SECURITIES PURCHASE AGREEMENT BY AND AMONG CATALYST LIGHTING GROUP, INC. AND KIG INVESTORS I, LLC DATED AS OF AUGUST 22, 2007
BY
AND AMONG
CATALYST
LIGHTING GROUP, INC.
AND
KIG
INVESTORS I, LLC
DATED
AS OF AUGUST 22, 2007
THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”)
is
made and entered into as of August 22, 2007, by and among KIG Investors I,
LLC,
a Delaware limited liability company (the "Buyer")
and
Catalyst Lighting Group, Inc. a Delaware corporation (the “Company").
RECITALS
A. The
Company currently has 4,190,642 shares of common stock, $0.01 par value, issued
and outstanding (“Common
Stock”).
B. The
Company desires to issue to the Buyer 1,572,770 shares of Series A Convertible
Preferred Stock, $0.01 par value (“Preferred
Shares”)
which
are convertible into 25,620,147 shares of Common Stock (“Conversion
Shares”),
and
the Buyer desires to purchase the Preferred Shares from the Company
(“Stock
Issuance”),
for a
purchase price of $157,277, or $0.10 per share, and on such other terms and
conditions set forth herein.
C. As
a
condition of the Stock Issuance, the proceeds of the purchase price from the
Stock Issuance shall be used to pay certain liabilities and obligations of
the
Company, all as more specifically set forth herein.
D. As
a
further condition to the Stock Issuance, the Company shall have entered into
certain settlement and release agreements (“Settlement
Agreements”)
with
certain creditors of the Company (“Settlement
Creditors”)
pursuant to which such creditors have agreed to accept, in the aggregate, up
to
11,542,574 shares of the Company common stock (“Settlement
Shares”)
in
exchange for each creditor’s agreement to terminate and cancel any and all
agreements and contracts with the Company (including any warrants to purchase
shares of the Company’s common stock) and to irrevocably release the Company
from any and all debts, liabilities and obligations, pursuant to the terms
and
conditions set forth in such Settlement Agreements, which such terms and
conditions shall be acceptable to the Buyer.
E. In
connection with the Stock Issuance, the Conversion Shares underlying the
Preferred Shares issued by the Company to the Buyer will be granted registration
rights pursuant to the terms and conditions set forth in a certain registration
rights agreement between the Company, the Buyer and the Settlement Creditors,
the form of which is attached hereto as Exhibit A (“Registration
Rights Agreement”).
F. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated under this Agreement and the execution and delivery of the
Registration Rights Agreement have been duly authorized and approved by the
directors of the Company, and no approval of the stockholders of the Company
is
required with respect to any of the foregoing.
NOW,
THEREFORE, in consideration of the above recitals, the covenants, promises
and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE
I
SALE
AND PURCHASE
1.1 Sale
and Purchase of Shares; Registration Rights. At
the
Closing and subject to and upon the terms and conditions of this Agreement,
the
Company agrees to sell and issue to the Buyer, and the Buyer agrees to purchase
from the Company, the Preferred Shares. The Preferred Shares, when issued,
shall
have registration rights pursuant to the terms and conditions of the
Registration Rights Agreement, which Registration Rights Agreement shall be
executed and delivered by the Company and the Buyer at Closing. As of Closing,
the Preferred Shares shall constitute not less than 61.8% of the issued and
outstanding shares of the Company’s Common Stock on an as-converted and fully
diluted basis. The sale and purchase of Preferred Shares contemplated hereunder
shall be referred to herein as the "Transaction"
or the
“Stock
Issuance”.
1.2 Closing. Unless
this Agreement shall have been terminated pursuant to Article VIII hereof,
and
subject to the satisfaction and waiver of the conditions set forth in Article
VI
hereof, the closing of the Transaction (the “Closing”)
shall
take place at the offices of the Buyer on a date not later than three (3)
business following the satisfaction or and waiver of the conditions set forth
in
Article VI hereof or such other date mutually agreeable to the Buyer and the
Company (the “Closing
Date”).
1.3 Purchase
Price.
The
aggregate purchase price for the Preferred Shares shall be One Hundred
Fifty-Seven Thousand Two Hundred Seventy-Seven Dollars ($157,277) ("Purchase
Price").
1.4 Issuance
of Certificates Representing the Preferred Shares.
At
Closing, the Company shall deliver certificate(s) representing the Preferred
Shares with the restrictive legend under the Securities Act of 1933, as amended
(“Securities
Act”).
1.5 Taking
of Necessary Action; Further Action.
If,
at
any time after the Closing, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest Buyer with full right,
title and possession to the Preferred Shares, the Company will take all such
lawful and necessary action.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE
COMPANY
The
Company hereby represents and warrants to, and covenants with, the Buyer, as
follows:
2.1 Organization
and Qualification.
(a) The
Company is a corporation duly incorporated or organized, validly existing and
in
good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted by the
Company. The Company is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
(“Approvals”)
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being by the Company. The
Company is duly qualified to conduct its business in each state and each foreign
jurisdiction in which is required to do so. The Company has filed each annual
corporate or information report (“Annual
Report”)
required to be filed by it in the state of Delaware and in each state and
foreign jurisdiction in which it is required to be qualified to do business
as a
foreign corporation. Complete and correct copies of the articles of
incorporation or organization and by-laws (or other comparable governing
instruments with different names) (collectively referred to herein as
"Charter
Documents")
of the
Company, as amended and currently in effect, and each Annual Report filed by
the
Company have been heretofore delivered to the Buyer. The Company is not in
violation of any of the provisions of the Company's Charter
Documents.
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(b) The
minute books of the Company contain true, complete and accurate records of
all
meetings and consents in lieu of meetings of its Board of Directors (and any
committees thereof), similar governing bodies and stockholders ("Corporate
Records"),
since
the time of the Company's organization. Copies of such Corporate Records of
the
Company have been heretofore delivered to the Buyer.
(c) The
Company has heretofore delivered to the Buyer a true, complete and accurate
record of the registered ownership of the Company's capital stock maintained
by
the Transfer Agent as of a recent date acceptable to the Buyer and a record
of
the beneficial ownership of the Company’s capital stock as of a recent date
acceptable to the Buyer, together stock transfer and issuance ledgers and
records from the Transfer Agent ("Stock
Records").
2.2 Subsidiaries.
Whitco
Company, LP (“Whitco”),
a
Texas limited partnership, was formerly a wholly-owned subsidiary of the
Company, but Whitco was dissolved and terminated as a result of the dissolution
of Whitco Management, LLC (“Whitco
Management”),
a
Delaware limited liability company and sole general partner of Whitco. The
Company was the sole member of Whitco Management.
2.3 Authority
Relative to this Agreement.
The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby (including the Transaction). The execution
and
delivery of this Agreement and the consummation by the Company of the
transactions contemplated hereby (including the Transaction) have been duly
and
validly authorized by all necessary corporate action on the part of Company
(including the approval by its board of directors), and no other corporate
proceedings on the part of the Company (including the approval of the Company’s
stockholders) are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by the Buyer, constitutes the legal and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization
or
other similar laws affecting the enforcement of creditors’ rights generally and
by general principles of equity and public policy.
2.4 No
Conflict; Required Filings and Consents.
(a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company shall not: (i) conflict with or
violate the Company's Charter Documents, (ii) conflict with or violate any
Legal
Requirements to which the Company is bound, or (iii) result in any breach of
or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or materially impair the Company’s rights or
alter the rights or obligations of any third party under, or give to others
any
rights of termination, amendment, acceleration or cancellation of, or result
in
the creation of a lien or encumbrance on any of the properties or assets of
the
Company pursuant to any Contracts (as defined in Section 2.16) except, with
respect to clauses (ii) or (iii), for any such conflicts, violations, breaches,
defaults or other occurrences that would not, individually and in the aggregate,
have a Material Adverse Effect on the Company, taken as a whole. For purposes
of
this Agreement, “Legal
Requirements”
means
any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity (as defined in Section 2.4(b)), and all requirements
set forth in applicable Contracts.
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(b) The
execution and delivery of this Agreement by the Company does, and the
performance of its obligations hereunder will not, require any consent,
approval, authorization or permit of, filing with, or notification to, any
court, administrative agency, commission, governmental or regulatory authority,
domestic or foreign (a “Governmental
Entity”),
except for applicable requirements, if any, of the Securities Act, the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
state
securities laws (“Blue
Sky Laws”),
and
the rules and regulations thereunder, and appropriate documents with the
relevant authorities of other jurisdictions in which the Company is qualified
to
do business.
2.5 Capitalization.
(a) The
authorized capital stock of the Company consists of 40,000,000 shares of common
stock, $0.01 par value ("Common
Stock")
and
10,000,000 shares of preferred stock, $0.01 par value ("Preferred
Stock")
of
which 1,600,000 shares will be designated as Series A Convertible Preferred
Stock pursuant to the Certificate of Designations of Series A Convertible
Preferred Stock attached hereto as Exhibit
B)
("Series
A Preferred Stock Designations").
At
the close of business on the business day prior to the date hereof:, (i)
4,190,642 shares of the Company’s common stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable; (ii) no shares of
the
Company’s preferred stock were issued and outstanding; (iii) no options to
purchase the Company’s common stock were outstanding; (iv) warrants to purchase
40,433 shares of the Company’s common stock were outstanding (which excludes
warrants to be cancelled under the Settlement Agreements and warrants to be
cancelled by ▇▇▇▇▇▇▇ Investments, LLC) )(“Warrants”);
and
(v) no notes, debentures or securities convertible into the Company’s common
stock are outstanding (other than convertible notes held by Laurus Master Fund,
Ltd. which will be terminated and canceled under the Settlement Agreements
(“Laurus
Notes”)).
All
shares of the Company’s common stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instrument pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid
and
nonassessable. All securities of the Company have been issued and granted in
compliance with (i) all applicable securities laws and regulations, (ii) all
Legal Requirements, and (iii) all requirements set forth in any applicable
contracts. Prior to Closing, there will an aggregate of 1,600,000 shares of
authorized but unissued shares of Series A Convertible Preferred Stock, par
value $0.01 per share (“Series
A Preferred Stock”),
which, subject to the approval of the Company’s stockholders of the Reverse
Split (as defined herein) and the Certificate of Amendment (as defined herein),
which approval in any case shall be required to have occurred subsequent to
the
Closing (“Stockholder
Approval”):
(i)
shall be convertible into 16.28982 shares of Common Stock for each share of
Series A Preferred Stock, subject to adjustment for the Reverse Split. Upon
the
issuance of the shares of the Series A Preferred Stock, and, subject to the
Stockholder Approval, the Conversion Shares issuable upon conversion thereof,
when issued, will be validly issued, fully paid and non-assessable. The term
“Reverse
Split”
shall
mean a 1-for-10 reverse stock split of the Company’s outstanding shares of
common stock, and the “Certificate
of Amendment”
shall
mean the amendment to the Company’s certificate of incorporation which, in
addition to the Reverse Split, provides for an increase in the authorized shares
of the Company’s common stock from 40,000,000 shares to 200,000,000 shares, and
the reduction of the par value for the Company’s common and preferred stock from
$0.01 to $0.0001 per share.
(b) Except
for the Warrants, Laurus Notes and the Settlement Agreements, (i) there are
no
subscriptions, options, warrants, equity securities, partnership interests
or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which the Company is a party
or by
which it is bound obligating the Company to issue, deliver or sell, or cause
to
be issued, delivered or sold, or to repurchase, redeem or otherwise acquire,
or
cause the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of the Company or
obligating the Company to grant, extend, accelerate the vesting of or enter
into
any such subscription, option, warrant, equity security, call, right, commitment
or agreement, (ii) there are no lock up agreements or other agreements affecting
the transfer of any equity security of any class of the Company, and (iii)
there
are no bonds, debentures, notes or other indebtedness of the Company issued
or
outstanding having the right to vote (or convertible into, or exchangeable
for,
securities having the right to vote) on any matters on which the stockholders
of
the Company may vote.
4
(c) Except
as
contemplated by this Agreement and under the Settlement Agreements, there are
no
registration rights, and there is no voting trust, proxy, rights plan,
anti-takeover plan, or other agreement or understanding to which the Company
is
a party or by which the Company is bound with respect to any equity security
of
any class of the Company.
(d) The
Preferred Shares to be issued with respect to the Transaction contemplated
under
this Agreement shall, when issued, be duly authorized, validly issued, fully
paid and nonassessable, shall be free and clear of all liens, claims, charges,
encumbrances, pledges, mortgages, security interests, options, rights to
acquire, proxies, voting trusts or similar agreements, restrictions on transfer
or adverse claims of any nature whatsoever (“Liens”)
and
shall have been issued in compliance with all Legal Requirements.
2.6 Compliance.
The
Company
has complied with, are not in violation of, any laws, rules or regulations
of
any Governmental Entity including, without limitation, any and all applicable
securities laws and regulations, environmental laws and regulations, and laws
and regulations regarding hazardous and toxic substances and materials, except
for failures to comply or violations which, individually or in the aggregate,
have not had and are not reasonably likely to have a Material Adverse Effect
on
the Company.
2.7 Financial
Statements; Filings.
(a) The
Company has made available to the Buyer each report and statement filed by
the
Company with any Governmental Entity (the “Company
Reports”),
which
are all the forms, reports and documents required to be filed by the Company
with any Governmental Entity, and such Company Reports are true, correct and
complete. As of their respective dates, the Company Reports (i) were prepared
in
accordance and complied in all material respects with the requirements of the
applicable Governmental Entity, and the rules and regulations of such
Governmental Entities applicable to such Company Reports, and (ii) did not
at
the time they were filed (and if amended or superseded by a filing prior to
the
date of this Agreement then on the date of such filing and as so amended or
superceded) contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent set forth in the preceding sentence, the
Company makes no representation or warranty whatsoever concerning the Company
Reports as of any time other than the time they were filed.
(b) The
Company has provided to the Buyer a correct and complete copy of the audited
financial statements (including, in each case, any related notes thereto) of
the
Company and each Subsidiary for the fiscal years ended September 30, 2004 and
2003, complied as to form in all material respects with the published rules
and
regulations of any applicable Governmental Entity, prepared in accordance with
the generally accepted accounting principles of the United States ("U.S.
GAAP")
applied on a consistent basis throughout the periods involved (except as may
be
indicated in the notes thereto), audited by a certifying accountant registered
with the Public Company Accounting Oversight Board (“PCAOB”),
and
each fairly presents in all material respects the financial position of the
Company and Subsidiaries at the respective dates thereof and the results of
its
operations and cash flows for the periods indicated.
5
(c) The
Company shall provide to the Buyer prior to the Closing, a correct and complete
copy of the audited consolidated financial statements (including all related
notes thereto) of the Company for the fiscal year ended September 30, 2005,
complied as to form in all material respects with the published rules and
regulations of any applicable Governmental Entity, prepared in accordance with
U.S. GAAP applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto), and fairly presenting in all material
respects the financial position of the Company and Subsidiaries at the date
thereof and the results of its operations and cash flows for the periods
indicated.
(d) The
Company has previously furnished to the Buyer a complete and correct copy of
any
amendments or modifications, which have not yet been filed with the applicable
Governmental Entities but which are required to be filed with respect to the
Company, to agreements, documents or other instruments which previously had
been
filed by the Company with the applicable Governmental Entities pursuant to
applicable rules and regulations. The books of account and other financial
records of the Company have been maintained in accordance with good business
practice.
(e) On
December 27, 2005, the Company filed Form 15-12G (“Form
15”)
to
withdraw the registration of its common stock under the Exchange Act, the Form
15 was true, accurate and complete, and the Company did not receive any notice
or comment from the SEC with respect thereto. Accordingly, none of the Company’s
securities are currently registered under Section 12(g) of the Exchange Act.
2.8 No
Liabilities. Except
as
set forth in Schedule
2.8
hereto
and except for the obligations of the Company under the Settlement Agreements
and Registration Rights Agreement, the Company has no Liabilities. For purposes
of this Agreement, “Liability”
or
“Liabilities”
shall
mean all debts, liabilities and obligations, direct, indirect, absolute or
contingent of the Company, whether accrued, vested or otherwise, whether known
or unknown and whether or not reflected, or required in accordance with U.S.
GAAP to be reflected, in the Company’s balance sheet. The proceeds of the
Purchase Price will be sufficient to pay and satisfy in full, at Closing, all
Liabilities set forth on Schedule
2.8
hereto
(“Scheduled
Liabilities”).
2.9 Absence
of Certain Changes or Events. Since
September 30, 2006, there has not been: (i) any Material Adverse Effect on
the
Company, (ii) any declaration, setting aside or payment of any dividend on,
or
other distribution (whether in cash, stock or property) in respect of, any
of
the Company’s capital stock, or any purchase, redemption or other acquisition of
any of the Company’s capital stock or any other securities of the Company or any
options, warrants, calls or rights to acquire any such shares or other
securities, (iii) any split, combination or reclassification of any of the
Company’s capital stock, (iv) any granting by the Company of any increase in
compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
(v) any material change by the Company in its accounting methods, principles
or
practices, except as required by concurrent changes in U.S. GAAP, (vi) any
change in the auditors of the Company, (vii) any issuance of capital stock
of
the Company, or (vii) any revaluation by the Company of any of their respective
assets, other than in the ordinary course of business.
6
2.10 Litigation.
There
are
no claims, suits, actions or proceedings (at law or in equity) pending or
threatened against the Company, before any Governmental Entity or arbitrator
(including, without limitation, any allegation of criminal conduct or a
violation of the Racketeer and Influenced Corrupt Practices, as amended), and
the Company is not subject to any outstanding order, writ, judgment, injunction,
order, decree or arbitration order. There are no suits, actions, claims,
proceedings pending or threatened, seeking to prevent, hinder, modify or
challenge the transactions contemplated under this Agreement.
2.11 Employee
Benefit Plans.
(a) The
Company does not have in place any arrangement or policy (written or oral)
providing for insurance coverage, workers’ compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, severance or termination
benefits, retirement or deferred compensation, profit sharing, bonuses, stock
options, stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which is
maintained or administered by the Company, or to which the Company contributes,
and which covers any employee or former employee of the Company or under which
the Company has any liability, including any “employee welfare benefit plan,”
“employee benefit plan” and “employee pension benefit plan” as defined under the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
(b) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any stockholder, director, employee or consultant of the
Company.
2.12 Labor
Matters.
The
Company is not a party to any collective bargaining agreements or labor union
contract. There are no strikes or labor disputes or lawsuits, unfair labor
or
unlawful employment practice charges, contract grievances or similar actions
pending or threatened by any of the employees, former employees or employment
applicants of the Company.
2.13 Restrictions
on Business Activities. There
is
no agreement, commitment, judgment, injunction, order or decree binding upon
Company or to which Company is a party which has or could reasonably be expected
to have the effect of prohibiting or materially impairing any business practice
of the Company, any acquisition of property by the Company or the current or
future conduct of business by the Company.
2.14 Taxes.
(a) Definition
of Taxes.
For
the
purposes of this Agreement, “Tax”
or
“Taxes”
refers
to any and all federal, state, local and foreign taxes, including, without
limitation, gross receipts, income, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, assessments, governmental charges and
duties together with all interest, penalties and additions imposed with respect
to any such amounts and any obligations under any agreements or arrangements
with any other person with respect to any such amounts and including any
liability of a predecessor entity for any such amounts.
(b) Tax
Returns and Audits.
(i)
the
Company has timely filed all federal, state, local and foreign returns,
estimates, information statements and reports relating to Taxes (“Returns”)
required to be filed by the Company with any Tax authority prior to the date
hereof, except such Returns which are not material to the Company and for those
income tax returns for the Company’s fiscal year ended September 30, 2006. All
such Returns are true, correct and complete in all material respects. The
Company has paid all Taxes shown to be due on such Returns.
7
(ii)
All
Taxes
that the Company is required by law to withhold or collect have been duly
withheld or collected, and have been paid over to the proper governmental
authorities.
(iii)
The
Company has not been delinquent in the payment of any material Tax nor is there
any material Tax deficiency outstanding, proposed or assessed against the
Company, nor has the Company executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of
any
Tax.
(iv)
No
audit
or other examination of any Return of the Company by any Tax authority is
presently in progress, nor has the Company been notified of any request for
such
an audit or other examination.
(v)
No
adjustment relating to any Returns filed by the Company has been proposed in
writing, formally or informally, by any Tax authority to the Company or any
representative thereof.
(vi)
The
Company has no liability for any Taxes for its current fiscal year, whether
or
not such Taxes are currently due and payable.
2.15 No
Brokers; Third Party Expenses.
Neither
the Neither
company nor the principals of the Company have incurred, nor will they incur,
directly or indirectly, any liability for brokerage commissions in connection
with this Agreement or any transaction contemplated hereby.
2.16 Agreements,
Contracts and Commitments.
Except
as set forth in Schedule
2.16,
(a)
there are no written employment agreements, termination or severance agreements,
or consulting agreements with the current or former officers, directors,
employees or consultants of the Company and to which the Company is a party;
(b)
the Company is not a party to and is not bound by any commitment, agreement
or
other instrument which contemplates payment of any monies or which is otherwise
material to the operations, assets or financial condition of the Company,
including but not limited to any royalty, franchising fees, or any other fee
based on a percentage of revenues or income; (c) the Company is not a party
to
and is not bound by any commitment, agreement or instrument which limits the
freedom of the Company to compete in any line of business or with any Person;
and (d) the Company is not in default in any material respect under any material
lease, contract, mortgage, indentures, note, deed of trust, loan agreement,
bond, guaranty, liens, license, permit, franchise, purchase orders, sales
orders, arbitration awards, judgments, decrees, orders, documents, instruments,
understandings and commitments, or other instrument or obligation of any kind,
whether written or oral. True, correct and complete copies of each contract,
commitment, agreement, obligation or instrument to which the Company is
currently a party or bound under (or written summaries in the case of oral
contracts) have been heretofore delivered to the Buyer.
2.17 Interested
Party Transactions.
No
employee, officer, director or 5% or more stockholder of the Company or a member
of his or her immediate family is indebted to the Company, nor is the Company
indebted (or committed to make loans or extend or guarantee credit) to any
of
them, other than (i) for payment of salary for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of the Company, and
(iii) for other employee benefits made generally available to all employees,
and
all related party transactions between such persons and the Company have been
fully and properly disclosed in the Company Reports.
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2.18 Pink
Sheet Quotation.
The
Company's common stock is quoted on the “pink sheets’ quotation system
maintained by Pink Sheets, LLC. There is no action or proceeding pending or,
to
Company's knowledge, threatened against the Company by NASDAQ or the National
Association of Securities Dealers ("NASD")
with
respect to any intention by such entities to prohibit or terminate the quotation
of the Company’s Common Stock on the “pink sheets.” There is no action pending
or threatened, to Company's knowledge, by any market maker in the Company's
common stock to discontinue their market making activities with respect thereto.
2.19 Investment
Company Act.
The
Company is not an “investment company” or an “affiliated person” of or
“promoter” or “principal underwriter” or an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended, nor is the
Company otherwise subject to regulation thereunder. The Company is not a
“holding company” as that term is defined in, and is not otherwise subject to
regulation under, the Public Utility Holding Company Act of 1935.
2.20 Bankruptcy
and Criminal Proceedings.
Except
for the filing by the Company on July 25, 2006 of a voluntary petition for
relief under Chapter 11 of the U.S. Bankruptcy Code, which petition was
dismissed on January 9, 2007, neither the Company and its respective officers,
directors, affiliates, promoters nor any predecessor of the Company have been
subject to or suffered any of the following:
(a) a
petition under the Federal bankruptcy laws or any other insolvency or moratorium
law or has a receiver, fiscal agent or similar officer been appointed by a
court
for such person, or any partnership in which such person was a general partner
at or within two years before the time of such filing, or any corporation or
business association of which such person was an executive officer at or within
two years before the time of such filing;
(b) a
conviction in a criminal proceeding or a named subject of a pending criminal
proceeding (excluding traffic violations which do not relate to driving while
intoxicated or driving under the influence);
(c) any
order, judgment or decree, not subsequently reversed, suspended or vacated,
of
any court of competent jurisdiction, permanently or temporarily enjoining,
barring suspending or otherwise limiting such person’s involvement in any type
of business, securities or banking activities;
or
(d) been
found guilty by a court of competent jurisdiction in a civil action or by the
U.S. Securities and Exchange Commission (“SEC”),
the
Commodity Futures Trading Commission (“CFTC”)
or
state securities regulators and commissions to have violated any federal or
state securities or commodities law, regulation or decree and the judgment
in
such civil action or finding by the SEC, CFTC or state securities regulators
or
commissions has not been subsequently reversed, suspended or vacated.
2.21 Assets;
Properties and Insurance.
At
Closing, the Company will not have any assets, whether tangible or intangible,
will not own any real or personal property and will not maintain any insurance
of any kind.
2.22 Environmental
Matters.
The
Company: (a) has not received any written notice, citation, claim, assessment,
proposed assessment or demand for abatement alleging that it is responsible
for
the correction or cleanup of any condition resulting from a violation of any
law, ordinance or other governmental regulation regarding environmental matters;
(b) has no knowledge that any toxic or hazardous substances or materials have
been emitted, generated, disposed of or stored on any real property owned or
leased by it, or owned or controlled by it as a trustee or fiduciary
(collectively, the “Properties”),
in
any manner that violates or, after the lapse of time may violate, any presently
existing federal, foreign, regional, state or local law or regulation governing
or pertaining to such substances and materials; and (c) has no knowledge that,
during its ownership or lease of such Properties, any of such Properties has
been operated in any manner that violated any applicable federal, foreign,
regional, state or local law or regulation governing or pertaining to toxic
or
hazardous substances and materials.
9
2.23 Intellectual
Property.
There
are no arrangements relating to the use by the Company of any intellectual
property owned by another Person, and the Company has not at any time been
in
breach of such arrangements. The Company has not granted and is not obligated
to
grant a license, assignment or other right with respect to any intellectual
property.
2.24 Representations
and Warranties Complete.
The
representations and warranties of the Company included in this Agreement and
any
list, statement, document or information set forth in, or attached to, any
Schedule provided pursuant to this Agreement or delivered hereunder, are true
and complete in all material respects and do 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 contained therein not misleading, under
the
circumstance under which they were made.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
Buyer
represents and warrants to, and covenants with, the Company, as follows:
3.1 Organization.
The
Buyer is a limited liability company duly organized and validly existing under
the laws of the State of Delaware and has the requisite power and authority
to
own, lease and operate its assets and properties and to carry on its business
as
it is now being or currently planned by the Buyer to be
conducted.
3.2 Authority
Relative to this Agreement.
The
Buyer has full power and authority to: (i) execute, deliver and perform this
Agreement, and each ancillary document which the Buyer has executed or delivered
or is to execute or deliver pursuant to this Agreement, and (ii) carry out
the
Buyer's obligations hereunder and thereunder and, to consummate the transactions
contemplated hereby (including the Transaction). The execution and delivery
of
this Agreement and the consummation by the Buyer of the transactions
contemplated hereby (including the Transaction) have been duly and validly
authorized by all necessary action on the part of the Buyer (including the
approval by its Board of Managers), and no other proceedings on the part of
the
Buyer are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Buyer and, assuming the due authorization,
execution and delivery thereof by the Company, constitutes the legal and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors’ rights generally and
by general principles of equity and public policy.
3.3 No
Conflict; Required Filings and Consents.
(a) The
execution and delivery of this Agreement by the Buyer does not, and the
performance of this Agreement by the Buyer, shall not: (i) conflict with or
violate the Buyer's certificate of organization or operating agreement, or
(ii)
subject to obtaining the adoption of this Agreement and the Transaction by
the
Board of Managers, conflict with or violate any laws or
regulations.
10
(b) The
execution and delivery of this Agreement by the Buyer does not, and the
performance of its obligations hereunder will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except for applicable requirements, if any, of the Exchange
Act and the rules and regulations thereunder.
3.4 Brokers.
The
Buyer has not incurred, nor will it incur, directly or indirectly, any liability
for brokerage or finders' fees or agent’s commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
3.5
Approval.
The
Board of Managers of the Buyer has, as of the date of this Agreement,
unanimously declared the advisability of the Transaction and approved this
Agreement and the transactions contemplated hereby.
3.6
Acquisition
of Shares for Investment.
The
Buyer is an “accredited investor,” as such term is defined in Section 2(15) of
the Securities Act and Rule 501 of Regulation D promulgated thereunder, the
Buyer is purchasing the Preferred Shares (and upon conversion, the Conversion
Shares) for the Buyer’s own account, solely for investment purposes, and not
with a view to, or for resale in connection with, any distribution thereof
or
with any present intention of distributing or selling any of the Preferred
Shares (and upon conversion, the Conversion Shares), except as allowed by the
Securities Act, or any rules and regulations promulgated thereunder. The Buyer
understands and agrees that the Preferred Shares (and upon conversion, the
Conversion Shares) being acquired pursuant to this Agreement have not been
registered under the Securities Act or under any applicable state securities
laws and may not be sold, pledged, assigned, hypothecated or otherwise
transferred ("Transfer"),
except pursuant to an effective registration statement under the Securities
Act
or pursuant to an exemption from registration under the Securities Act, the
availability of which shall be established to the satisfaction of the Company
at
or prior to the time of Transfer. The Buyer acknowledges that it must bear
the
economic risk of its investment in the Preferred Shares (and upon conversion,
the Conversion Shares) for an indefinite period of time since the Preferred
Shares (and upon conversion, the Conversion Shares) have not been registered
under the Securities Act and therefore cannot be sold unless the Preferred
Shares (and upon conversion, the Conversion Shares) are subsequently registered
or an exemption form registration is available. The Buyer has received and
reviewed such information concerning the Company as it deems necessary to
evaluate the risks and merits of its investment in the Company. The Buyer has
such knowledge and experience in financial matters as to be capable of
evaluating the merits and risks of an investment in the Preferred Shares (and
upon conversion, the Conversion Shares). The sale of the Preferred Shares (and
upon conversion, the Conversion Shares) to the Buyer is being made without
any
public solicitation or advertisements.
3.7 Bankruptcy
and Criminal Proceedings.
Neither
the Buyer nor its managers, affiliates, promoters nor any predecessor of the
Buyer have been subject to or suffered any of the following:
(a) a
petition under the Federal bankruptcy laws or any other insolvency or moratorium
law or has a receiver, fiscal agent or similar officer been appointed by a
court
for such person, or any partnership in which such person was a general partner
at or within two years before the time of such filing, or any corporation or
business association of which such person was an executive officer at or within
two years before the time of such filing;
11
(b) a
conviction in a criminal proceeding or a named subject of a pending criminal
proceeding (excluding traffic violations which do not relate to driving while
intoxicated or driving under the influence);
(c) any
order, judgment or decree, not subsequently reversed, suspended or vacated,
of
any court of competent jurisdiction, permanently or temporarily enjoining,
barring suspending or otherwise limiting such person’s involvement in any type
of business, securities or banking activities; or
(d) been
found guilty by a court of competent jurisdiction in a civil action or by the
U.S. Securities and Exchange Commission (“SEC”),
the
Commodity Futures Trading Commission (“CFTC”)
or
state securities regulators and commissions to have violated any federal or
state securities or commodities law, regulation or decree and the judgment
in
such civil action or finding by the SEC, CFTC or state securities regulators
or
commissions has not been subsequently reversed, suspended or
vacated.
3.8 Representations
and Warranties Complete.
The
representations and warranties of the Buyer included in this Agreement and
any
list, statement, document or information set forth in, or attached to, any
Schedule provided pursuant to this Agreement or delivered hereunder, are true
and complete in all material respects and do 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 contained therein not misleading, under
the
circumstance under which they were made.
ARTICLE
IV
CONDUCT
PRIOR TO THE EFFECTIVE TIME
During
the period from the date of this Agreement and continuing until the earlier
of
the termination of this Agreement pursuant to its terms or the Closing, the
Company, except to the extent that the Buyer shall otherwise consent in writing,
shall carry on its business in the usual, regular and ordinary course consistent
with past practices, in substantially the same manner as heretofore conducted
and in compliance with all applicable laws and regulations, pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, pay
or
perform other material obligations when due, and use its commercially reasonable
efforts consistent with past practices and policies to preserve substantially
intact its present business organization.
ARTICLE
V
ADDITIONAL
AGREEMENTS
5.1 Payment
of Company Closing Obligations.
Any and
all debts,
liabilities or obligations of the Company, whether or not such obligations
are
due at the time of Closing (including, without limitation: (i) the Scheduled
Liabilities and all fees and expenses incurred by the Company for attorneys,
accountants, advisors and consultants in connection with the Transaction, and
(ii) any advances made to the Company, or any expenses paid on behalf of the
Company, by the Buyer or its affiliates for the payment of costs associated
with
the Compliance Matters or any other corporate purpose.
5.2 Resignations
and Appointments of Company's Officers and Directors.
At or
prior to Closing, the Company shall deliver to the Buyer resignations, in a
form
and substance acceptable to the Buyer, providing for the resignation of all
of
the directors (except for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) and all officers of the Company
other than ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Resignations").
12
5.3 Undertaking
by New Company Accountants.
At or
prior to Closing, the Company shall obtain, and deliver to the Buyer, an
undertaking from a registered public accounting firm acceptable to the Buyer
(“Accountant”),
in a
form and substance satisfactory to the Buyer, providing that: (i) the Accountant
agrees to an engagement with Company to serve as its registered public
accounting firm following the Closing for purposes of auditing the Company’s
financial statements for the fiscal years ended September 30, 2006 and 2007,
at
rates acceptable to the Buyer, (ii) the Accountant is willing to act as the
Company’s registered public accounting firm for ongoing reporting requirements
under the Exchange Act including, without limitation, the filing of Forms 10-QSB
and 10-KSB, at the rates and charges acceptable to the Buyer, (iii) the
Accountant is duly registered with the U.S. Public Company Accounting Oversight
Board ("PCAOB"),
and
(iv) the Accountant shall provide its consent to the use of its audited
financial statements and accompanying report in any regulatory filing by the
Company prior to or following the Closing including, without limitation, the
Company’s Form 10-SB to be filed by the Company following the Closing
("Undertaking").
5.4 Compliance
Matters.
Prior
to and as a condition of the Closing, the Company shall: (i) update and complete
the books and records of the Company and its subsidiaries through September
30,
2007 and deliver the same to the Buyer, (ii) prepare and have audited by ▇▇▇▇
& Associates its financial statements for the fiscal year ended September
30, 2005 (“2005
Audit”),
(iii)
provide the Buyer with any information required to be included by the Company
in
a Form 10-SB to be filed by the Company following the Closing, and (iv) prepare
and file all of the Company’s income, franchise and other tax returns for the
fiscal years ended September 30, 2007 (“Tax
Returns”)(collectively,
the “Compliance
Matters”).
5.5 Other
Actions; Due Diligence Schedule.
The
Buyer and the Company shall cooperate with each other and use their respective
reasonable best efforts to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable on their part under
this Agreement and applicable laws to consummate the Transaction and the other
transactions contemplated hereby, including preparing and filing as soon as
practicable all documentation to effect all necessary notices, reports and
other
filings, and obtaining as soon as practicable all consents, registrations,
approvals, permits and authorizations necessary or advisable to be obtained
from
any third party and/or any Governmental Entity in order to consummate the
Transaction or any of the other transactions contemplated hereby.
5.6 Confidentiality;
Access to Information.
Each
party agrees to maintain and hold in strict confidence any material, non-public
information provided by any other party in connection with transactions
contemplated hereunder. The Company shall afford the Buyer and its financial
advisors, accountants, counsel and other representatives reasonable access
during normal business hours, upon reasonable notice, to the properties, books,
records and personnel of the Company and its Subsidiaries during the period
prior to the Closing to obtain all information concerning the business,
including financial condition, properties, results of operations and personnel
of the Company and its Subsidiaries, as the Buyer may reasonably request. No
information or knowledge obtained by the Buyer in any investigation pursuant
to
this Section 5.6 will affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties
to
consummate the Transaction.
5.7 No
Solicitation.
Other
than with respect to the Transaction, the Company agrees that it shall not,
and
shall direct and use its reasonable best efforts to cause its officers,
directors, employees, representatives, agents, or affiliates (including, but
not
limited to any investment banker, attorney, or accountant retained by the
Company) to, directly or indirectly, solicit, knowingly encourage, initiate
discussions or negotiations with, or knowingly provide any nonpublic information
to, any corporation, partnership, person, or other entity or group concerning
any proposed Alternative Transaction (as defined below), or otherwise knowingly
facilitate any effort or attempt to make or implement an Alternative
Transaction. For
purposes of this Agreement, the term “Alternative Transaction” shall mean any of
the following involving the Company or any subsidiary: (i) any tender offer,
exchange offer, merger, consolidation, share exchange, business combination
or
similar transaction involving capital stock of the Company; (ii) any transaction
or series of related transactions pursuant to which any person or entity (or
its
shareholders), (a “Third Party”) acquires shares (or securities exercisable for
or convertible into shares) representing more that 20% of the outstanding shares
of any class of capital stock of the Company; or (iii) any sale, lease,
exchange, licensing, transfer or other disposition pursuant to which a Third
Party acquires control of more than 20% of the assets (including, but not
limited to, intellectual property assets) of the Company (determined by
reference to the fair market value of such assets), in a single transaction
or
series of related transactions. The Company shall immediately terminate all
discussions with Third Parties concerning any proposed Alternate Transaction,
and will request that such Third Parties promptly return any confidential
information furnished by the Company in connection with any proposed Alternative
Transaction.
13
5.8
Public
Disclosure.
The
Buyer and
the
Company shall consult with each other and agree in writing before issuing any
press release or otherwise making any public statement with respect to the
Transaction or this Agreement and will not issue any such press release or
make
any such public statement prior to such consultation.
5.9 Business
Records.
At
Closing, the Company shall deliver to Buyer all
records and documents relating to the Company, wherever located, including,
without limitation, books, records, supplier and customer lists and files,
government filings, the Returns, consent decrees, orders, and correspondence,
financial information and records, electronic files containing any financial
information and records, and other documents used in or associated with the
Company ("Business
Records").
5.10 Ownership
Records; Transfer Agent Undertaking.
At
Closing, the Company shall deliver to Buyer a full and complete listing of
all
stockholders of the Company, dated within three (3) business days prior to
Closing, from and certified by the Company’s transfer agent showing the name and
address of each stockholder, the number of shares owned by each stockholder,
and
the certificate number and issue dates for the shares owned by each stockholder.
At or prior to Closing, the Company shall obtain, and deliver to the Buyer,
an
undertaking from the transfer agent, in a form and substance satisfactory to
the
Buyer, stating the amount of any and all fees and charges owed to the transfer
agent by the Company for services rendered prior to Closing together with a
copy
of the current agreement in place between the Company and the transfer agent
(“Transfer
Agent Undertaking").
ARTICLE
VI
CONDITIONS
TO THE TRANSACTION
6.1 Conditions
to Obligations of Each Party to Effect the Transaction. The
respective obligations of each party to this Agreement to effect the Transaction
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) No
Order.
No
Governmental Entity shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect and
which
has the effect of making the Transaction illegal or otherwise prohibiting
consummation of the Transaction, substantially on the terms contemplated by
this
Agreement. All waiting periods, if any, under any law in any jurisdiction in
which the Company or the Buyer has material operations relating to the
transactions contemplated hereby will have expired or terminated.
14
(b) Preferred
Stock Designations.
Prior
to Closing, the Board of Director of the Company shall have adopted, and the
Company shall have filed with and have accepted by the Secretary of State of
the
State of Delaware, the Certificate of Designations attached hereto as Exhibit
A.
6.2 Additional
Conditions to Obligations of the Company. The
obligations of the Company to consummate and effect the Transaction shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
the
Company:
(a) Representations
and Warranties.
Each
representation and warranty of the Buyer contained in this Agreement (i) shall
have been true and correct as of the date of this Agreement and (ii) shall
be
true and correct on and as of the Closing Date with the same force and effect
as
if made on the Closing Date. The Company shall have received a certificate
with
respect to the foregoing signed on behalf of the Buyer by an authorized manager
of the Buyer ("Buyer
Closing Certificate").
(b) Agreements
and Covenants.
The
Buyer
shall have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by
it
on or prior to the Closing Date, except to the extent that any failure to
perform or comply (other than a willful failure to perform or comply or failure
to perform or comply with an agreement or covenant reasonably within the control
of the Buyer) does not, or will not, constitute a Material Adverse Effect with
respect to the Buyer taken as a whole, and the Company shall have received
the
Buyer Closing Certificate to such effect.
(c) Other
Deliveries.
At or
prior to Closing, the Buyer shall have delivered to the Company: (i) the
resolutions by the Buyer's board of managers approving this Agreement and the
transactions contemplated hereunder, (ii) the duly executed Registration Rights
Agreement, and (iii) such other documents or certificates as shall reasonably
be
required by the Company and its counsel in order to consummate the transactions
contemplated hereunder. At or prior to the Closing, the Buyer shall have
delivered the Purchase Price to the Company, and the proceeds thereof shall
be
handled and disbursed in accordance with Section 5.1 hereof.
6.3
Additional
Conditions to the Obligations of the Buyer. The
obligations of the Buyer to consummate and effect the Transaction shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
the
Buyer:
(a) Representations
and Warranties.
Each
representation and warranty of the Company contained in this Agreement (i)
shall
have been true and correct as of the date of this Agreement and (ii) shall
be
true and correct on and as of the Closing Date with the same force and effect
as
if made on and as of the Closing. The Buyer shall have received a certificate
with respect to the foregoing signed on behalf of the Company with respect
to
the warranties and representations made by the Company under this Agreement
("Company
Closing Certificate").
(b) Agreements
and Covenants.
The
Company shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by the
Company at or prior to the Closing Date except to the extent that any failure
to
perform or comply (other than a willful failure to perform or comply or failure
to perform or comply with an agreement or covenant reasonably within the control
of the Company) does not, or will not, constitute a Material Adverse Effect
on
the Company, and the Buyer shall have received the Closing Certificate to such
effect.
15
(c) Company
Disclosure Schedules.
The
Buyer shall have completed its due diligence investigation and review of the
Company which shall be acceptable to the Buyer in its sole discretion. The
Company shall have delivered the disclosure schedules under Article II to the
Buyer, and such disclosure schedules are reasonably satisfactory to the
Buyer.
(d) Cancellation
and Termination of Options and Contracts.
The
Company shall have delivered to the Buyer written instruments evidencing that
all agreements, contracts and commitments under which the Company is a party
or
under which the Company has any obligations have been cancelled or terminated
without any further liability to the Company including, without limitation,
the
termination of the Company’s engagement with its existing transfer agent under
terms and conditions acceptable to the Buyer.
(e) Settlement
Agreements.
The
Company and the Settlement Creditors have executed and delivered to the Buyer
the Settlement Agreements, the Settlement Shares shall be issued at or prior
to
the Closing, and the Settlement Creditors have executed and delivered to the
Company any UCC termination filings.
(f) Corporate
Matters; Compliance Matters.
The
Company shall have delivered to the Buyer a certified copy of the Company’s
certificate of incorporation, with any amendments thereto, a certified copy
of
the Company’s bylaws, with any amendments thereto, a certificate of good
standing in Delaware. All of the Compliance Matters have been completed to
the
satisfaction of the Buyer.
(g) Other
Deliveries.
At or
prior to Closing, the Company shall have delivered to the Buyer: (i) the
resolutions by the Company's board of directors approving this Agreement and
the
transactions contemplated hereunder, (ii) the duly executed Registration Rights
Agreement, and (iii) such other documents or certificates as shall reasonably
be
required by the Buyer and its counsel in order to consummate the transactions
contemplated hereunder. At or prior to the Closing, the Company shall have
caused the certificates representing the Preferred Shares to be delivered to
the
Buyer.
ARTICLE
VII
SURVIVAL
All
representations, warranties, agreements and covenants contained in or made
pursuant to this Agreement, or any Schedule hereto or thereto or any certificate
delivered at the Closing, shall not survive the Closing, and no claims by virtue
of the breach such representations, warranties, agreements and covenants shall
be made after the Closing.
ARTICLE
VIII
TERMINATION,
AMENDMENT AND WAIVER
8.1 Termination. This
Agreement may be terminated at any time prior to the Closing:
(a) by
mutual
written agreement of the Buyer and the Company;
16
(b) by
either
the Buyer or the Company if the Transaction shall not have been consummated
for
any reason by December 31, 2007 or such other date mutually agreeable to the
Buyer and the Company; or
(c) by
either
the Buyer or the Company if a Governmental Entity shall have issued an order,
decree or ruling or taken any other action, in any case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Transaction,
which order, decree, ruling or other action is final and nonappealable.
8.2
Notice
of Termination; Effect of Termination.
Any
termination of this Agreement under Section 8.1 above will be effective
immediately upon the delivery of written notice of the terminating party to
the
other parties hereto. In the event of the termination of this Agreement as
provided in Section 8.1, this Agreement shall be of no further force or effect
and the Transaction shall be abandoned, except (i) as set forth in this Section
8.2, Section 8.3 and Article IX (General Provisions), each of which shall
survive the termination of this Agreement, and (ii) nothing herein shall relieve
any party from liability for any intentional or willful breach of this
Agreement.
8.3 Fees
and Expenses. All
fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Transaction is consummated. Without limiting the foregoing sentence,
the Company shall be responsible for all costs associated with the Compliance
Matters, which shall be paid at Closing.
8.4 Amendment. This
Agreement may be amended by the parties hereto at any time by execution of
an
instrument in writing signed on behalf of each of the Buyer and the Company.
8.5 Extension;
Waiver. At
any
time prior to the Closing, any party hereto may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or other
acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties made to such party contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on
the
part of a party hereto to any such extension or waiver shall be valid only
if
set forth in an instrument in writing signed on behalf of such party. Delay
in
exercising any right under this Agreement shall not constitute a waiver of
such
right.
ARTICLE
IX
GENERAL
PROVISIONS
9.1 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery service, or
sent
via telecopy (receipt confirmed) to the parties at the following addresses
or
telecopy numbers (or at such other address or telecopy numbers for a party
as
shall be specified by like notice):
(a) if
to the
Buyer, to:
KIG
Investors I, LLC
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Manager
▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇)
▇▇▇-▇▇▇▇ fax
17
(b) if
to the
Company, to:
Catalyst
Lighting Group, Inc.
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇)
▇▇▇-▇▇▇▇ fax
9.2 Interpretation.
(a) When
a
reference is made in this Agreement to Exhibits, such reference shall be to
an
Exhibit to this Agreement unless otherwise indicated. When a reference is made
in this Agreement to Sections, such reference shall be to a Section of this
Agreement. Unless otherwise indicated the words “include,” “includes” and
“including” when used herein shall be deemed in each case to be followed by the
words “without limitation.” The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein
to
“the business of” an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity.
(b) For
purposes of this Agreement, the term “Material
Adverse Effect”
when
used in connection with an entity means any change, event, violation,
inaccuracy, circumstance or effect, individually or when aggregated with other
changes, events, violations, inaccuracies, circumstances or effects, that is
materially adverse to the business, assets (including intangible assets),
revenues, financial condition or results of operations of such entity and its
Subsidiaries, if any, taken as a whole (it being understood that neither of
the
following alone or in combination shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (a) changes attributable to the public
announcement or pendency of the transactions contemplated hereby, (b) changes
in
general national or regional economic conditions or (c) changes affecting the
industry generally in which the Company or the Buyer operates).
(c) For
purposes of this Agreement, the term “Person”
shall
mean any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(b) For
purposes of this Agreement, all monetary amounts set forth herein are referenced
in United States dollars, unless otherwise noted.
9.3 Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to
the
other party, it being understood that all parties need not sign the same
counterpart. Facsimile and electronic signatures to this Agreement by the
parties shall be accepted and shall be treated as original signatures hereto.
9.4 Entire
Agreement; Third Party Beneficiaries. This
Agreement and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein, including the Schedules
hereto (a) constitute the entire agreement among the parties with respect to
the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) are not intended to confer upon any other person any rights
or
remedies hereunder (except as specifically provided in this Agreement).
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9.5 Severability. In
the
event that any provision of this Agreement, or the application thereof, becomes
or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force
and
effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of
this Agreement with a valid and enforceable provision that will achieve, to
the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
9.6 Other
Remedies; Specific Performance. Except
as
otherwise provided herein, any and all remedies herein expressly conferred
upon
a party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the exercise by
a
party of any one remedy will not preclude the exercise of any other remedy.
The
parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction,
this
being in addition to any other remedy to which they are entitled at law or
in
equity.
9.7 Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, USA, regardless of the laws that might otherwise govern
under
applicable principles of conflicts of law thereof.
9.8 Rules
of Construction. The
parties hereto agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against
the
party drafting such agreement or document.
9.9 Assignment. No
party
may assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other parties. Subject
to
the first sentence of this Section 9.9, this Agreement shall be binding upon
and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
9.10 Arbitration.
Any
disputes or claims arising under or in connection with this Agreement or the
transactions contemplated hereunder shall be resolved by binding arbitration.
Notice of a demand to arbitrate a dispute by either party shall be given in
writing to the other at their last known address. Arbitration shall be commenced
by the filing by a party of an arbitration demand with the American Arbitration
Association (“AAA”)
in its
office in Denver, Colorado USA. The arbitration and resolution of the dispute
shall be resolved by a single arbitrator appointed by the AAA pursuant to AAA
rules. The arbitration shall in all respects be governed and conducted by
applicable AAA rules, and any award and/or decision shall be conclusive and
binding on the parties. The arbitration shall be conducted in Denver, Colorado.
The arbitrator shall supply a written opinion supporting any award, and judgment
may be entered on the award in any court of competent jurisdiction. Each party
shall pay its own fees and expenses for the arbitration, except that any costs
and charges imposed by the AAA and any fees of the arbitrator for his services
shall be assessed against the losing party by the arbitrator. In the event
that
preliminary or permanent injunctive relief is necessary or desirable in order
to
prevent a party from acting contrary to this Agreement or to prevent irreparable
harm prior to a confirmation of an arbitration award, then either party is
authorized and entitled to commence a lawsuit solely to obtain equitable relief
against the other pending the completion of the arbitration in a court having
jurisdiction over the parties. All rights and remedies of the parties shall
be
cumulative and in addition to any other rights and remedies obtainable from
arbitration.
[Remainder
of this page intentionally left blank.]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the date first written above.
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KIG
Investors I, LLC
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| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Manager
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Catalyst
Lighting Group, Inc.
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| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ | |
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, CEO |
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Index
of Exhibits
Exhibit
A - Registration Rights Agreement
Exhibit
B - Certificate
of Designations of Series A Convertible Preferred Stock
Schedules
Disclosure
Schedules by the Company (to be delivered prior to
Closing)
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