with the terms of the initial Registration
Rights Agreement within sixty (60) calendar days of the date hereof or
the Registration Statement has not been declared effective within one
hundred eighty (180) calendar days of the date hereof; or
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(vii) the Common Stock ceases to be registered under the 1933 Act.
(viii) The occurrence of a Material Adverse Effect;
(ix) The Commission or the NASD shall have suspended trading in the
Common Stock for a period of five (5) consecutive Trading Days during
Open Period.
(x) The Securities cease to be registered under the 1934 Act or listed
or traded on the Nasdaq National Market, American Stock Exchanged or
Nasdaq Small Cap Market or OTC Bulletin Board; or
(xi) The Company requires shareholder approval under AMEX rules to
issue additional shares and such approval is not obtained within 60
days from the date when the Company has issued its 19.9% maximum
allowable shares.
Upon the occurrence of one of the above-described events, the Company shall send
written notice of such event to the Investor, who shall have thirty (30)
calendar days to terminate by sending written notice by facsimile transmission
or overnight delivery to the Company. Failure of the Investor to send the
Company written notice within thirty (30) calendar days pursuant to the terms of
this Section 9 shall be deemed a waiver by the Investor to terminate as to the
occurrence of such event, but not a waiver to terminate upon the occurrence of
any other event enumerated above.
10. INDEMNIFICATION. In consideration of the Investor's execution and
delivery of the this Agreement and the Registration Rights Agreement and
acquiring the Shares hereunder and in addition to all of the Company's other
obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless the Investor and all of their shareholders,
officers, directors, employees and direct or indirect investors and any of the
foregoing person's 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, costs, 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 reasonable attorneys' fees and disbursements
(the "INDEMNIFIED LIABILITIES'), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in 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 the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (iii) any cause of action, suit or
claim brought or made against such Indemnitee by a third party and arising out
of or resulting from the execution, delivery, performance or enforcement of the
Transaction
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Documents or any other certificate, instrument or document contemplated hereby
or thereby, (iv) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Shares or (v)
the status of the Investor or holder of the Shares as an investor in the
Company, except insofar as any such untrue statement, alleged untrue statement,
omission or alleged omission is made in reliance upon and in conformity with
written information furnished to the Company by the Investor which is
specifically intended by the Investor for use in the preparation of any such
Registration Statement, preliminary prospectus or prospectus. 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. The indemnity provisions contained herein shall be in addition to any cause
of action or similar rights the Investor may have, and any liabilities the
Investor may be subject to.
11. 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. Each party hereby irrevocably submits to the
non-exclusive 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, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
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.
b. Fees and Expenses.
(i) As a further inducement to the Investor to enter into this
Agreement, on each Closing Date the Company shall pay to the
Investor or its designee, an amount equal to 5% of the Purchase
Amount, which amount the Investor may, at its sole option, deduct
against the Purchase Amount.
(ii) On each Closing Date the Company shall pay to Dutchess
Advisors, Ltd. a finder's fee equal to the sum of 10% of gross
proceeds
32
<PAGE>
raised over $250,000 and up to $3,000,000; 8% of gross proceeds
raised over $3,000,000 and up to $7,000,000; 6% of gross proceeds
raised over $7,000,000 and up to $10,000,000; and 4% of gross
proceeds raised over $10,000,000.
(iii) On or before the Execution Date, the Company shall pay its
counsel, Akin, Gump, Strauss, Hauer & Feld, LLP the sum of $50,000
on the Execution Date for legal expenses.
(iv) Except as otherwise set forth herein, each party shall pay
the 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. Any attorneys' fees
and expenses incurred by either the Company or by the Investor in
connection with the preparation, negotiation, execution and
delivery of any amendments to this Agreement or relating to the
enforcement of the rights of any party, after the occurrence of
any breach of the terms of this Agreement by another party or any
default by another party in respect of the transactions
contemplated hereunder, shall be paid on demand by the party which
breached the Agreement and/or defaulted, as the case may be. The
Company shall pay all stamp and other taxes and duties levied in
connection with the issuance of any Shares issued pursuant hereto.
c. 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; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
d. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
e. 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.
f. Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Investor, 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
(including the other Transaction Documents) 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
33
<PAGE>
the Company nor the Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Investor, and no provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought.
g. 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); or (iii) 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:
Booktech.com, Inc.
42 Cummings Park
Woburn, MA 01801
Attention: Morris A. Shepard, Chief Executive Officer
Telephone: 781-933-5400
Facsimile: 781-933-6750
If to the Investor:
Cornell Capital Partners, L.P.
-----------------------------
-----------------------------
With a copy to:
-----------------------------
-----------------------------
-----------------------------
Attention: _________________
Telephone: _________________
Facsimile: _________________
Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
h. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns,
34
<PAGE>
including any purchasers of the Shares. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Investor, including by merger or consolidation. The Investor may
assign some or all of its rights hereunder; provided, however, that any such
assignment shall not release the Investor from its obligations hereunder unless
such obligations are assumed by such assignee and the Company has consented to
such assignment and assumption. Notwithstanding anything to the contrary
contained in the Transaction Documents, the Investor shall be entitled to pledge
the Shares in connection with a bona fide margin account.
i. 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.
j. Survival. The representations and warranties of the Company and the
Investor contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4 and 5, and the indemnification provisions set forth in Section 10,
shall survive each of the Closings. The Investor shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.
k. Publicity. The Company and Investor 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. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of Investor without
the prior written consent of such Investor, except to the extent required by
law. Investor acknowledges that this Agreement and all or part of the
Transaction Documents may be deemed to be "material contracts" as that term is
defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore
be required to file such documents as exhibits to reports or registration
statements filed under the Securities 1933 Act or the 1934 Act. Investor further
agrees that the status of such documents and materials as material contracts
shall be determined solely by the Company, in consultation with its counsel.
l. 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.
m. Placement Agent. The Company acknowledges and warrants that it has
not engaged a placement agent or broker in connection with the sale of the
Shares. Except for the fee payable to Dutchess Advisors, Ltd. by the Company
pursuant to Section
35
<PAGE>
11(b)(ii) hereof, no fees or commissions will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other person or entity, with respect to the transactions
contemplated by the Transaction Documents. The Investor shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of
other persons or entities for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the Transaction
Documents. The Company shall indemnify and hold harmless the Investor, their
employees, officers, directors, agents, and partners, and their respective
affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses incurred in respect of
any such claimed or existing fees, as such fees and expenses are incurred.
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.
o. Remedies. The Investor and each holder of the Shares shall have all
rights and remedies set forth in this Agreement and the Registration Rights
Agreement and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any default
or breach of any provision of this Agreement, including the recovery of
reasonable attorneys fees and costs, and to exercise all other rights granted by
law.
p. Payment Set Aside. To the extent that the Company makes a payment or
payments to the Investor hereunder or the Registration Rights Agreement or the
Investor enforces or exercises its 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 to be 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
36 |
| | booktech.com BTC - AMEX | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| To: ChainSaw who started this subject | 7/3/2001 11:55:15 PM | | From: jmhollen | | | | <PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Investment
Agreement to be duly executed as of the date and year first above written.
COMPANY: BOOKTECH.COM, INC.
By: ____________________________________
Name: Morris A. Shepard
Title: Chief Executive Officer
INVESTOR: CORNELL CAPITAL PARTNERS, L.P
By its General Partner, Yorkeville Advisors Management, LLC
By: ____________________________________
Name:
Title:
37
<PAGE>
LIST OF SCHEDULES
-----------------
Schedule 4(a) Subsidiaries
Schedule 4(c) Capitalization
Schedule 4(e) Conflicts
Schedule 4(g) Material Changes
Schedule 4(h) Litigation
Schedule 4(n) Intellectual Property
Schedule 4(p) Liens
Schedule 4(v) Certain Transactions
<PAGE>
LIST OF EXHIBITS
-----------------
EXHIBIT A Registration Rights Agreement
EXHIBIT B Escrow Agreement
EXHIBIT C Put Notice
EXHIBIT D Lock Up Agreement
EXHIBIT E Officers' Certificate
EXHIBIT F Opinion of Company's Counsel
EXHIBIT G Secretary's Certificate
<PAGE>
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT "B"
ESCROW AGREEMENT
<PAGE>
EXHIBIT "C"
PUT NOTICE
Booktech.com, Inc. (the "Company) hereby elects to sell shares of its Common
Stock to the Investor, during the designated Purchase Period, at a Purchase
Price and for the number of shares of Common Stock to be determined on the last
day of the Purchase Period, all pursuant to that certain Investment Agreement by
and between the Company and Investor dated as of March 22, 2001.
Put Notice Date: __________________________
Dollar Amount Requested: __________________
Purchase Period: _________________________
Purchase Price: __________________________ (to be determined)
Number of Shares: _______________________ (to be determined)
Note: Capitalized terms shall have the meaning ascribed to them in the
Investment Agreement.
Booktech.com, Inc.
By: ______________________
<PAGE>
EXHIBIT "D"
LOCK UP AGREEMENT
<PAGE>
EXHIBIT "E"
OFFICER'S CERTIFICATE
<PAGE>
EXHIBIT "F"
OPINION OF COMPANY'S COUNSEL
<PAGE>
EXHIBIT "G"
SECRETARY'S CERTIFICATE
</TEXT>
</DOCUMENT>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March 22,
2001, by and between booktech.com, inc., a company organized under the laws of
state of Nevada, with its principal executive office at 42 Cummings Park,
Woburn, MA 01801 (the "Company"), Cornell Capital Partners, L.P., a New York
limited partnership, (the "Investor"), and Yorkeville Advisors Management, LLC,
a _________ limited liability company ("Yorkeville", together with the Investor
referred to as the "Stockholders").
WHEREAS, In connection with the Investment Agreement by and between the
Company and the Investor of even date herewith (the "Investment Agreement"), the
Company has agreed to issue (i) to the Investor an indeterminate number of
shares of the Company's common stock, $.00042 par value per share (the "Common
Stock"), to be purchased pursuant to the Investment Agreement, and (ii) to
Yorkeville, 250,000 shares of Common Stock; and
WHEREAS, To induce the Investor to execute and deliver the Investment
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws, with respect to the shares of Common Stock
issuable pursuant to the Investment Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained hereinafter and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Investor hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "Holder" means the Stockholders and any transferee or assignee
thereof to whom the Stockholders assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9.
b. "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
c. "Principal Market" means the Nasdaq National Market, the New York
Stock Exchange, the American Stock Exchange, Inc., the Nasdaq SmallCap Market,
or the OTC Bulletin Board, whichever is the principal market for the Common
Stock.
d. "Register," "Registered," and "Registration" refer to a registration
effected by preparing and filing one or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule
1
<PAGE>
415 under the 1933 Act or any successor rule providing for offering securities
on a continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement(s) by the United States Securities
and Exchange Commission (the "SEC").
f. "Registrable Securities" means the shares of Common Stock issued or
issuable (i) pursuant to the Investment Agreement, and (ii) any shares of
capital stock issued or issuable with respect to the such shares of Common Stock
as a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, which have not been (x) included in a Registration
Statement that has been declared effective by the SEC, (y) sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the 1933 Act or (z) otherwise transferred
to a holder who may trade such shares without restriction under the 1933 Act.
g. "Registration Statement" means a registration statement of the
Company filed under the 1933 Act.
All capitalized terms used in this Agreement and not otherwise defined
herein shall have the same meaning ascribed to them as in the Investment
Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, and, as soon as
practicable but in no event later than May 22, 2001, file with the SEC a
Registration Statement or Registration Statements (as is necessary) on Form SB-2
(or, if such form is unavailable for such a registration, on such other form as
is available for such a registration), covering the resale of all of the
Registrable Securities, which Registration Statement(s) shall state that, in
accordance with Rule 416 promulgated under the 1933 Act, such Registration
Statement(s) also covers such indeterminate number of additional shares of
Common Stock as may become issuable upon stock splits, stock dividends or
similar transactions. The Company shall initially register for resale 250,000
shares of Common Stock which would be issuable on the date preceding the filing
of the Registration Statement based on the closing bid price of the Company's
Common Stock on such date pursuant to the terms of the Investment Agreement. In
the event the Company cannot register, due to the remaining number of authorized
shares of Common Stock being insufficient, the Company will use its best efforts
to register the maximum number of shares it can based on the remaining balance
of authorized shares and will use its best efforts to increase the number of its
authorized shares as soon as reasonably practicable.
b. The Company shall use its best efforts to have the Registration
Statement(s) declared effective by the SEC within one hundred twenty (120)
calendar days after the filing thereof.
3. RELATED OBLIGATIONS.
At such time as the Company is obligated to prepare and file a
Registration Statement with the SEC pursuant to Section 2(a), the Company will
use its best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition
2
<PAGE>
thereof and, with respect thereto, the Company shall have the following
obligations:
a. The Company shall use its best efforts to cause such Registration
Statement relating to the Registrable Securities to become effective within one
hundred twenty (120) days after the date of the filing thereof, and shall keep
such Registration Statement effective pursuant to Rule 415 until the earlier of
(i) the date as of which the Holders may sell all of the Registrable Securities
without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto) or (ii) the date on which (A) the Holders shall have sold all
the Registrable Securities, and (B) the Investor has no right to acquire any
additional shares of Common Stock under the Investment Agreement, respectively
(the "Registration Period"), which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the event the
number of shares of Common Stock available under a Registration Statement filed
pursuant to this Agreement is at any time insufficient to cover all of the
Registrable Securities, the Company shall amend such Registration Statement, or
file a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover all of the Registrable Securities, in each
case, as soon as practicable, but in any event within thirty (30) calendar days
after the necessity therefor arises (based on the then Purchase Price of the
Common Stock and other relevant factors on which the Company reasonably elects
to rely), assuming the Company has sufficient authorized shares at that time,
and if it does not, within thirty (30) calendar days after such shares are
authorized. The Company shall use it best efforts to cause such amendment and/or
new Registration Statement to become effective as soon as practicable following
the filing thereof.
c. The Company shall furnish to each Holder whose Registrable
Securities are included in any Registration Statement and its legal counsel
without charge (i) upon the effectiveness of any Registration Statement, ten
(10) copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Holder may reasonably request) and (ii) such other documents, including copies
of any final prospectus, as such Holder may reasonably request from time to time
in order to facilitate the disposition of the Registrable Securities owned by
such Holder.
d. The Company shall use reasonable efforts to (i) register and qualify
the Registrable Securities covered by a Registration Statement under such other
securities or "blue sky" laws of
3
<PAGE>
such states in the United States as any Holder reasonably requests, (ii) prepare
and file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
each Holder who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or "blue sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.
e. As promptly as practicable after becoming aware of such event, the
Company shall notify each Holder in writing of the happening of any event as a
result of which the prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, ("Registration Default") and use all diligent efforts to promptly
prepare a supplement or amendment to such Registration Statement and take any
other necessary steps to cure the Registration Default, (which, if such
Registration Statement is on Form S-3, may consist of a document to be filed by
the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
1934 Act (as defined below) and to be incorporated by reference in the
prospectus) to correct such untrue statement or omission, and deliver ten (10)
copies of such supplement or amendment to each Holder (or such other number of
copies as such Holder may reasonably request). The Company shall also promptly
notify each Holder in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration Statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to each Holder by facsimile on the same day of
such effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
f. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify each Holder who holds Registrable Securities being sold of
the issuance of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.
g. The Company shall permit each Holder and a single firm of counsel,
designated as selling
4
<PAGE>
shareholders' counsel by the Holders who hold a majority of the Registrable
Securities being sold, to review and comment upon a Registration Statement and
all amendments and supplements thereto at least three (3) business days prior to
their filing with the SEC, and not file any document in a form to which such
counsel reasonably objects. The Company shall not submit to the SEC a request
for acceleration of the effectiveness of a Registration Statement or file with
the SEC a Registration Statement or any amendment or supplement thereto without
the prior approval of such counsel, which approval shall not be unreasonably
withheld.
h. Reserved.
i. The Company shall hold in confidence and not make any disclosure of
information concerning a Holder provided to the Company unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning a Holder is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to such Holder and allow such Holder, at the Holder's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
j. The Company shall use its best efforts to secure designation and
quotation of all the Registrable Securities covered by any Registration
Statement on the Principal Market. If, despite the Company's best efforts, the
Company is unsuccessful in satisfying the preceding sentence, it shall use its
best efforts to cause all the Registrable Securities covered by any Registration
Statement to be listed on each other national securities exchange and automated
quotation system, if any, on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or system. If,
despite the Company's best efforts, the Company is unsuccessful in satisfying
the two preceding sentences, it will use its best efforts to secure the
inclusion for quotation on the Nasdaq SmallCap Market for such Registrable
Securities and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register with the National Association of
Securities Dealers, Inc. as such with respect to such Registrable Securities.
The Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(j).
k. The Company shall cooperate with the Holders who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be offered pursuant to a
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the Holders may reasonably request and
registered in such names of the Persons who shall acquire such Registrable
Securities from the Holders, as the Holders may request.
5
<PAGE>
l. The Company shall provide a transfer agent for all the Registrable
Securities not later than the effective date of the first Registration Statement
filed pursuant hereto.
m. If requested by the Holders holding a majority of the Registrable
Securities, the Company shall (i) as soon as reasonably practical incorporate in
a prospectus supplement or post-effective amendment such information as such
Holders reasonably determine should be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the offering of the Registrable Securities to be
sold in such offering; (ii) make all required filings of such prospectus
supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement if reasonably
requested by such Holders.
n. The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.
o. The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
p. Within one (1) business day after a Registration Statement which
includes Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Holders whose
Registrable Securities are included in such Registration Statement) confirmation
that such Registration Statement has been declared effective by the SEC in the
form attached hereto as Exhibit A.
q. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Holders of Registrable Securities
pursuant to a Registration Statement.
4. OBLIGATIONS OF THE HOLDERS.
a. At least fifteen (15) calendar days prior to the first anticipated
filing date of a Registration Statement the Company shall notify each Holder in
writing of the information the Company requires from each such Holder if such
Holder elects to have any of such Holder's Registrable Securities included in
such Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Holder that
such Holder shall furnish in writing to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall reasonably be
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. Each Holder covenants and agrees that, in connection with
any disposition or transfer of Registrable Securities by it pursuant to a
Registration Statement, it shall comply with the "Plan of Distribution" section
of the current prospectus relating to such Registration Statement.
6 |
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| To: ChainSaw who started this subject | 7/4/2001 12:02:39 AM | | From: jmhollen | | | | <PAGE>
b. Each Holder, by such Holder's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Holder has notified the Company in writing of
such Holder's election to exclude all of such Holder's Registrable Securities
from such Registration Statement.
c. Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), such Holder will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e).
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printing and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Holder who holds such Registrable
Securities, the directors, officers, partners, employees, agents,
representatives of, and each Person, if any, who controls, any Holder within the
meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act"), (each, an "Indemnified Person"), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several (collectively,
"Claims"), incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which the statements therein were
made, not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in the final prospectus (as amended or supplemented, if
the Company files any amendment
7
<PAGE>
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6(c) with
respect to the number of legal counsel, the Company shall reimburse the Holders
and each such controlling person, promptly as such expenses are incurred and are
due and payable, for any reasonable legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by any Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus were timely made available by the Company pursuant to Section 3(c);
(ii) shall not be available to the extent such Claim is based on (a) a failure
of the Holder to deliver or to cause to be delivered the prospectus made
available by the Company or (b) the Indemnified Person's use of an incorrect
prospectus despite being promptly advised in advance by the Company in writing
not to use such incorrect prospectus; and (iii) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Holders pursuant to Section 9.
b. In connection with any Registration Statement in which a Holder is
participating, each such Holder agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement, each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any Claim
or Indemnified Damages to which any of them may become subject, under the 1933
Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages
arise out of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Holder
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c), such Holder will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of such Holder, which consent
shall not be unreasonably withheld; provided, further, however, that the Holder
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Holder as a
result of the sale of Registrable Securities pursuant to such Registration
Statement.
8
<PAGE>
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Holders pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
were corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The indemnifying
party shall pay for only one separate legal counsel for the Indemnified Persons
or the Indemnified Parties, as applicable, and such counsel shall be selected by
Holders holding a majority-in-interest of the Registrable Securities included in
the Registration Statement to which the Claim relates, if the Holders are
entitled to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully appraised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim.
Following indemnification as provided for hereunder, the indemnifying party
shall be surrogated to all rights of the Indemnified Party or Indemnified Person
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party
9
<PAGE>
under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
e. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Holders the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Holders to sell securities of the Company to
the public without registration ("Rule 144"), the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144; and
b. file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4(c) of the
Investment Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by
the Holders to any transferee of all or any portion of Registrable Securities if
(i) the Holder agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the
10
<PAGE>
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the Registrable Securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such Registrable Securities by the
transferee or assignee is restricted under the 1933 Act and applicable state
securities laws; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions
contained herein; and (v) such transfer shall have been made in accordance with
the applicable requirements of the Investment Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Holders who hold a majority of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Holder and the Company. No such amendment shall be effective to the extent that
it applies to less than all of the Holders of the Registrable Securities. No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.
11. MISCELLANEOUS.
a. A Person is deemed to be a Holder of Registrable Securities whenever
such Person owns of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered owner of such
Registrable Securities.
b. 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 confirmation
of transmission is mechanically or electronically generated and kept on file by
the sending party); or (iii) 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:
booktech.com, inc.
42 Cummings Park
Woburn, MA 01801
Attention: Morris Shepard, CEO
Telephone: 781-933-5400
Facsimile: 718-933-6750
11
<PAGE>
If to the Investor:
Cornell Capital Partners, L.P.
c/o Meir Levin
521 Fifth Avenue, 17th Floor
New York, New York 10175
Telephone:
Facsimile:
Each party shall provide five (5) business days prior notice to the
other party of any change in address, phone number or facsimile number.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. The laws of the State of New York shall govern all issues concerning
the relative rights of the Company and its stockholders. All other questions
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. Each party hereby
irrevocably submits to the non-exclusive 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, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. 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. This Agreement and the Investment Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement and the
Investment Agreement supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this Agreement shall inure
to the benefit of and be binding upon the permitted successors and assigns of
each of the parties hereto.
12
<PAGE>
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
i. 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.
j. All consents and other determinations to be made by the Holders
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by Holders holding a majority of the Registrable Securities.
k. 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the day and year first above written.
BOOKTECH.COM, Inc
By: ________________________________
Name: Morris A. Shepard
Title: Chief Executive Officer
CORNELL CAPITAL PARTNERS, L.P.
By its General Partner
Yorkeville Advisors Management, LLC
By: ________________________________
Name:
Title:
YORKEVILLE ADVISORS MANAGEMENT, LLC
By: ________________________________
Name:
Title:
14
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Date: __________
Re: Booktech.com, Inc
Ladies and Gentlemen:
We are counsel to Booktech.com, Inc., a Nevada corporation (the
"Company"), and have represented the Company in connection with that certain
Investment Agreement (the "Investment Agreement") entered into by and among the
Company and Cornell Capital Partners, L.P. (the "Investor") pursuant to which
the Company has agreed to issue to the Investor and Yorkeville Advisors
Management LLC ("Yorkeville") shares of the Company's common stock, $.00042 par
value per share (the "Common Stock") on the terms and conditions set forth in
the Investment Agreement. Pursuant to the Investment Agreement, the Company also
has entered into a Registration Rights Agreement with the Investor and
Yorkeville (the "Registration Rights Agreement") pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the shares of Common Stock
issued or issuable under the Investment Agreement under the Securities Act of
1933, as amended (the "1933 Act"). In connection with the Company's obligations
under the Registration Rights Agreement, on ____________ ___, 2001, the Company
filed a Registration Statement on Form S- ___ (File No. 333-________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names the Investor as a
selling shareholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [enter the
time of effectiveness] on [enter the date of effectiveness] and to the best of
our knowledge, after telephonic inquiry of a member of the SEC's staff, no stop
order suspending its effectiveness has been issued and no proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[Company Counsel]
By: ____________________
cc: Cornell Capital Partners, L.P.
</TEXT>
</DOCUMENT>
RESALE RESTRICTION AGREEMENT
March 22, 2001
booktech.com, inc., inc.
42 Cummings Park
Woburn, Massachusetts 01801
Attention: Morris A. Shepard, Ph.D.
Ladies and Gentlemen:
Pursuant to the terms of an Investment Agreement dated as of March 22,
2001 (the "Agreement") among booktech.com, inc., a Nevada corporation (the
"Company") and Cornell Capital Partners, L.P., a New York limited partnership,
the undersigned will receive 250,000 shares of Common Stock, $.00042 par value
per share, of the Company (the "Shares").
In order to induce the Company to enter into the Agreement, the
undersigned hereby agrees as follows:
1. Except as expressly set forth in this paragraph 1 and in paragraph 2
below, each Share may not be sold, transferred, hypothecated, pledged, be the
subject of an equity swap, option or warrant, put, put equivalent position or
similar agreement or otherwise be transferred or disposed of (collectively, a
"Disposition") without the prior written consent of the Company, prior to the
six-month anniversary of the Effective Date (as defined in the Agreement) (the
"Restricted Period"). The foregoing restriction is expressly agreed to preclude
the undersigned from engaging in any hedging or other transaction which is
designed or reasonably expected to lead to or result in a Disposition of the
Shares, even if such Shares would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would include,
without limitation, any short sale or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to any
security that includes, relates to or derives any significant part of its value
from such Shares. Notwithstanding the foregoing, the undersigned is allowed to
cause a Disposition in a public sale of up to 10,000 Shares each week during the
Restricted Period.
2. Notwithstanding anything to the contrary contained herein, the
undersigned may cause a Disposition of any number of the Shares in one or more
private transactions; provided however, that in the event that the undersigned
desires to effect such a private transaction (or transactions), (i) the
undersigned shall provide at least three (3) days prior written notice to the
Company, (ii) the transferee of the undersigned shall be required to become
bound by the terms of this Resale Restriction Agreement through the remainder of
the Restricted Period by executing a copy of this Resale Restriction Agreement
contemporaneously with such private transaction and (iii) the undersigned and
all of its transferees who obtain Shares in such private transactions (and any
of their subsequent transferees who acquire any Shares during the Restricted
Period
<PAGE>
pursuant to a private transaction) shall not be permitted to effect public sales
of more than an aggregate of 10,000 Shares per week during the remainder of the
Restricted Period.
3. The undersigned acknowledges that the Company may impose stock
transfer restrictions on the Shares with the Company's stock transfer agent
and/or place stock legends on the certificates representing the Shares to
enforce the provisions of this Agreement.
Very truly yours,
Yorkeville Advisors Management, L.L.C.
By:_________________________________
Name:
Title: |
| | booktech.com BTC - AMEX | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| To: ChainSaw who started this subject | 7/4/2001 12:05:54 AM | | From: jmhollen | | | | LOAN AGREEMENT
THIS LOAN AGREEMENT is made effective as of December 31, 2000 (the
"Effective Date ") by and between booktech.com, inc. a Nevada corporation (the
"Company"), and Verus Investments Holdings, Inc., a British Virgin Islands
corporation ("Lender").
1. THE LOAN.
1.1 The Loan. Lender agrees, on the terms of and subject to the conditions
specified in this Agreement, to lend to the Company the sum of Nine Hundred
Thirty Nine Thousand Two Hundred Sixty One and No/100 United States Dollars
($939,261). Lender's loan shall be evidenced by a promissory note in the form
set forth on Exhibit A dated the Effective Date (the "Note"). The loan made in
accordance with this Section 1.1 shall be referred to herein as the "Loan."
1.2 Place and Date of Closing. The closing of the transactions provided for
herein (the "Closing") will be held at the offices of the Company on the
Effective Date or at such other time and place as the parties shall mutually
agree (the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Lender as follows:
2.1 Organization and Standing. The Company is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of Nevada
and is in good standing under such laws. The Company is duly qualified or
licensed as a corporation in good standing under the laws of each jurisdiction
wherein failure to so qualify could reasonably be expected to have a Materially
Adverse Effect (as defined below). The Company has the requisite corporate power
to own and operate its properties and assets, and to carry on its business as
presently conducted and as proposed to be conducted.
2.2 Corporate Power. The Company will have at the Closing all requisite
legal and corporate power to execute and deliver this Agreement, to issue the
Note and to carry out and perform its obligations under the terms of this
Agreement and the Note.
2.3 Authorization. As soon as possible following the Closing, the
execution, delivery and performance of this Agreement and the Note by the
Company will be duly ratified by all requisite corporate action, so that it will
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with its terms, subject as to enforcement of remedies
to applicable bankruptcy, insolvency, reorganization, or similar laws relating
to or affecting the enforcement of creditors' rights.
2.4 No Conflict. The Company's execution, delivery and performance of its
obligations under this Agreement and the Note do not and will not contravene or
conflict with any provision of (i) applicable law, rule or regulation (ii) any
judgment, decree or order applicable or binding upon the Company, (iii) the
corporate charter or bylaws of the Company, or (iv) any agreement or instrument
binding upon the Company or upon any assets or property of
1
<PAGE>
the Company for which the Company has obtained the necessary consent or waiver
of the other parties to such agreement or instrument.
2.5 Full Disclosure. To the knowledge of the Company, all factual
information heretofore or contemporaneously furnished by the Company to the
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby is true and accurate in every material respect on the date
as of which such information is dated or certified, and the Company has not
knowingly omitted any fact necessary to prevent such information from being
false or misleading.
2.6 No Regulatory Restrictions. The Company is not (a) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended, (b) a "holding
company" or a "subsidiary company" of a holding company within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or (iii) otherwise
subject to any regulatory scheme which restricts its ability to incur debt.
2.7 Authorizations. The Company has obtained all licenses, permits,
franchises and other governmental authorizations necessary to the ownership of
its properties or to the conduct of its businesses, including without limitation
all licenses, permits, franchises and other governmental authorizations required
under all applicable environmental laws, a failure to obtain or violation of
which could reasonably be expected to have a Material Adverse Effect.
2.8 Financial Statements. On or prior to the date of this Agreement, the
Company has furnished to the Lender its balance sheet and consolidating
statements of income, earnings, stockholders equity and cash flows (i) as of and
for the fiscal year ended December 31, 1999, and (ii) as of and for the fiscal
quarter(s) and the portion of the fiscal year ended September 30, 2000,
certified by the Company's chief financial officer. The Company acknowledges
that the Lender is relying upon the accuracy of such financial statements as an
inducement to make the Loan.
For the purposes of this Agreement, "Material Adverse Effect" means a material
adverse effect on (a) the business, operations, property, condition or prospects
(financial or otherwise) of the Company, (b) the ability of the Company to
perform its obligations under this Agreement or the Note, or (c) the validity or
enforceability of this Agreement or the Note or the rights and remedies of the
Lender under this Agreement or the Note.
3. REPRESENTATIONS AND WARRANTIES OF THE LENDER AND ADDITIONAL REPRESENTATIONS
OF THE COMPANY.
3.1 Representations and Warranties. Lender represents and warrants to the
Company as of the Closing Date as follows:
(a) The Lender will have at the Closing all requisite legal and
corporate power to execute and deliver this Agreement and to carry out its
obligations under the terms of this Agreement.
(b) All action on the part of the Lender for the authorization,
execution,
2
<PAGE>
delivery and performance by the Lender of this Agreement has been taken,
and this Agreement constitutes a valid and binding obligation of the
Lender, enforceable in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors' rights.
(c) The Lender is a sophisticated investor with such knowledge and
experience in financial and business matters so as to be capable of
evaluating the merits and risks of the Note and who is capable of bearing
the economic risks of such Note, assuming the completeness and accuracy of
the representations made by the Company.
3.2 Legends. The certificate representing the Note will be endorsed with
the following legend (in addition to any legend required under applicable state
securities laws):
THE SECURITIES REPRESENTED BY THIS PROMISSORY NOTE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENT OF SAID ACT AND
ANY STATE SECURITIES LAWS.
4. COVENANTS. The Company agrees that: (i) it will maintain its corporate
existence and good standing in each jurisdiction wherein such qualification is
necessary, except where failure to do so would not have a Material Adverse
Effect; (ii) it will promptly upon learning of the occurrence of any of the
following, furnish to the Lender notice of such occurrence and the steps being
taken by the Company with respect thereto: (a) the occurrence of any Event of
Default, or (b) the institution of, or any adverse determination in, any
material litigation, arbitration proceeding or governmental proceeding; (iii)
without the prior written consent of Lender, it will not incur or permit to
exist any debt other than that represented by the Note except for trade debt
incurred in the ordinary course of business, and in any event, to exceed
$25,000; and (iv) without the prior written consent of Lender, it will not enter
into or execute or permit to exist any lien, security interest or encumbrance on
any of the assets of the Company except to secure debt incurred in the normal
course of business (i.e., liens of carriers, warehousemen, mechanics, laborers
and materialmen or incurred in connection with workers compensation or
unemployment insurance), and in any event, not to exceed $25,000.
Notwithstanding the foregoing, the Lender (and/or any affiliates of the Lender)
and the Company may enter into one or several lending transactions subsequent to
the Loan without the requirement of any prior written consent.
5. DEFAULTS AND REMEDIES.
5.1 Events of Default. The following events shall be considered "Events of
Default" with respect to the Note:
(a) The Company shall default in the payment of any part of the
principal or
3
<PAGE>
accrued interest on the Note for more than thirty (30) days after the same
shall become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise;
(b) The Company shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts as they become
due, or shall file a voluntary petition for bankruptcy, or shall file any
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, dissolution or similar relief under any present
or future statute, law or regulation, or shall file any answer admitting
the material allegations of a petition filed against the Company in any
such proceeding, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of the Company, or of
all or any substantial part of the properties of the Company, or the
Company or its respective directors or majority shareholders shall take any
action looking to the dissolution or liquidation of the Company;
(c) Within thirty (30) days after the commencement of any proceeding
against the Company seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or future statute, law or regulation, such proceeding shall not have been
dismissed or, within thirty (30) days after the appointment without the
consent or acquiescence of the Company of any trustee, receiver or
liquidator of the Company or of all or any substantial part of the
properties of the Company, such appointment shall not have been vacated;
(d) The Company fails to perform any obligations or breaches any
covenants contained in this Agreement or the Note, and Company does not
perform such obligation or cure such breach within thirty (30) days after
receipt of written notice from Lender;
(e) Any representation or warranty made by the Company herein is false
or misleading in any material respect; or
(f) The Company sells, transfers, distributes or disposes of all or
substantially all of its assets other than in the ordinary course of
business or merges or consolidates with another person or entity without
the prior written consent of the Lender.
5.2 Remedies. Upon the occurrence of an Event of Default under Section 5.1
hereof, at the option and upon the declaration of the holder of the Note, (i)
the entire unpaid principal and accrued interest on the Note held by such holder
shall, without presentment, demand, protest, or notice of any kind, all of which
are hereby expressly waived, be forthwith due and payable, and the holder may,
immediately and without expiration of any period of grace, enforce payment of
all amounts due and owing under such Note and exercise any and all other
remedies granted to it at law, in equity, or otherwise.
6. MISCELLANEOUS.
6.1 Waivers and Amendments. With the written consent of the record holder
of the Note and the Company, the obligations of the Company and the rights of
the holder of the Note under this Agreement may be waived (either generally or
in a particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely). Neither
4
<PAGE>
this Agreement nor any provisions hereof may be changed, waived, discharged or
terminated orally, but only by a signed statement in writing.
6.2 Further Assurances; Subordination. Upon request of the Company, Lender
will acknowledge in writing its subordination undertakings as set forth in the
Note.
6.3 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York, without regard to its internal conflict of laws
rules.
6.4 Survival. The representations, warranties, covenants and agreements
made herein shall survive until the date on which Company has paid to Lender all
principal and interest owed pursuant to this Agreement and the Note.
6.5 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
Neither Company nor Lender may assign this Agreement, the Note, or any of its
rights, interests or obligations hereunder, or thereunder, without the prior
written consent of the other party hereto; provided, however, that Lender may
(a) assign any or all of its rights and interests under this Agreement and the
Note to one or more of its "affiliates," as that term is defined in Rule
144(a)(1) of the rules and regulations promulgated under the Securities Act of
1933, as amended; and (b) designate one or more of its affiliates to perform its
obligations under this Agreement and the Note.
6.6 Costs and Expenses. The Company promises to pay, upon the Lender's
demand therefor, all costs and expenses, including attorneys' fees, incurred in
the collection and enforcement of this Agreement and the Note.
6.7 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
6.8 Severability of this Agreement. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6.9 Titles and Subtitles. The titles of the Sections and Subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.10 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to the Lender, upon any breach or
default of the Company under this Agreement or the Note, shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character by the Lender of any breach or default under
this Agreement, or any waiver by the Lender of any provisions or conditions of
this Agreement must be in writing and shall be effective only to the extent
5
<PAGE>
specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to the Lender, shall be cumulative
and not alternative.
6.11 Notices. Any notices, claims or demands or other communications
hereunder shall be in writing and shall be deemed to be duly given if personally
given or if sent by telecopier, nationally-recognized overnight courier or by
registered or certified mail, return receipt required and postage prepaid,
addressed to such party in accordance herewith or as otherwise stated in any
notice given in accordance herewith. Any such notice shall be deemed to have
been received (a) in the case or personal delivery or delivery by telecopier, on
the date of such delivery, (b) in the case of a nationally-recognized overnight
courier, on the next business day after the date sent and (c) in the case of
mailing, on the third business day following that on which the piece of mail
containing such communications is posted.
To the Company: booktech.com, inc.
42 Cummings Park
Woburn, Massachusetts 01801
Attention: William G. Christie
Fax: (781) 933-6750
Email: bchristie@booktech.com
To the Lender: Verus Investments Holdings, Inc.
c/o Verus Support Services, Inc.
520 Madison Avenue
New York, New York 10022
Attention: Ajmal Khan
Fax: (212) 588-0869
Email: akhan@verusinternational.com
6.11 Counterparts. This Agreement may be executed by facsimile and in any
number of counterparts, each of which shall be deemed an original, and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first written above.
BOOKTECH.COM, INC.
By: /s/ TED BERNHARDT
------------------------------------------
Ted Bernhardt
Chief Financial Officer
LENDER:
VERUS INVESTMENTS HOLDINGS, INC.
6
<PAGE>
By: /s/ AJMAL KHAN
-----------------------------------------
Ajmal Khan
President and Chief Executive Officer
Principal Amount of Note: $939,261
7
<PAGE>
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS PROMISSORY NOTE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENT OF SAID ACT AND ANY STATE
SECURITIES LAWS.
DATE: EFFECTIVE AS OF DECEMBER 31, 2000 $939,261
BOOKTECH.COM, INC.
PROMISSORY NOTE
booktech.com, inc., a Nevada corporation (the "Company"), for value
received, promises to pay to Verus Investments Holdings, Inc. (the "Lender"),
the principal sum of $939,261, in lawful money of the United States of America
and in immediately available funds, plus simple interest of 8% per annum on the
principal amount hereof as provided below. All principal and accrued interest
shall be due and payable on December 31, 2001 (whether by acceleration or
otherwise). Interest shall be computed on the basis of a year of 365 days for
the actual number of days elapsed.
1. DEFINITIONS. Unless the context indicates otherwise, capitalized terms used
herein shall have the meanings given them in the Loan Agreement (defined below),
provided that the following terms used herein shall have the following meanings:
1.1 "Loan Agreement" means the Loan Agreement dated as of December 31, 2000
between the Lender and the Company.
1.2 "Noteholder," "holder," or similar terms, when the context refers to a
holder of a Note, means any person who shall at the time be the holder of this
Note.
2. PREPAYMENT. The principal amount of this Note and any accrued interest
thereon may be prepaid in whole or in installments by the Company prior to
maturity without penalty.
3. SUBORDINATION. The indebtedness represented by this Note is hereby expressly
subordinated in right of payment to the prior payment in full of all of the
Company's indebtedness for money borrowed from insured banks, licensed insurance
companies, lenders approved pursuant to Section 2.10 of the Loan Agreement, or
other third-party commercial lending institutions regularly engaged in the
business of lending money.
4. LEGAL RATE ADJUSTMENT. Notwithstanding anything herein to the contrary, if at
any time the interest rate applicable to the Loan, together with all fees,
charges and other amounts which are treated as interest on the Loan under
applicable law shall exceed the maximum lawful rate (the "Maximum Rate") which
may be contracted for, charged, taken, received or reserved by the
<PAGE>
Lender in accordance with applicable law, the rate of interest payable in
respect of such Loan hereunder, together with all charges payable in respect
thereof, shall be limited to the Maximum Rate.
5. INDEMNIFICATION. The Company shall defend, indemnify and hold harmless the
Lender and its officers, directors, employees and agents against (a) all
obligations, demands, claims, and liabilities claimed or asserted by any person
in connection with the transactions contemplated by this Note, and (b) all
losses or expenses in any way suffered, incurred, or paid by the Lender as a
result of or in any way arising out of, following, or consequential to
transactions between the Lender and the Company under this Note or otherwise
(including without limitation reasonable attorneys' fees and expenses), expect
for losses caused solely by the Lender's gross negligence or willful misconduct.
6. LOAN AGREEMENT. This Note is the Note referred to in the Loan Agreement and
is entitled to all the benefits provided therein. Reference is made to said Loan
Agreement for the representation and warranties of the Company, the covenants,
the Events of Default and the rights of acceleration of the maturity of the Note
upon an Event of Default, as well as the miscellaneous provisions of Article 6
of the Loan Agreement, all of which are incorporated herein by reference.
7. GOVERNING LAW. This Note shall be governed in all respects by the laws of the
State of New York, without regard to its internal conflict of laws rules.
BOOKTECH.COM, INC.
By:
---------------------------------
Ted Bernhardt
Chief Financial Officer
</TEXT>
</DOCUMENT>
THE SECURITIES REPRESENTED BY THIS PROMISSORY NOTE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENT OF SAID ACT AND ANY STATE
SECURITIES LAWS.
DATE: EFFECTIVE AS OF DECEMBER 31, 2000 $939,261
BOOKTECH.COM, INC.
PROMISSORY NOTE
booktech.com, inc., a Nevada corporation (the "Company"), for value
received, promises to pay to Verus Investments Holdings, Inc. (the "Lender"),
the principal sum of $939,261, in lawful money of the United States of America
and in immediately available funds, plus simple interest of 8% per annum on the
principal amount hereof as provided below. All principal and accrued interest
shall be due and payable on December 31, 2001 (whether by acceleration or
otherwise). Interest shall be computed on the basis of a year of 365 days for
the actual number of days elapsed.
1. DEFINITIONS. Unless the context indicates otherwise, capitalized terms used
herein shall have the meanings given them in the Loan Agreement (defined below),
provided that the following terms used herein shall have the following meanings:
1.1 "Loan Agreement" means the Loan Agreement dated as of December 31, 2000
between the Lender and the Company.
1.2 "Noteholder," "holder," or similar terms, when the context refers to a
holder of a Note, means any person who shall at the time be the holder of this
Note.
2. PREPAYMENT. The principal amount of this Note and any accrued interest
thereon may be prepaid in whole or in installments by the Company prior to
maturity without penalty.
3. SUBORDINATION. The indebtedness represented by this Note is hereby expressly
subordinated in right of payment to the prior payment in full of all of the
Company's indebtedness for money borrowed from insured banks, licensed insurance
companies, lenders approved pursuant to Section 2.10 of the Loan Agreement, or
other third-party commercial lending institutions regularly engaged in the
business of lending money.
4. LEGAL RATE ADJUSTMENT. Notwithstanding anything herein to the contrary, if at
any time the interest rate applicable to the Loan, together with all fees,
charges and other amounts which are treated as interest on the Loan under
applicable law shall exceed the maximum lawful rate (the "Maximum Rate") which
may be contracted for, charged, taken, received or reserved by the Lender in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all charges payable in respect thereof, shall be
limited to the Maximum
1
<PAGE>
Rate.
5. INDEMNIFICATION. The Company shall defend, indemnify and hold harmless the
Lender and its officers, directors, employees and agents against (a) all
obligations, demands, claims, and liabilities claimed or asserted by any person
in connection with the transactions contemplated by this Note, and (b) all
losses or expenses in any way suffered, incurred, or paid by the Lender as a
result of or in any way arising out of, following, or consequential to
transactions between the Lender and the Company under this Note or otherwise
(including without limitation reasonable attorneys' fees and expenses), expect
for losses caused solely by the Lender's gross negligence or willful misconduct.
6. LOAN AGREEMENT. This Note is the Note referred to in the Loan Agreement and
is entitled to all the benefits provided therein. Reference is made to said Loan
Agreement for the representation and warranties of the Company, the covenants,
the Events of Default and the rights of acceleration of the maturity of the Note
upon an Event of Default, as well as the miscellaneous provisions of Article 6
of the Loan Agreement, all of which are incorporated herein by reference.
7. GOVERNING LAW. This Note shall be governed in all respects by the laws of the
State of New York, without regard to its internal conflict of laws rules.
BOOKTECH.COM, INC.
By: /S/ TED BERNHARDT
-----------------------
Ted Bernhardt
Chief Financial Officer
2
</TEXT>
</DOCUMENT>
PROMISSORY NOTE XEROX
--------------------------------------------------------------------------------
Not Accepted until Countersigned by, The Document Company, Xerox
-------------------------------------------------------------------------------- |
| | booktech.com BTC - AMEX | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
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| To: ChainSaw who started this subject | 7/4/2001 12:07:44 AM | | From: jmhollen | | | | Date: JANUARY 10, 2001
Customer Name: BOOK TECH. INC. Customer # 500520424
42 CUMMING PARK
WOBURN, MA. 01801
1. Amount Financed: $455,627.18 3 Total of Payments (1+2): $496,073.34
2. Interest: $40,446.16 4. Interest Rate: 16%
A. TERMS AND REPAYMENT: For value received the undersigned (hereinafter
referred to as "Customer") promises to pay to THE DOCUMENT COMPANY, XEROX
at its offices at HEADQUARTERS PROGRAMS & CONTROL, 150 EAST MAIN ST.,
ROCHESTER, NY 14604, or to anyone Xerox may designate. the sum of
$455,627.18 together with interest at a rate of 16% per annum in 12 equal
monthly payments of $41,339.44 each, beginning FEBRUARY 15, 2001 on the
15TH day of each month thereafter with the final payment of $41,339.44 due
on JANUARY 10, 2002. This will constitute "total of payments" (Item 3,
above). Customer agrees. however, that Xerox may accelerate the outstanding
principle balance of this note upon the happening of any event of default
as defined below.
B. DEFAULT: At Xerox's option, the unpaid balance of the amount financed and
all unpaid accrued interest will become immediately due and payable without
any notice or demand to Customer if any one or more of the following events
occur:
1. Failure to pay any installment due under this agreement within ten
(10) days of the due date;
2. Upon the event of an assignment for the benefit of creditors of, or
the commencement of any bankruptcy, receivership, insolvency, or
liquidation proceedings by or against Customer;
3. Failure to pay any other obligation of Customer to Xerox within thirty
(30) days of due date;
4. Failure of Customer to comply with any or all of the terms and
conditions of this agreement.
C. SECURITY INTEREST: Customer recognizes and agrees that the Security
Interest originally granted to Xerox in connection with any Term Lease,
Installment Purchase, or Outright Sale of equipment under any of the above
referenced customer numbers continues uninterrupted and is additional
security for sums due under this promissory note.
D. LEGAL FEES AND COURT COSTS: In the event that legal proceedings are
instituted to collect any amount due upon any installment of this note, the
undersigned, jointly and
1
<PAGE>
severally, agree to pay to the holder hereof in addition to the amount of
the unpaid balance or principal and accrued unpaid interest, all costs and
expenses of such proceedings including reasonable attorney fees.
E. WAIVER: The undersigned and all guarantors hereof hereby jointly and
severally waive presentment for payment, demand, notice of non-payment, and
notice of sureties. Guarantors consent to any and all extension of time,
renewals, waivers, or modifications that may be granted by Xerox with
respect to the payments or other provisions of this note, and to the
release of the collateral, or any part thereof without substitution and
agree that additional makers, endorsers, guarantors, or sureties may become
parties hereto without notice to them or without affecting their
liabilities thereunder.
No delay or omission to exercise any right, power or remedy accruing to
Xerox upon breach or default by Customer or guarantor under this promissory
note shall impair any such right, power or remedy of Xerox, or shall be
construed as a waiver of any breach or default or any similar breach or
default thereafter occurring; nor shall any waiver of a single breach or
default be deemed a waiver of any subsequent breach or default. All waivers
by Xerox must be in writing.
F. MISCELLANEOUS
Payments due under this Promissory Note shall be made without claim of
set-off, counterclaim or deduction of any nature or kind or for any cause
whatsoever.
Upon prior written notice, Xerox may change the address to which Customer
makes payments under this Promissory Note. Customer shall give Xerox
reasonable prior written notice of any address change by Customer.
The liability of each of the undersigned shall be absolute and
unconditional and without regard to the liability of any other party.
This promissory note and the security interest(s) granted to Xerox shall be
governed by and interpreted in accordance with the laws of MA.
01.11.01 booktech.com
----------------------------- ----------------------------------------
Date Print Name of Customer
By: /s/ MORRIS A SHEPARD
-----------------------------
Name and Title
Morris A. Shepard, Ph.D.
2
<PAGE>
As additional consideration for the refinancing of the principal balance of this
Promissory Note, the undersigned personally guarantees payment of this note in
accordance with its tenor.
/S/ MORRIS A. SHEPARD 01.11.01
---------------------------------- ----------------------------------------
Guarantor Date
---------------------------------- ----------------------------------------
Guarantor Date
33 Fells Road
----------------------------------
Address
Winchester, MA 01890
----------------------------------
Accepted by The Document Company, Xerox:
----------------------------------------
Name and Title
3
</TEXT>
</DOCUMENT>
EXHIBIT 11.1
booktech.com, inc. and Subsidiary
Computation of Net Loss Per Common Share
For the Year Ended December 31, 2000, the Five Months Ended December 31, 1999
and the Year Ended July 31, 1999
<TABLE>
<CAPTION>
Five Months
Year Ended Ended
December 31, December 31, Year Ended
2000 1999 July 31, 1999
------------ ------------ -------------
<S> <C> <C> <C>
BASIC NET LOSS PER COMMON SHARE:
Net loss attributable to common stockholders ........... $ (8,194,279) $ (1,060,646) $ (2,182,431)
------------ ------------ ------------
Weighted average number of common shares outstanding:
Common Stock ...................................... 16,123,291 6,921,001 6,016,552
------------ ------------ ------------
Basic net loss per common share ........................ $ (.51) $ (.15) $ (.36)
============ ============ ============
DILUTED NET LOSS PER COMMON SHARE:
Net loss attributable to common stockholders ........... $ (8,194,279) $ (1,060,646) $ (2,182,431)
------------ ------------ ------------
Weighted average number of common shares outstanding:
Common Stock ...................................... 16,123,291 6,921,001 6,016,552
Effect of Potentially dilutive common shares ...... -- -- --
------------ ------------ ------------
Total ........................................ 16,123,291 6,921,001 6,016,552
------------ ------------ ------------
Diluted net loss per common share ................. $ (.51) $ (.15) $ (.36)
============ ============ ============
</TABLE>
</TEXT>
</DOCUMENT>
EXHIBIT 21
booktech.com, inc. and Subsidiary
Subsidiary of the Registrant
Subsidiary Name State of Incorporation
---------------- ----------------------
booktechmass. com, inc. Massachusetts
42 Cummings Park
Woburn, Massachusetts 01801 |
| | booktech.com BTC - AMEX | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last ReadRead Replies (1) |
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| To: jmhollen who wrote (47) | 7/6/2001 1:52:28 PM | | From: RockyBalboa | | | | If you are going the wrong direction it is useless to double the speed.
Booktech
$0.39 -$0.34.
A lil' sleeper, your stock, I would say. |
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